Lawmakers seek to strip IOC of tax-exempt status for going easy on China's Winter Olympics

The International Olympic Committee would be stripped of its federal tax-exempt status under legislation that could be proposed as early as next week, four people with direct knowledge of the plan told USA TODAY Sports.

The proposed legislation has bipartisan support and is in response to the IOC’s refusal to challenge China on human rights abuses, one of the people said. All four people spoke on condition of anonymity because the legislation has not been unveiled yet.

The United States has already announced a diplomatic boycott of next month’s Winter Olympics, which begin Feb. 4 in Beijing. The measure is largely symbolic, however, and Congressional members are looking to take more direct action against the IOC. 

But it's not clear what, if any, impact stripping the IOC of its tax-exempt status would have.

U.S.-based companies contribute an outsized portion of the IOC's revenues, reported at a little over $2 billion in its 2018 federal return, the most recent full return available. NBC is paying $7.75 billion for the broadcast rights to the Olympic Games through 2032, the IOC’s largest commercial contract, while Airbnb, Coca-Cola, Intel, P&G and Visa are among the organization’s top sponsors.

Because the IOC is based in Switzerland, however, tax attorneys and economists told USA TODAY Sports that, depending upon how the legislation is written or interpreted, the organization could find loopholes that would continue to allow it to avoid paying U.S. taxes. USA TODAY Sports has not reviewed the language of the legislation.

"If Switzerland did it, it would have a whole different effect," said Victor Matheson, a specialist in sports economics and professor at Holy Cross.

"But why not?" Matheson added. "The IOC, along with FIFA, are probably the two least-deserving companies in the world deserving of charitable status."

The IOC has come under increasing condemnation for turning a blind eye to China’s repression of its people, particularly its treatment of the minority Muslim Uyghur population that the U.S. government describes as “genocide.” IOC president Thomas Bach has been criticized personally of being complicit in China’s silencing of tennis player Peng Shuai, staging a phone call with her and declaring her to be safe.

The three-time Olympian has not spoken freely since November, when she accused a former top Chinese official of sexual abuse, and almost all mentions of her have been erased from social media in China.

Several members of Congress had previously urged the IOC to move the Winter Olympics, citing China’s ongoing abuses and its reversal on promises of reform as part of its bid for the 2008 Summer Games. When it became clear the Games would stay in Beijing, the bipartisan Congressional Executive Commission on China (CECC) hauled the U.S.-based sponsors in for a hearing, demanding to know why they weren’t using their influence on both the IOC and China.

On Wednesday, members of the CECC sent Bach a letter asking him for proof that clothing worn by IOC members and staff during the Beijing Games wasn't made by forced labor. Both Anta and the HYX Group, which have contracts to provide clothing for the IOC, use cotton produced in the Xinjiang region, which is "synonymous with forced labor and the systematic repression that takes place there," according to the letter signed by Sen. Jeff Merkley, D-Oregon, and Rep. James McGovern, D-Massachusetts, co-chairs of the commission, as well as another commissioner, Rep. Christopher Smith, R-New Jersey. 

"The Chinese Communist Party and government have created a system of mass surveillance and internment, forbidden the observance of key tenets of Islam and otherwise restricted individuals’ ability to peacefully practice their religion, forcibly sterilized women and forced them to undergo abortions, and separated children from their families," the letter read. "Forced labor plays an integral role in the genocide taking place against Uyghurs and other predominantly Muslim ethnic groups in the region."

Also, Rep. Michael Waltz, R-Florida, tried to insert an amendment into last month’s National Defense Authorization Act that would have barred federal agencies from doing business with corporate sponsors of the Beijing Games. It failed after a heavy lobbying effort by several of the companies.

Waltz and Rep. Jennifer Wexton, D-Virginia, also co-sponsored a House resolution in December condemning the IOC for its failure to protect both human rights and the safety of athletes in Peng’s case. The measure passed without opposition.