Consumer Group Accuses Sam Altman of Tax Violations

The Midas Project, an AI watchdog nonprofit, lodged the IRS complaint against OpenAI, alleging that OpenAI’s structure allows executives to benefit financially from nonprofit assets, in violation of Section 501(c)(3). The filing came amid OpenAI’s restructuring talks to convert its for-profit arm into a public-benefit corporation.

Midas argues that Altman’s dual roles – as CEO of OpenAI’s for-profit subsidiary and as a member of its nonprofit board – create conflicts of interest that could funnel grants and equity stakes to executives, contravening federal rules for tax-exempt organizations.

The group contends that Altman stands to receive equity worth potentially billions (given OpenAI’s $300 billion valuation), creating a prohibited “private benefit” to insiders and undermining the nonprofit’s charitable purpose.

The complaint details conflicts among board members: chairman Bret Taylor’s Sierra AI resells OpenAI models; Adam D’Angelo’s Quora is an OpenAI client; Adebayo Ogunlesi’s Global Infrastructure Partners profits from AI data centers.

The filing also alleges that grants awarded by OpenAI’s nonprofit arm may have been diverted to support for-profit initiatives, further blurring the lines between charitable and commercial activities.

“CEO Sam Altman may receive equity in the new for-profit company, but either way, his investments in companies partnering with OpenAI create additional conflicts potentially worth hundreds of millions,” the Midas Project stated.

OpenAI responded that Altman currently holds no direct equity and that no final decisions on restructuring have been made.

OpenAI was founded in 2015 as a nonprofit to develop safe artificial general intelligence for public benefit. In November 2024, preliminary discussions began with U.S. regulators about transitioning the for-profit subsidiary into a public-benefit corporation, a plan later paused.

Former co-founder Elon Musk sued OpenAI in 2024, accusing it of breaching its nonprofit charter, and offered a $97.4 billion takeover bid, which Altman rejected.