Paul L. Caron
Dean


Tuesday, April 23, 2013

An Analysis of the Jock Tax

The Legal Blitz:  An Analysis of the Jock Tax, by Nick Zotos (Satterlee Stephens Burke & Burke, New York):

  • Does a professional athlete have to pay tax to every state where he/she plays in a particular season? What methods are commonly utilized to calculate these values?
  • How does the NHL’s substantial presence in Canada affect the tax returns of American citizens who play for U.S. teams?
  • Is there any difference in treatment for the type of money earned (salary vs. sponsorship dollars)? Which states gets to claim the tax benefits for each of these?
  • An athlete’s signing bonus seems to create a potential hurdle because it is income that is could be considered “earned” at signing although it is actually paid out over time. With the burdens of local, state, and federal taxes, is it possible that an athlete with a fresh contract could actually owe more than he/she actually pocketed?
  • Is there any argument that it is unfair to place tax burdens on foreign players who may never establish citizenship, let alone vote, in this country?
  • For retired players who reside in a different state than the teams for which they played, what state collects the tax on their pension distributions?
  • Do professional athletes sometimes sign out of free agency with an eye to the teams located in states such as Texas and Florida with no state income tax? Could that be part of the reason LeBron “took his talents to South Beach” and why some argue that Joe Flacco should have considered doing the same?

(Hat Tip: Above the Law.)

https://taxprof.typepad.com/taxprof_blog/2013/04/an-analysis.html

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