The nonprofit status of OpenAI has been shoved into the crosshairs of U.S. tax enforcement. A formal IRS complaint, filed by watchdog group The Midas Project, accuses the AI powerhouse of violating federal tax law—specifically targeting CEO Sam Altman’s dual role as both a nonprofit board member and the head of OpenAI’s for-profit operations.
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According to the filing, that structure creates glaring conflicts of interest. Altman, the complaint argues, is financially positioned to benefit from OpenAI’s deals with companies he’s already invested in, potentially pocketing hundreds of millions, if not billions. And that’s just the start.
Boardroom Entanglements Get Exposed
The complaint goes further, highlighting financial ties across OpenAI’s board. Chairman Bret Taylor’s Sierra AI resells OpenAI models. Adam D’Angelo’s Quora is an OpenAI customer. Adebayo Ogunlesi’s firm owns data centers surging in value from AI demand. These details are central to The Midas Project’s case that OpenAI’s structure breaches IRS rules for tax-exempt nonprofits.
Nonprofit or Profit Engine in Disguise?
OpenAI was born in 2015 to serve humanity, not shareholders. But that founding promise is under pressure. After entering talks to restructure into a for-profit public benefit corporation, the company pulled back this May and recommitted to its nonprofit status. That hasn’t stopped scrutiny.
The watchdog argues that OpenAI’s nonprofit framework now serves a different purpose: shielding a high-valuation tech firm from oversight while executives cash in behind the curtain. The company’s $300 billion valuation makes even minor equity slices staggeringly valuable.
Elon Musk Enters Again
Elon Musk (TSLA), once co-founder, now critic-in-chief, has already sued OpenAI twice. He accuses the company of abandoning its mission and original charter. Earlier this year, he led a $97 billion investor bid to take over the company. Altman rejected it.
Now, the IRS may be the next challenger in line.
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