Cleveland, Ohio may be famous in the realm of Rock and Roll, but it is the state’s unique implementation of the jock tax with regard to NFL athletes that is making recent headlines. As reported by Bloomberg BNA’s Bebe Raupe, Cleveland filed its certiorari petition with the U.S. Supreme Court on Oct. 6, following the Ohio Supreme Court’s ruling on April 30 that Cleveland’s “games-played” method of administering the jock tax violates the due process rights of nonresident visiting professional athletes, namely appellant Hunter Hillenmeyer, a former Chicago Bears linebacker.
Ultimately, this ruling came down to the finding that the “games-played” method of allocating a visiting professional athlete’s income to the city of Cleveland actually resulted in the taxation of income from work occurring outside of the city.
Similarly, another decision released April 30 involving Jeffrey Saturday, a retired center for the Indianapolis Colts and Green Bay Packers, further negated Cleveland’s taxing authority. The Ohio Supreme Court held that a nonresident professional athlete who neither attended nor played in a game held in Cleveland is not liable for municipal income tax. The “duty-days” method was deemed a more reasonable allocation of tax by the Ohio high court, holding that it ensures that tax collected is proportionate to income received for services rendered in Cleveland, whereas the “games-played” method allows for a higher percentage of income to be taxed by reaching income accrued outside of Cleveland, thus creating unconstitutional extraterritorial taxation.
Although Cleveland maintains its position that taxation is a matter of local jurisdiction and implementing its “games-played” method of taxation of nonresident professional athletes is within its taxing authority, it could find itself in the “Dawg Pound” if the U.S. Supreme Court thinks otherwise.
For more information regarding Ohio’s jock tax, see Weekly State Tax Report articles by Erin McManus and Bebe Raupe.
Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: How should the U.S. Supreme Court rule on Cleveland’s authority to implement the games-played method of taxation if writ of certiorari is granted, and how might the Court’s ruling affect other jurisdictions’ taxation of professional athletes?
For more information about state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)