Watchdog Group Files IRS Complaint Against OpenAI Over Alleged Conflicts of Interest

- Watchdog group Midas Project accuses OpenAI leadership of financial wrongdoing in an IRS complaint. - The complaint alleges conflicts of interest surrounding CEO Sam Altman’s dual roles, threatening OpenAI’s nonprofit structure. On July 11, 2025, Cryptopolitan and Politico reported that the tech watchdog group Midas Project filed an official complaint with the Internal Revenue Service (IRS). The complaint raises significant ethical and legal concerns about OpenAI's transition from a nonprofit to a for-profit entity. It focuses on CEO Sam Altman’s dual positions, arguing his roles as CEO of the for-profit arm and as a nonprofit board member create conflicts of interest. These conflicts could violate federal tax regulations for nonprofits. The Midas Project claimed this organizational structure might allow Altman and other leaders to financially benefit from OpenAI’s commercial activities. This arrangement would undermine the nonprofit’s stated charitable mission. The group also alleged that restructuring plans could give Altman a substantial equity stake in the for-profit arm, further diminishing the nonprofit board’s oversight. Additionally, the Midas Project raised concerns about the company misusing nonprofit grants to serve for-profit clients. These accusations come amid an ongoing legal battle from OpenAI co-founder Elon Musk. In early 2024, Musk filed a lawsuit to block the company’s transition to a for-profit model, claiming the move violates OpenAI’s founding principles. In May 2025, a judge rejected OpenAI’s attempt to dismiss the case, allowing fraud allegations to proceed to trial in March 2026. Meanwhile, facing tensions over its restructuring, OpenAI filed a separate legal complaint against Californians for Accountability in a New Internet (CANI), a nonprofit that opposes its plans. According to Politico, OpenAI filed the complaint with the California Fair Political Practices Commission on July 11. The company alleges that CANI violated state lobbying regulations and could have undisclosed ties to Musk. However, CANI has denied the claims and any connection to Musk. In response to mounting legal pressure and public scrutiny, OpenAI announced modified restructuring plans in May. The company stated its nonprofit board would maintain control over the for-profit entity. Despite this move, Musk’s legal team argued the adjustment does not resolve their concerns and confirmed the trial will proceed as scheduled.