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On road, tax man always wins

Pro athletes pay income tax not just to their home state, but to most every place where they play a road game.

By JOANNE KORTH
Published April 15, 2006

Rays pitcher Brian Meadows sat down with a stack of papers recently and, in the privacy of his home, had what is best described as a thoroughly taxing autograph session.

Sign here.

Sign there.

Taxes due everywhere.

Each year, people scramble to meet the dreaded April deadline for filing income tax returns - April 15 falls on a Saturday this year so procrastinators have until Monday - but imagine repeating the exercise more than a dozen times.

Florida has no state income tax, but that won't spare members of the Bucs, Rays and Lightning from paying taxes in Georgia, New York and California. Athletes in the four major sports leagues - the NFL, NHL, NBA and major-league baseball - owe taxes to many of the states, and a few enterprising cities, in which they play games.

Road games.

"I don't think a lot of people know that," Meadows said. "When I tell my friends they can't believe it. My taxes are 2 inches thick. I have to file in all these different states."

It all started after the Chicago Bulls beat the Los Angeles Lakers in the 1991 NBA Finals. California decided to extend its state income tax to Bulls star Michael Jordan and his teammates.

The next year, Illinois came back with "Michael Jordan's Revenge," a state tax applied to visiting athletes from states that taxed visiting athletes.

In other words: Take that!

Today, 20 of 24 states with major pro sports franchises have what is commonly called a "jock tax." Florida, Texas, Tennessee and Washington do not have state income taxes, and Congress forbids the District of Columbia from taxing nonresident athletes.

"One year I had about 14 different returns," Lightning defenseman Cory Sarich said. "That's a lot of signatures when it comes time."

The tax law that allows states and cities to collect from visiting athletes is actually a nonresident tax that could just as legally be applied to all business travelers, from salesmen to sports writers.

The theory is that workers should pay taxes on income earned while working in a state other than their state of residence. Many states have extended the jock tax to entertainers, such as rock stars, and New Jersey taxes out-of-state attorneys.

But the movements of everyday business travelers are difficult to monitor and few earn enough money to make it worth the effort for states to pursue. On the other hand, Yankees third baseman Alex Rodriguez - who makes more than $20-million per season - is a one-man windfall.

For the most part, states and cities use the same formula to compute an athlete's taxable income. The number of "duty days" spent in a location is divided by the total number of duty days for the season. That percentage is then multiplied by the annual salary, and the resulting amount is taxed.

"It's getting to the point where every day you have to track where you've been," Lightning center Tim Taylor said. "If we get there at 3 o'clock in the morning and play later that day, you're only there one day. But if you get in the night before you were there, two."

And the rates vary. In California, entertainers and athletes are subject to a 7 percent tax on income of more than $1,500. But Minnesota only withholds 2 percent.

And Nebraska withholds 4 percent if the income is less than $28,000 and 6 percent if it's more than $28,000.

While highly paid stars such as Rodriguez and Shaquille O'Neal can mean big bucks for a state or city, the majority of athletes playing for average salaries likely spend more in accounting fees than actual taxes.

Taylor once wrote a check for $16 to the city of Philadelphia. Lightning teammate Chris Dingman wrote a $16 check to North Carolina.

"You pay minuscule amounts to these states for one day or two days," Dingman said. "I feel bad for the guy who has to go through all those things, all those receipts and little pieces of paper."

Meadows can top that. He once wrote a check for $5, though he doesn't recall the state or city.

"It's almost pointless to even write a check for that," Meadows said.

Though some states give credits, many are taxed twice, some say unfairly, on the same income, once by the nonresident state and again by the resident state.

Rays slugger Aubrey Huff, whose mother handles his tax returns, said he tries not to worry about the math.

"I'm proud to be an American," Huff said. "I'll pay my taxes."

Sign here.

And here.

And here.

[Last modified April 15, 2006, 00:53:01]