In a move that could shake things up, the Midas Project, an AI watchdog, has filed a complaint against OpenAI, accusing the company of potentially violating tax laws that could jeopardize its nonprofit status. The complaint, filed Thursday, lays out a damning case, claiming OpenAI has “abandoned safeguards,” is “rife with conflicts of interest,” and could be mishandling charitable funds.
🚨 BREAKING: We just filed an IRS complaint against OpenAI for potential tax law violations that could threaten its nonprofit status.
— The Midas Project (@TheMidasProj) July 10, 2025
Thread below 🧵
The watchdog isn’t pulling punches, alleging that OpenAI’s board has massive financial conflicts, particularly with CEO Sam Altman’s dual role as both the head of OpenAI’s for-profit arm and a member of its nonprofit board. They argue that this setup creates a situation where Altman personally benefits, while the nonprofit could be taking a hit.
“CEO Sam Altman may receive equity in a restructured OpenAI company—potentially worth billions given the company’s $300 billion valuation,” the complaint points out.
It also highlights other board members with financial interests in companies that benefit from OpenAI’s work. Take chairman Bret Taylor, for example, his company, Sierra AI, resells OpenAI’s models. Or Adam D’Angelo’s Quora, an OpenAI customer. Even Adebayo Ogunlesi’s firm, which owns data centers profiting from AI infrastructure demand, isn’t escaping scrutiny.
Nonprofit or For-Profit? OpenAI’s Identity Crisis
OpenAI, originally founded in 2015 as a nonprofit with the noble goal of ensuring advanced AI benefits humanity, not shareholders, appears to be at a crossroads. Last year, they explored transforming into a for-profit entity, but it seems those talks have stalled, with OpenAI reaffirming its commitment to nonprofit status in May. However, the Midas Project isn’t convinced, and they believe OpenAI’s actions could put the public interest at risk.
The watchdog is calling on the IRS to investigate, claiming that if OpenAI weakens its nonprofit protections, it could endanger the very mission they once promised to uphold.
In a dramatic twist, the complaint also brings up the involvement of Elon Musk, OpenAI’s original co-founder. Musk had previously pushed for OpenAI to become for-profit, but now finds himself at odds with the company. In 2024, he filed lawsuits against OpenAI, claiming they violated their original nonprofit contract while chasing profits. Adding fuel to the fire, Musk’s group of investors tried to buy OpenAI for $97.4 billion in February, only for Altman to turn down the offer.
As this drama unfolds, one thing is clear: the watchdogs are barking, and OpenAI might have some explaining to do.
Tanya Petrusenko
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