Comprehensive Tax & Legal Solutions

U.S. Supreme Court won’t review order against ‘jock tax’

On Behalf of | Nov 11, 2015 | Tax Law

It was way back in January when we first discussed the way the city of Cleveland taxes professional athletes’ income when they come to town to play one of the local sports teams. As we explained then, currently Cleveland calculates the taxes on visiting NFL players and other athletes in an unusual way.

But that is set to change, after the U.S. Supreme Court announced recently that it would not hear the city’s appeal of a lower court decision in favor of two former NFL players who sued to get the method of calculation changed.

Cleveland is one of only eight U.S. cities with a municipal “jock tax.” And it is the only one of the eight to calculate athletes’ tax bill by the number of games they play annually, rather than the number of days they work in the city each year. State law forbids city-level income taxes on out-of-state-workers who work in that city fewer than 12 days per year. But the law makes exceptions for visiting athletes and entertainers.

In the case of former Indianapolis Colts center Jeff Saturday, one of the plaintiffs in the lawsuit, this meant he taxed for a game his team played against the Browns in 2008. Except that Saturday never even set foot in Cleveland that day; he was injured, and stayed in Indianapolis the weekend of the game.

This summer, the Ohio Supreme Court ruled unanimously that Cleveland must impose the “jock tax” on a days-worked basis. The city appealed to the U.S. Supreme Court, but that Court’s refusal to hear the case means the city must now abide by the decision.

In an article in the Cleveland Plain Dealer, an attorney for the NFL Players Association predicted that many pro athletes who played the Indians, Cavaliers or Browns in the past three years will now seek a tax refund.

This matter will not affect the vast majority of our readers. But it shows that taxes are not always charged in compliance with the law.