A watchdog group called the Midas Project filed a complaint with the U.S. Internal Revenue Service (IRS), accusing OpenAI and CEO Sam Altman of violating nonprofit tax laws. The group alleges that Altman’s dual role—leading OpenAI’s for-profit arm while serving on its nonprofit board—may allow him to gain personally at the nonprofit’s expense
Conflict of Interest Raises Red Flags
The complaint points to a restructuring plan that could grant Altman an equity stake valued in the billions, potentially violating IRS rules that forbid nonprofit insiders from profiting from the organization’s assets. It also highlights similar conflicts involving board members tied to companies benefiting financially from OpenAI’s projects
Nonprofit Roots vs. Profit Ambitions
OpenAI began as a 501(c)(3) nonprofit in 2015, with the aim of benefiting humanity. But its rapidly growing for-profit subsidiary, now valued at an estimated $300 billion, is causing concern among regulators and watchdogs who question whether the nonprofit structure still applies
IRS and State Investigations
The IRS complaint isn’t the only investigation underway. California’s attorney general is probing OpenAI’s transfer of nonprofit assets into for-profit entities. Other regulators, like the FTC and SEC, are also scrutinizing its operations—though on different fronts .
OpenAI’s Response
OpenAI has stated that Altman currently has no equity stake and that a final decision on restructuring hasn’t been made New York Post. The board has reassured stakeholders that it will continue overseeing the nonprofit’s mission .
Why It Matters
- 📌 Tax integrity: If proven, violations could lead to IRS penalties or loss of tax-exempt status.
- ⚖️ Governance review: This case could reshape how hybrid entities—combining nonprofit missions with for-profit arms—are regulated.
- 🌐 Public trust: Ongoing probes may affect how OpenAI is viewed by governments, investors, and the public.
What Comes Next
The IRS will decide whether to investigate further. At the same time, state-level inquiries into asset transfers will continue. OpenAI may be required to reorganize its structure and reinforce nonprofit protections under federal and state tax laws
