The "Jock Tax"

by Dominick Stinelli 13. November 2015 12:43

When the average taxpayer travels out of state for business they do not typically file an income tax return in every state in which they travel.  Unlike the average taxpayer, however, professional athletes tend to encounter much more complex state income tax filing requirements.  Many states have realized that with minimal effort, they can generate tax revenue from visiting athletes.  Due to their high profile and corresponding high income, states have found it very easy to track and tax professional athletes who step foot in their state to play - an income tax now known as the “jock tax”.

The jock tax originated in California in the early 90’s, as the state imposed the tax on professional basketball players playing in the NBA finals in Los Angeles.  Most other states have since followed suit, and as of today, there are only a handful of states without a jock tax.  As a result of the jock tax, professional athletes must now adhere to a burdensome and complex tax policy, which often results in filing dozens of state and local income tax returns. 

The method of applying this tax has often been debated and, to add further complication, has not been universally accepted by the various states and localities.  Typically a professional athlete would allocate their income for the year based on the number of days they worked each year, which would inherently include their training and practice days.  In an effort to increase the allocated income to their particular state or locality, some jurisdictions assessed the tax based on the number of games an athlete played in a given year. 

The City of Cleveland imposed the jock tax in such a fashion.  It also assessed the tax on athletes playing for visiting teams, who were on the roster but did not actually travel with the team and did not set foot in the city.  As a result of the city’s stance, two professional athletes filed suit against Cleveland claiming that the city was subjecting athletes playing for visiting teams to disproportionately high taxes.  Just this week, the Ohio Supreme Court ruled on behalf of the athletes, stating that Cleveland should base the tax on the number of days worked each year, as opposed to the games they played. The court also overturned previous rulings which upheld the tax levied against an athlete who was sick and did not travel with the team for a game played in Cleveland.  A big win for professional athletes is now causing Cleveland to change its stance.

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