Could Sam Altman’s Dual Roles Cost OpenAI Billions in Tax Penalties?

OpenAI, the world-renowned artificial intelligence firm, is now facing a high-stakes IRS complaint that could threaten its nonprofit status. The Midas Project, an AI watchdog, alleges CEO Sam Altman’s dual roles create conflicts that may violate federal tax rules.

The complaint claims Altman’s position as both CEO of OpenAI’s for-profit operations and a board member of its nonprofit arm enables him to benefit personally at the expense of the nonprofit. This arrangement, critics argue, could expose OpenAI to billions in potential tax penalties if the IRS finds violations.

Are OpenAI’s board conflicts putting its nonprofit status in jeopardy?

The Midas Project’s complaint, filed in July 2025, documents what it calls “abandoned safeguards, rife conflicts of interest, and potential misuse of charitable funds.” The watchdog specifically points to Altman’s investments in companies that partner with OpenAI, suggesting these ties could be worth hundreds of millions if the organization transitions to a for-profit model.

OpenAI’s board structure is also under fire. Several members, including chairman Bret Taylor, Adam D’Angelo, and Adebayo Ogunlesi, have business interests that intersect with OpenAI’s operations. For example, Taylor co-founded Sierra AI, which resells OpenAI’s models, while D’Angelo’s Quora is a major OpenAI customer. Ogunlesi’s firm, Global Infrastructure Partners, profits from AI infrastructure demand.

Did you know?
OpenAI was originally founded as a nonprofit in 2015 to ensure artificial intelligence benefits all of humanity, but its hybrid structure now attracts intense regulatory attention.

Could tax penalties reshape the future of artificial intelligence leadership?

If the IRS determines that OpenAI’s structure violates nonprofit tax laws, the financial repercussions could be enormous. OpenAI, valued at over $300 billion, could face retroactive taxes, penalties, or even the loss of its tax-exempt status. Such an outcome would not only impact OpenAI’s bottom line but could also serve as a warning to other tech nonprofits navigating similar hybrid structures.

The complaint comes as OpenAI’s influence in the AI sector continues to expand rapidly. Investors and partners are now closely watching the IRS review, wary of the legal and financial risks that could follow. The company’s ability to secure future funding and partnerships may hinge on how it addresses these regulatory concerns.

ALSO READ | Can OpenAI’s Security Overhaul Thwart Foreign Espionage Threats?

OpenAI’s board structure creates complex conflicts of interest

Founded as a nonprofit in 2015, OpenAI aims to benefit humanity through advanced general intelligence. However, as it grew, the company adopted a hybrid governance model, creating a for-profit subsidiary to attract investment. Originally designed to strike a balance between social mission and commercial growth, this structure has now faced scrutiny for its potential to prioritize profit over public interest.

Legal experts note that when a nonprofit and a for-profit arm are at odds, the charitable mission must prevail. If board members or executives benefit financially from restructuring, regulators may intervene. The IRS complaint highlights the urgent need for transparency and accountability in how OpenAI manages these overlapping interests.

Sam Altman’s dual roles trigger IRS scrutiny and investor concern

The Midas Project alleges that Altman may receive equity in a restructured OpenAI entity, potentially worth billions. While OpenAI’s board has discussed compensation options, no final decisions have been made. Nonetheless, the perception of self-dealing and conflicts of interest has already triggered regulatory and public scrutiny.

The outcome of the IRS investigation could set a precedent for the entire tech industry, especially for organizations blending nonprofit missions with for-profit ambitions. As OpenAI faces this pivotal moment, its leadership must navigate not only legal risks but also questions about the future of responsible AI development.

Whatever the IRS decides, the world will be watching how OpenAI responds and whether it can maintain its commitment to benefiting humanity while managing unprecedented financial and ethical challenges.