Tuesday, January 10, 2012

The UBIT Bowl?

Is the Sugar Bowl disclosing all of its taxable incomes?  That's exactly what the IRS will have to find out.

Last night's 2012 Allstate BCS National Championship Game is run by the registered 501(3)(c) organization, and tickets for it ranged from $300 to $350, face value.  A steep price to pay but, presumably, that money was going to a good cause.  ESPN reported a few days ago that the Sugar Bowl's IRS disclosure form showed that the organization gave away $6.21 million in grants in the fiscal year ending June 2010.  Pretty charitable, right?  Not so fast.

A closer inspection reveals that the $6 million is a grant in name only.  It's really just a payment to the BCS, which theoretically uses that tax-free money to fund higher education.  But, according to ESPN, the BCS uses a majority of those funds to subsidize the high ticket prices they force universities to buy.  In total, the Sugar Bowl gave only $210,056 to charities in 2010, and those grants were the Southern Yacht Club and the Friends of New Orleans Lacrosse.

In the same blog post, ESPN reported some news that won't make the bowls too happy.  A lobbying group called the Playoff PAC plans to ask the IRS to look into the spending of all of the bowls.  They say there is a pattern of frivolous spending amongst the organizations, as well as undisclosed lobbying payments.  The IRS is already looking into the regime of former Fiesta Bowl CEO John Junker who is accused, among other things, of reimbursing employees for donations they made to political candidates and throwing extravagant parties that included trips to strip clubs.  This was covered in more detail in an article in last year's edition of The NonProfit Times.

Playoff PAC plans to officially file their complaint to the IRS later this month and, should it be confirmed, the bowls will be forced to pay more in unrelated business income taxes (UBIT).  To put in perspective how little the bowls have paid, the Orange, Sugar, and Rose Bowls all claimed zero in UBIT revenue in 2010.  The Fiesta Bowl claimed only $3,054.  If the allegations by Playoff PAC turn out to be true, it means the bowls are seriously underreporting their taxable incomes.

Read the full story on ESPN.

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