N.C. challenges NCAA's tax status for lobbying against HB 2

With March Madness in full swing, Republican state legislators in North Carolina are alleging the NCAA and the ACC violated their federal tax-exempt status by attempting to provoke a repeal of the Tar Heel State's transgender restroom law.

GOP state Rep. Mark Brody filed the Athletic Associations Accountability Act (HB 328) in the state legislature March 13.

The measure, which has 17 co-sponsors, would instruct leaders of the North Carolina General Assembly to "file a tax-exempt organization complaint (referral) with the Department of the United States Treasury, Internal Revenue Service, against both the National Collegiate Athletic Association (NCAA) and the Atlantic Coast Conference (ACC), alleging the organizations have engaged in excessive lobbying activities."

The bill explains, "Specifically, the NCAA and the ACC have exceeded the scope of their respective charters by using economic retaliation against the State of North Carolina for the purpose of forcing the General Assembly to adopt social legislation that is not connected to the core mission of either the NCAA or the ACC."

The IRS website states that 501(c)(3) tax-exempt organizations like the NCAA and ACC may not devote "a substantial part of [their] activities" to "attempting to influence legislation."

Tami Fitzgerald, executive director of the North Carolina Values Coalition, said the NCAA and ACC "have given legislators numerous deadlines by which to repeal the people's privacy law, have engaged in behind-the-scenes discussions with legislators, including those at the highest levels, and have sought to harm the state economically by instituting a boycott of the state until [the transgender restroom law] is repealed.

"If that doesn't constitute attempting to influence legislation, then I don't know what would," Fitzgerald told Baptist Press in written comments.

After North Carolina enacted House Bill 2 last year—legislation that requires individuals in state buildings to use restrooms that correspond with the sex listed on their birth certificates—the NCAA pulled seven championship sporting events from the state. The NCAA's decision included first- and second-round games of the 2017 Division I men's basketball tournament that were to be played in Greensboro.

Also at issue for the NCAA was HB 2's establishment of a statewide antidiscrimination law that did not include sexual orientation or gender identity among protected classes.

The ACC responded to HB 2 by pulling from North Carolina all neutral-site championships for the 2016-17 academic year, including the 2016 football championship game.

In addition to registering a complaint about lobbying, the Athletic Associations Accountability Act also would require public universities in North Carolina to disclose how their employees vote when serving on NCAA and ACC committees.

In September, the chancellors of both the University of North Carolina and North Carolina State University refused to disclose how they voted as members of the ACC Council of Presidents on moving championships from North Carolina, according to media reports.

The NCAA responded to HB 328 by stating it "has not lobbied North Carolina lawmakers."

"All conversations that we've had with representatives in the state have been designed to provide information about our championships process and timeline, not take positions on legislation," the NCAA said in a statement according to WBTV in Charlotte, N.C.

"When the Board of Governors moved championships from North Carolina last year, it was a clear response to state laws that local communities admitted would make it difficult to assure that our events could be held in an environment that was safe, healthy, and free from discrimination for all those watching and participating in our events," the NCAA stated.

Mark Creech, executive director of the Christian Action League of North Carolina, told BP the IRS will have to determine whether the NCAA and ACC violated the regulation prohibiting "substantial" lobbying. But, he said, "it is nothing less than double-speak to say they haven't taken a position on HB 2-related legislation."

"They've made it clear that the legislature can either repeal HB 2 or pass a compromise acceptable to them; otherwise, the state of North Carolina is going to be excluded from the bidding process on hosting their games," Creech said in written comments.

Creech added, "Technically, they may be within the parameters of the law, but they certainly aren't following the spirit of the law."

Fitzgerald, an attorney, said she believes some actions of the NCAA and ACC constitute "'substantial' lobbying activities that violate the organizations' tax-exempt status under the IRS code. These multi-million-dollar organizations are benefiting off the taxpayers of North Carolina, while extorting and attempting to cause economic harm to the state."

Economically, the Greensboro Coliseum estimates a loss of approximately $500,000 from cancelation of NCAA men's basketball tournament games previously scheduled for March 17-19, the Chicago Tribune reported.

Moving the 2016 ACC football championship game may have impacted the conference negatively.

The game, which was moved from Charlotte to Orlando, saw the lowest attendance in the ACC Championship's 12-year history, according to The Post and Courier of Charleston, S.C.

Creech said "there's no question" relocation of this year's NCAA basketball tournament games "has hurt some" economically. "The bottom line, however, is that it hasn't hurt to any significant degree our state's economy."

Creech noted, "But no matter the size of the losses, there is no price too high to protect our citizens' fundamental right to privacy, safety and religious liberty."

Democratic Gov. Roy Cooper urged lawmakers to repeal HB 2 March 13 in his State of the State address, calling the bill "the dark cloud hanging over our state of promise," the Associated Press reported.

A March 14 attempt by Democrats to repeal HB 2 fell short.

David Roach is chief national correspondent for Baptist Press, the Southern Baptist Convention's news service. 

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