PRO Sports Act

II 116TH CONGRESS 1ST SESSION S. 1121 To amend the Internal Revenue Code of 1986 to exclude major professional sports leagues from qualifying as tax-exempt organizations. IN THE SENATE OF THE UNITED STATES APRIL 10, 2019 Ms. ERNST (for herself and Mr. KING) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to exclude major professional sports leagues from qualifying as tax- exempt organizations. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Properly Reducing 4 Overexemptions for Sports Act’’ or the ‘‘PRO Sports 5 Act’’. 6 SEC. 2. FINDINGS. 7 Congress makes the following findings: 8 (1) The National Hockey League (NHL), PGA 9 Tour, and Ladies Professional Golf Association 10 VerDate Sep 11 2014 22:02 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1121.IS S1121 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 1121 IS (LPGA) each have league offices that are registered 1 with the Internal Revenue Service as nonprofit orga- 2 nizations under section 501(c)(6) of the Internal 3 Revenue Code of 1986. 4 (2) League-wide operations of the NHL, PGA 5 Tour, and LPGA together generate over 6 $1,000,000,000 in annual revenue, and these busi- 7 nesses are unmistakably organized for profit and to 8 promote their brands. 9 (3) According to the Internal Revenue Service, 10 section 501(c)(6) of the Internal Revenue Code of 11 1986 is for groups looking to promote a ‘‘common 12 business interest and not to engage in a regular 13 business of a kind ordinarily carried on for profit’’. 14 (4) According to the Internal Revenue Service, 15 businesses that conduct operations for profit on a 16 ‘‘cooperative basis’’ should not qualify for tax-ex- 17 empt treatment under section 501(c)(6) of the Inter- 18 nal Revenue Code of 1986. 19 SEC. 3. ELIMINATION OF SPECIFIC EXEMPTION FOR PRO- 20 FESSIONAL FOOTBALL LEAGUES. 21 (a) IN GENERAL.—Paragraph (6) of section 501(c) 22 of the Internal Revenue Code of 1986 is amended— 23 VerDate Sep 11 2014 22:02 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1121.IS S1121 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 1121 IS (1) by striking ‘‘, or professional football 1 leagues (whether or not administering a pension 2 fund for football players)’’, and 3 (2) by inserting ‘‘or’’ after ‘‘real-estate 4 boards,’’. 5 (b) EFFECTIVE DATE.—The amendments made by 6 this section shall apply to taxable years beginning after 7 December 31, 2019. 8 SEC. 4. SPECIAL RULES RELATING TO PROFESSIONAL 9 SPORTS LEAGUES. 10 (a) IN GENERAL.—Section 501 of the Internal Rev- 11 enue Code of 1986 is amended by adding at the end the 12 following new subsection: 13 ‘‘(s) SPECIAL RULES RELATING TO PROFESSIONAL 14 SPORTS LEAGUES.—No organization or entity shall be 15 treated as described in subsection (c)(6) if such organiza- 16 tion or entity— 17 ‘‘(1) is a professional sports league, organiza- 18 tion, or association, a substantial activity of which is 19 to foster national or international professional sports 20 competitions (including by managing league business 21 affairs, officiating or providing referees, coordinating 22 schedules, managing sponsorships or broadcast sales, 23 operating loan programs for competition facilities, or 24 overseeing player conduct), and 25 VerDate Sep 11 2014 22:02 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1121.IS S1121 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 1121 IS ‘‘(2) has annual gross receipts in excess of 1 $10,000,000.’’. 2 (b) EFFECTIVE DATE.—The amendment made by 3 this section shall apply to taxable years beginning after 4 December 31, 2019. 5 Æ VerDate Sep 11 2014 22:02 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\S1121.IS S1121 pamtmann on DSKBFK8HB2PROD with BILLS