A tech watchdog has lodged a formal complaint against OpenAI with the Internal Revenue Service — warning that CEO Sam Altman looks poised to reap a stake worth billions in violation of US tax laws, The Post has learned.
The artificial intelligence juggernaut’s board is riddled with conflicts of interest that enable Altman and key OpenAI board members to amass personal financial gains – a breach of federal rules that govern tax-exempt nonprofits, according to a complaint filed on Thursday by the Midas Project.
In particular, the group claims that Altman’s simultaneous status as both CEO of OpenAI’s for-profit operations and seat on its nonprofit board “creates an inherent conflict where Altman sits on both sides of negotiations that would personally benefit him at the nonprofit’s expense.”
The Thursday complaint — exclusively obtained by The Post — notes that Altman is expected to receive an equity stake in a restructured OpenAI entity that would be worth billions of dollars, given the company’s $300 billion valuation.
“This extensive network of investments creates situations where Altman’s personal financial interests are advanced through OpenAI nonprofit decisions,” according to the complaint.
An OpenAI spokesperson noted that Altman has no direct equity stake. The company declined further comment.
In response to previous media reports on Altman potentially receiving equity in a restructuring, the company has said no final decisions have been made.
Any IRS scrutiny of OpenAI could further complicate Altman’s push to restructure the company’s for-profit arm, which has already faced sharp pushback from state regulators in California and Delaware, where the company is headquartered and incorporated.
In May, OpenAI tried to assuage those concerns by stating that its nonprofit board would remain in overall control of the company.
At the same time, however, it is moving to satisfy investors like SoftBank and Thrive Capital by transforming its for-profit subsidiary into a public-benefit corporation – while allowing Altman and key employees to hold shares.
That same month, Softbank’s own finance chief said “nothing has really changed” regarding OpenAI’s restructuring.
Under federal tax rules, firms structured as section 501(c)(3) nonprofits – such as OpenAI – “must not be organized or operated for the benefit of private interests,” according to the IRS’s website.
Tyler Johnston, executive director of the Midas Project, said the goal behind the complaint is to ensure that leading AI firms like OpenAI are “following the law and acting in the public interest” while developing the controversial technology at breakneck speed.
“There’s a lot of signs that OpenAI hasn’t been fully transparent with the public, and they’ve explicitly admitted that they’re now making restructuring decisions at the behest of investors,” Johnston told The Post.
“I think we as a society are starting to pay attention to these issues, but it would be terrible if we woke up one day and realized we waited too long to act.”
Other conflicts flagged in the complaint include those of OpenAI board chairman Bret Taylor, who also co-founded Sierra AI, which resells OpenAI’s models to enterprise customers and board member Adam D’Angelo, the CEO of Quora, which is an OpenAI customer.
Board member Adebayo Ogunlesi’s firm Global Infrastructure Partners owns data centers that “stand to profit significantly from AI infrastructure demand driven by OpenAI’s scaling.”
“These board members are deciding what management and economic rights the nonprofit should have in OpenAI’s for-profit when giving up such rights could directly benefit their personal financial interests rather than the nonprofit’s charitable mission,” according to the complaint.
Altman, meanwhile, is personally invested in a number of firms that do business with OpenAI, including Reddit, payment processor Stripe, Retro Biosciences and hardware firms like chipmaker Rain AI, according to the complaint by the Midas Project, which claims its mission is to “ensure that AI technology benefits everybody.”
Midas Project – which has built an open-source database called the OpenAI Files tracking the firm’s structure and governance, including whistleblower complaints – warned the IRS that the restructuring will weaken the nonprofit board’s ability to steer the for-profit arm.
Midas Project also suggests that OpenAI may have improperly doled out nonprofit grants “to subsidize customers of its for-profit operations” by giving out API credits that could only be redeemed through its products.
The complaint points to examples such as the $50 million NextGenAI Program, which provides research grants and funding to colleges and hospitals while requiring them to use OpenAI’s tools.
Altman also faces an ongoing federal lawsuit filed by his longtime rival Elon Musk, who cofounded OpenAI and has now accused the firm of abandoning its original mission while pursuing profit.
It’s a politically fraught time for Altman, who aside from navigating OpenAI’s restructuring is also attempting to help shape AI regulations likely to emerge in the coming years.
After years of donating to Democratic causes – including $200,000 toward Joe Biden’s political committee in 2023 – Altman has shown signs of cozying up to President Trump.
Altman donated $1 million to Trump’s inauguration and then appeared at the White House in January while backing the $500 billion “Stargate” initiative to build out AI data centers and infrastructure.
More recently, Altman declared he feels “politically homeless” and no longer drawn to Democratic causes due to the party’s shift away from a “culture of innovation and entrepreneurship.”
