A complaint has been filed with the IRS against Milwaukee World Festival, Inc (MWF) the non-profit entity that operates Summerfest, alleging the organization has derived from its non profit mission and leverages it’s tax exempt status to engage in “anti-competitive behavior,” according to the complaint.
The complaint, first reported by Urban Milwaukee, states MWF’s “deliberate and intense” competition with for profit organizations in the Milwaukee music scene demonstrates it operates as a commercial entity and should there for forfeit its 501(c)(3) status.
In particular the complaint highlights a partnership between MWF and FPC Live, a for profit subsidiary of Live Nation, which promotes concerts held on festival grounds.
“Ostensibly benefitting from its tax-advantaged position and its ability to solicit tax-deductible donations from the public, MWF has positioned itself as the biggest player in the Milwaukee concert venue and promotion market,” according to the complaint. “It has further positioned itself to become even more competitive with for-profit firms by requiring its performers to agree to restrictions on playing at other venues as a condition of performing and by engaging in strategic partnerships with for-profit firms to strengthen its grip on performance venues in the area …”
The complaint also alleges MWF has been known to require performers to sign a clause in their contracts prohibiting them from performing in the Milwaukee area prior to stepping on stage at Summerfest.
MWF responded to the complaint on Wednesday,
“Milwaukee World Festival, Inc. has operated for 54 years to fulfill the non-profit mission set forth in its Articles of Incorporation, which include the promotion of an understanding of different ethnic cultures and nationalities, and the provision of a showcase for performing arts. We are confident that our operations are in furtherance of that mission.
The referral to the IRS mischaracterizes facts in a way that unfairly and inaccurately depicts how MWF operates. The IRS has previously examined MWF operations and found that MWF continues to qualify for exemption from federal income tax. The organization has not significantly changed its operations since the most recent review.
If contacted by the IRS regarding this referral, we will, of course, cooperate and provide any additional information the IRS requests.”
The complaint comes just a day after Summerfest released their lineup for their 2022 festival.