How the American Medical Association (AMA) Avoids Paying Income Taxes
Introduction
The American Medical Association (AMA) is one of the most powerful organizations in the U.S. healthcare system. While it presents itself as a nonprofit dedicated to improving medical practice, it operates more like a lobbying powerhouse and financial enterprise. Despite generating hundreds of millions of dollars in revenue, including from its monopoly on medical billing codes, the AMA does not pay federal income taxes due to its 501(c)(6) tax-exempt status.
This report details how the AMA legally avoids taxation while profiting from the healthcare system.
- The AMA’s Tax-Exempt Status Under IRS Rules
The AMA is classified as a 501(c)(6) nonprofit organization under the Internal Revenue Code.
What is a 501(c)(6)?
This classification is meant for business leagues, chambers of commerce, and trade associations that promote an industry.
Unlike 501(c)(3) charities, 501(c)(6) groups can engage in unlimited lobbying and still keep their tax-exempt status.
This loophole allows the AMA to function as a lobbying group while remaining tax-free.
✅ Key Fact: The AMA does not pay federal corporate income taxes on its main sources of revenue.
- The AMA’s Major Sources of Revenue (Untaxed)
Despite its nonprofit status, the AMA generates massive revenue through three key areas, none of which are taxed as regular corporate income.
A. CPT Codes – A Monopoly That Should Be Taxed
The AMA owns and controls Current Procedural Terminology (CPT) codes, which are required for billing insurance companies, Medicare, and Medicaid.
Every hospital, insurance company, and physician group must purchase these codes, generating hundreds of millions of dollars annually for the AMA.
Even though this is a for-profit business model, the AMA remains tax-exempt.
✅ Key Fact: The CPT code system is essentially a private tax on healthcare billing controlled by the AMA, yet it is not taxed as business income.
B. Membership Dues – A Key Source of Untaxed Money
The AMA collects millions in membership dues from physicians and medical professionals.
These funds help support AMA lobbying efforts, administrative expenses, and political influence.
Because the AMA claims these funds support its mission, they remain tax-free.
✅ Key Fact: Unlike professional associations that pay taxes on membership revenue, the AMA avoids taxes by using its nonprofit status.
C. Lobbying and Political Influence
The AMA is one of the largest lobbying groups in the U.S., spending over $24 million on lobbying in 2024 alone. (Source: OpenSecrets)
While traditional corporations must pay taxes on profits used for lobbying, the AMA spends untaxed revenue to influence healthcare policy.
✅ Key Fact: The AMA funnels untaxed money into lobbying efforts, something that would be heavily scrutinized if it were a for-profit entity.
- Why the AMA Doesn’t Pay Income Taxes
Despite its massive revenue, the AMA does not pay federal income taxes because of the way it reports its finances to the IRS.
IRS Loopholes the AMA Uses to Avoid Taxes
Does the AMA Pay Any Taxes?
The only taxes the AMA might pay are Unrelated Business Income Tax (UBIT) on non-core activities (e.g., renting office space, selling merchandise).
However, the AMA structures its finances carefully to minimize these taxes.
✅ Key Fact: The AMA’s main revenue sources—CPT code sales, membership dues, and lobbying—are all untaxed.
- The Consequences of the AMA’s Tax-Free Status
By avoiding taxes, the AMA has built a financial empire that allows it to control key aspects of healthcare while protecting its financial interests.
A. Higher Healthcare Costs
The AMA’s CPT code monopoly forces hospitals and insurance companies to pay millions, which raises administrative costs for the entire healthcare system.
These costs are passed on to patients, contributing to the high price of medical care.
B. Restricted Physician Supply
The AMA has a long history of restricting the number of doctors to keep physician salaries high.
It lobbies against increasing medical school slots and opposes allowing foreign-trained doctors to practice more easily in the U.S.
C. Preventable Medical Errors – The 3rd Leading Cause of Death
According to Johns Hopkins University, medical errors are the third leading cause of death in the U.S., killing over 250,000 Americans per year.
The AMA contributes to doctor shortages, increasing wait times, burnout, and rushed care—all of which lead to medical mistakes.
✅ Key Fact: The AMA profits from a system that makes healthcare more expensive and dangerous, yet it remains tax-free. (Source: Johns Hopkins Study)
- What Can Be Done?
A. The IRS Could Investigate the AMA’s Tax Status
If the IRS determined that the AMA’s primary purpose is lobbying and business activity, it could revoke its 501(c)(6) status and force it to pay federal income taxes.
B. Congress Could Close the 501(c)(6) Loophole
Lawmakers could pass a new tax rule preventing trade associations like the AMA from claiming tax-exempt status if they engage in excessive lobbying or generate significant business income.
C. Breaking the AMA’s CPT Code Monopoly
Congress could transfer ownership of CPT codes to a public or government-controlled entity, eliminating the AMA’s ability to charge for them.
✅ Key Fact: If the AMA were taxed like a normal business, it would owe millions in federal taxes, which could be used to fund healthcare reform.
Conclusion: The AMA’s Tax-Free Empire Needs to Be Challenged
The AMA presents itself as a nonprofit organization that supports doctors and improves healthcare, but in reality, it:
Avoids paying income taxes on massive revenue streams like CPT codes and membership dues.
Uses untaxed money to fund lobbying efforts that benefit doctors at the expense of patients.
Limits competition in the medical field, contributing to high costs and preventable medical errors.
If the AMA were treated like any other for-profit corporation, it would be forced to pay federal income taxes and held accountable for its impact on the healthcare system.
Would you like a draft letter to lawmakers or an IRS complaint template to challenge the AMA’s tax-exempt status?
The AMA has been one of the biggest roadblocks to keeping people sick. They were instrumental in blocking cancer cures in the past. Corrupt to the core.