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Former National Football League wide receiver Keyshawn Johnson wasn’t a California resident from 2000 through 2004 when he played for the Tampa Bay Buccaneers and Dallas Cowboys, the State Board of Equalization said.
In what was likely the last income tax appeal case before them, the five-member elected board ruled unanimously Dec. 11 that Johnson was a California resident in 1996. He owes $218,857 in tax for that year.
In finding that he wasn’t a resident during the other five years at issue, the board overturned nearly $2 million in taxes and $80,000 in penalties the Franchise Tax Board said he owed.
The board rejected arguments from the FTB that Johnson’s ties to his home state through family, real estate, and business ventures meant he wasn’t in other states for more than temporary or transitory purposes from 2000 through 2004. The FTB argued it established through a thorough audit that Johnson spent significant time in California when he wasn’t required to be in Florida, Texas, or traveling for games.
Johnson’s own words in his 1997 memoir, "Just Give Me the Damn Ball!", showed he considered California his home, FTB Tax Counsel Jason Riley said. When he had a few days off from playing for the New York Jets and had the chance, he flew home to take a break.
“To me, that meant getting my butt to Los Angeles,” Riley read from the book.
Riley said Johnson's 1998 prenuptial agreement with his former wife and his 2003 divorce decree also said he lived in California.
“Mr. Johnson was a California resident all along,” Riley said.
The tax agency pointed to multiple homes and a condominium he owned, bought, or sold in the Los Angeles area from 2000 through 2004 as evidence of his residency. He bought a 6,500 square foot home for $1.2 million in Tarzana in 1996 and a 9,670 square foot home for $3.3 million in Los Angeles 2002, among others. He sold the Los Angeles home for $4 million in 2004.
Johnson cried a bit when he explained to the board that he bought the Tarzana home for his mother as soon as he was drafted in the first round to the New York Jets from the University of Southern California in 1996. His mother, Vivian Jessie, lived in the house with his six siblings until she
passed away in 2011, he said.
“You guys are making me tear up,” he said. “You’re poor and you have dreams and aspirations to help your parents out.”
He also said he kept his possessions with him as he moved from team to team—not back in California.
“My Super Bowl Ring is with me,” he said. “Most of my stuff was with me, except my degree. I gave that to my mom to hang over her bed.”
Johnson’s attorney, Marty Dakessian with Dakessian Law in Los Angeles, told the board that the question wasn’t whether Johnson was devoid of any ties to California, but whether he had enough ties to be a resident with a California domicile. He didn't, Dakessian said.
The FTB failed in its audit to count days he was clearly playing or traveling for NFL games as days he wasn’t in the state, Dakessian said. Auditors also skewed information about credit card charges in California when he wasn’t in the state, he said. Johnson’s mother and some of his business associates were authorized to make purchases with the cards, Johnson said.
The board ruled in Johnson’s favor for 2000 through 2004, but ruled against him for 1996, when he attempted to claim that he was a resident of Nevada based on his $300 monthly rental of a room in a house there before he left for New York.
He also was renting an apartment in Los Angeles in 1996 with his girlfriend and new baby. Dakessian said Johnson rented the Las Vegas room and attempted to claim Nevada residency based on bad tax advice. Still, he argued unsuccessfully that Johnson was only in California for temporary and transitory purposes that year.
Johnson filed tax returns as a California resident in 1997 and 1998. He filed a nonresident California return in 1999 that the FTB didn't challenge. He played for the Jets during those years.
The SBOE’s authority to hear tax appeals ends Jan. 1, when the role transfers to a new Office of Tax Appeals. Johnson’s case was likely the last income tax appeal to come before the board before it loses the authority to hear and decide on appeals.
Because more than $500,000 is at issue in the case, the SBOE would be required to issue a written ruling explaining its decision within 120 days. Although the procedures are unclear, the OTA will likely issue a written ruling in the case after it becomes final in 30 days. Either party can file a petition for rehearing within 30 days, which would prevent it from becoming final.
The case is In re Johnson, Cal. Board of Equalization, 786255, 12/11/17.
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