OpenAI and tax controversy: profit/nonprofit model under IRS scrutiny, Sam Altman at the center
- Graziano Stefanelli
- Jul 11
- 4 min read
OpenAI in turmoil: IRS complaint over alleged tax violations and conflicts of interest involving Sam Altman
A formal complaint puts the spotlight on OpenAI’s tax practices.
In recent days, the U.S. tech scene has been shaken by news of a formal complaint filed with the IRS—the American tax agency—against OpenAI and its tax structure. According to the first documents leaked to the press, the independent watchdog "Midas Project" accuses the company led by Sam Altman of circumventing federal tax regulations through operations allegedly inconsistent with the foundation’s nonprofit status. The complaint, filed on July 10 and initially reported by the New York Post, lists a series of alleged tax irregularities referring to the 2015–2023 period, during which OpenAI moved from its experimental phase to becoming a global leader in artificial intelligence.
Midas Project is an independent American watchdog organization specializing in reporting suspicious tax practices and conflicts of interest in the tech sector. The group files formal complaints with authorities such as the IRS and SEC to promote transparency and fairness in big tech, particularly in the world of artificial intelligence.
The heart of the complaint: how OpenAI allegedly built a “bridge” from the nonprofit to the commercial company, shifting money, taxes, and value
According to the Midas Project’s dossier, the OpenAI case centers around a complex corporate structure allegedly designed to channel the revenues generated by research and industrial deals toward the commercial component, while still taking advantage of the tax benefits of a foundation. The watchdog describes a system in which the nonprofit foundation OpenAI Inc., though formally at the center of the project, controls only a minimal part of an intermediate vehicle, OpenAI GP LLC, the real “linking ring” between the philanthropic and the commercial side. Here, the company OpenAI Global LLC comes into play, into which contracts, agreements, and all profitable activities flow. According to the accusation, the proceeds from research, licensing, and collaborations enter through the “philanthropic door” and end up in the “commercial room,” maintaining throughout the process a series of tax and regulatory benefits originally intended to protect collective interests.
One of the most emblematic episodes is said to be the mega-license granted to Microsoft in 2023: the license for GPT models, instead of being issued by the nonprofit foundation, allegedly went directly through the commercial LLC. This detail, according to Midas, channels the flow of royalties, fees, and profits onto a purely commercial level, leaving the foundation on the sidelines both in fiscal terms and in terms of returns for the community. Meanwhile, it emerges that part of the resources generated by these operations were allocated to performance bonuses and stock options in favor of OpenAI’s top executives—including Sam Altman, Greg Brockman, and Mira Murati—even though these individuals remained on the foundation’s board. According to U.S. law, a foundation cannot “pass on” economic value to its administrators (the so-called inurement), yet the adopted strategy, with the presence of roles in both entities, risks creating a structural conflict of interest.
Midas Project, precisely in light of this corporate engineering, is asking the IRS to verify not only the asset flows and the maximum profit cap for investors, but also the legitimacy of the allocation of license proceeds. The most extreme request is to revoke OpenAI Inc.’s nonprofit status and recalculate the taxes due since 2016: a scenario which, if realized, would have a huge impact on the solidity and reputation of the entire organization.
Focus on Sam Altman: conflicts of interest and overlapping roles
The most delicate aspect of the complaint concerns the role of Sam Altman, who, in addition to leading OpenAI’s growth, is alleged by the complainants to have held positions that could constitute real conflicts of interest. Midas Project particularly emphasizes the possibility that Altman benefited from incentives, stock options, and indirect compensation through the for-profit component while simultaneously holding roles in the governance of the nonprofit. The accusation highlights the difficulty of accurately tracking internal financial flows and profit distribution, and points out that these practices could constitute a violation of IRS rules for tax-exempt entities.
OpenAI’s reaction and the regulatory context of AI entities in America
OpenAI has publicly responded by calling the accusations “baseless” and reiterating the transparency of its tax practices. In a statement released to the media, the company claims to operate “in full compliance with the law” and emphasizes that the nonprofit/for-profit duality was implemented to ensure the economic sustainability of advanced AI research. Nevertheless, the case reignites the long-running debate in the sector over the tax strategies adopted by many big tech firms—especially among AI companies growing at breakneck speed and often adopting hybrid corporate structures to maximize investments, asset protection, and internal incentives.
Potential consequences and scenarios for OpenAI’s future governance
The opening of an IRS investigation could have far-reaching consequences not only for the company’s reputation, but also for OpenAI’s ability to access subsidized funding, institutional partnerships, and federal grants. A wide-ranging regulatory review could force OpenAI to revise its internal practices and adopt new, more transparent governance mechanisms, especially regarding the relationship between the nonprofit structure and the commercial company. The case, which quickly became symbolic in the context of the “global AI race,” once again puts the spotlight on the blurry line between disinterested research and major financial interests in the U.S. technology sector.
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