Complaint Against OpenAI Filed with IRS
The High Tech Watchdog has formally lodged a complaint against OpenAI with the Internal Revenue Agency, as CEO Sam Altman could potentially gain billions in stock under circumstances that may breach U.S. tax regulations, according to information obtained by the Post.
In a complaint submitted on Thursday by the MIDAS Project, concerns were raised about Altman’s dual roles—serving as both CEO of OpenAI’s commercial arm and the nonprofit committee. The group suggests this creates a conflict of interest that could enable Altman and other board members to prioritize personal financial interests.
Specifically, the complaint points out that Altman legislates negotiations that might benefit him personally while undermining the nonprofit’s mission. The document emphasizes that his financial interests are deeply intertwined with decisions made by OpenAI.
Acquired only from the Post Office, this complaint indicates that, given OpenAI’s valuation of $300 billion, Altman is set to receive a significant amount of stock from the company’s restructuring efforts.
“This complex investment environment creates a scenario where Altman’s financial gains could be influenced by nonprofit choices made at OpenAI,” the complaint asserts.
An OpenAI representative remarked that Altman does not hold any direct shares and declined to elaborate further on the situation.
The company has also indicated that no final decisions have been made regarding the restructuring, amidst growing scrutiny from state regulators in California and Delaware.
Back in May, OpenAI attempted to quell these worries by stating that the nonprofit committee would retain overall control of the organization, even as they aim to appease investors like SoftBank by potentially transforming its for-profit subsidiary into a public benefits corporation.
SoftBank’s financial director recently mentioned that “nothing has changed” regarding OpenAI’s reorganization plans.
According to federal tax laws, organizations classified as nonprofits, such as OpenAI under Section 501(c)(3), must operate for the public benefit rather than for private interests.
Tyler Johnston, the executive director of the MIDAS Project, stated that the intent behind the complaint is to promote compliance with the law and ensure that major AI firms like OpenAI act in the public interest.
“There are numerous signs indicating that OpenAI has not been fully transparent, acknowledging that restructuring choices are made under investor pressure,” Johnston shared. “As a society, we need to stay alert to these issues.”
The complaint also outlines tensions between OpenAI’s customer model and its chairman Bret Taylor, who co-founded Sierra AI—another entity that aims to resell OpenAI’s models. Additionally, board member Adebayo Ogunlesi’s Global Infrastructure Partners manages a data center likely to benefit from increasing demand for AI infrastructure linked to OpenAI’s expansion.
“These board members are responsible for deciding what rights the nonprofit should have within OpenAI’s for-profit branches, particularly if waiving those rights could financially benefit individuals,” the complaint alleges.
Moreover, Altman has a personal stake in various companies that partner with OpenAI, including firms in hardware like Reddit and Payment Processor Stripe, among others.
The MIDAS Project has crafted an initiative to track OpenAI’s structure and governance through an open-source database called OpenAI files, highlighting concerns that the IRS might cite the nonprofit’s restructuring as detrimental to its ability to steer its for-profit sector.
They also assert that OpenAI may have inappropriately leveraged its nonprofit grants to entice commercial customers using API credits tied to product usage.
Highlighted in the document is OpenAI’s $50 million Nextgenai program, which provides research funding to institutions while requiring the use of OpenAI tools.
Complicating matters for Altman is an ongoing federal lawsuit initiated by Elon Musk, a co-founder of OpenAI, who accuses Altman of straying from the organization’s original mission in favor of profit-making.
This is a politically sensitive period for Altman, as he navigates the complexities of shaping AI regulations and restructuring operations. Throughout the years, he has made substantial donations to Democratic causes, such as $200,000 to support Joe Biden’s political committee in 2023, but he has shown a surprising openness towards President Trump.
Altman previously contributed $1 million to Trump’s inauguration and even spoke at the White House in January, endorsing the $500 billion “Stargate” initiative aimed at developing AI data centers. Recently, he expressed feelings of being “politically homeless,” indicating a shift away from Democratic support, citing the party’s drifting focus away from innovation and entrepreneurship.
