The Chronicle of Higher Education reported on a group, Playoff PAC, which has filed a complaint with the Internal Revenue Service about the Orange Bowl paying for a gathering of several dozen athletic directors, conference commissioners, and their spouses aboard a Caribbean cruise ship. Playoff PAC filed a broader complaint in September, alleging various abuses of charitable funds against two other major bowl organizations, the Fiesta Bowl Committee and the Sugar Bowl Committee, as well as the Orange Bowl Committee. This complaint is among the continuing questions of tax-exempt issues involving college sports.
“The bowl games are charities, and they are considered to be educational in nature because of the sort of longstanding understanding that college athletics furthers higher education,” said Marcus S. Owens, a Washington lawyer who served for 10 years as director of the IRS division that oversees tax-exempt groups like the bowl committees. But, he added, “it’s not apparent how the bowl committees—and, in particular, the Orange Bowl Committee, with its trip to the Bahamas—really fits into that calculus any more.”
According to the article, bowl committees are charitable organizations incorporated under section 501(c)(3) of the federal tax code, and they are exempt from paying taxes. This is one key source of Playoff PAC’s complaint: In return for tax-exempt status, the organizations are required by law to serve the public interest and avoid giving “private benefits” unless doing so is essential to fulfilling their charitable purpose. Playoff PAC stated that bowls are not supposed to use charitable resources to benefit executives or “insiders.”
Officials with the Orange Bowl Committee say the cruise served an important purpose: to allow the committee to meet with “key stakeholders” to communicate and advocate its business focus. “This is consistent with our mission because it greatly assists the Orange Bowl in remaining current with matters related to college athletics, and in maintaining its prestigious national position as a BCS bowl,” the committee said in a statement.