TLDR: AI watchdog, The Midas Project, has filed a formal complaint with the IRS against OpenAI, alleging potential tax law violations that could jeopardize its nonprofit status. The complaint primarily targets CEO Sam Altman’s dual role as head of OpenAI’s for-profit operations and a board member of its nonprofit, alongside other board members’ alleged financial conflicts of interest.
OpenAI, a leading artificial intelligence developer, is now facing a formal complaint filed with the U.S. Internal Revenue Service (IRS) by The Midas Project, an AI watchdog group. The complaint, lodged on Thursday, July 10, 2025, alleges significant tax law violations and conflicts of interest that could threaten OpenAI’s crucial nonprofit status.
Central to the allegations is the dual role of OpenAI CEO Sam Altman, who serves as both the chief executive of the company’s for-profit operations and a board member of its nonprofit entity. The Midas Project contends that this structure creates inherent conflicts, potentially allowing Altman to personally benefit from deals and decisions that should primarily serve the nonprofit’s mission. Reports suggest Altman could receive an equity stake worth billions if OpenAI were to restructure, given its estimated $300 billion valuation.
The complaint extends beyond Altman, highlighting alleged financial entanglements among other key board members. Chairman Bret Taylor, for instance, reportedly co-founded Sierra AI, a company that resells OpenAI’s models. Adam D’Angelo’s company, Quora, is identified as an OpenAI customer, while Adebayo Ogunlesi’s firm, Global Infrastructure Partners, owns data centers that profit from the surging demand for AI infrastructure. The Midas Project argues that these ties violate federal rules governing tax-exempt nonprofits, as they could lead to financial incentives overshadowing the organization’s original altruistic goals.
OpenAI was founded in 2015 as a nonprofit organization with the stated mission to ensure advanced general intelligence benefits humanity, not just shareholders. The Midas Project emphasizes that any weakening of these foundational protections could put the public interest at risk, urging the IRS to investigate to preserve OpenAI’s duty to humanity. The watchdog group also accused OpenAI of potentially misusing nonprofit grants, such as the $50 million NextGenAI Program, by allegedly demanding that grant recipients use OpenAI’s tools, thereby subsidizing its for-profit customers.
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This complaint comes after OpenAI reportedly entered preliminary talks with U.S. regulators last November to transform into a for-profit structure, only to abandon these plans and reaffirm its commitment to its nonprofit status in May, stating no final decisions had been made regarding restructuring. Tyler Johnston, Executive Director of The Midas Project, has called for greater transparency, asserting that the rapid development of controversial AI technology by OpenAI necessitates strict adherence to legal and public interest standards. OpenAI has not yet issued an immediate response to the allegations.
