What This Bill Does
This bill changes tax rules for major professional sports leagues. It removes tax benefits (tax-exempt status) that some sports leagues currently receive from the federal government.
Who It Affects
Professional sports leagues with annual revenue over $10,000,000. The bill specifically mentions the National Hockey League, PGA Tour, and Ladies Professional Golf Association. Team owners and league executives would be affected by losing tax-exempt status.
Key Provisions
• Professional sports leagues can no longer qualify as tax-exempt organizations if a main activity is running national or international sports competitions, which includes managing league business, hiring officials, scheduling games, handling sponsorships and broadcast sales, lending money for facilities, or overseeing player behavior. The league must also have annual revenue exceeding $10,000,000. (Sec. 4)
• The bill removes specific language that previously allowed professional football leagues to be tax-exempt. (Sec. 3)
What Changes
Professional sports leagues that meet the definition in the bill lose the ability to operate as tax-exempt organizations. This means these leagues would owe federal taxes on their income instead of receiving tax benefits.
Important Definitions
Tax-exempt organization: A group that does not pay federal income taxes because it serves public or charitable purposes.
Professional sports league: An organization that manages national or international sports competitions.
Effective Date
These changes apply to tax years beginning after December 31, 2022.
I
118TH CONGRESS
1ST SESSION
H. R. 578
To amend the Internal Revenue Code of 1986 to exclude major professional
sports leagues from qualifying as tax-exempt organizations.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 26, 2023
Mr. STEUBE introduced the following bill; which was referred to the
Committee on Ways and Means
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
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•HR 578 IH
(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
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•HR 578 IH
(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, 2022.
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
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•HR 578 IH
‘‘(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, 2022.
5
Æ
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