Ohio Supreme Court to Hear "Jock Tax" Arguments Today

By Jonathan Nehring | Disclaimer

4/30 UPDATE: The Ohio Supreme Court ruled unanimously in favor of the taxpayers in both Hillenmeyer's and Saturday's case. These rulings deemed Cleveland can no longer collect tax on professional athletes who don't travel to Cleveland with the team and can no longer apportion income to Cleveland under the "games played" apportionment method. 

Original Post:

Today the Ohio Supreme Court will be hearing oral arguments for two “jock tax” cases. If you don’t know much about the “jock tax”, this article gets a bit technical so you may want to read about how the “jock tax” works first.

Here is everything you need to know for these cases.

• The technical names for these two cases are 1) Hunter T. Hillenmeyer v. City of Cleveland Board of Review and Nassim Lynch, Cleveland Tax Administrator and 2) Jeffrey B. Saturday and Karen B. Saturday v. City of Cleveland Board of Review and Nassim Lynch, Cleveland Tax Administrator. 
  
• Technical names aside, these cases involve a dispute between the city of Cleveland and former Chicago Bears Linebacker Hunter Hillenmeyer and former Indianapolis Colts Center Jeff Saturday. 
  
• The dispute is in regards to how Cleveland assessed income tax on these two former NFL players.
  
• Both of these cases, while separate cases, share the same theme which is an opposition as to how Cleveland assesses income tax on nonresident professional athletes. 

• Under Ohio law, a municipal tax organization is disallowed from assessing income tax on nonresident individuals unless that nonresident has been in that municipality for more than 12 days. However, that law exempts professional athletes and entertainers from this 12 day requirement. This allows municipalities to tax professional athletes even if they are only in the city for one day. For example, an NFL player who only plays one game at the Cleveland Browns would be subject to income tax for that game’s paycheck instead of Cleveland only being able to tax that player if he worked in Cleveland for 12 days during the tax year. 
  
• Additionally, most states who tax nonresident professional athletes generally decide how much of that athlete’s income is subject to taxation using the “duty-day” apportionment method. However, Cleveland uses the “games played” apportionment method. This method assigns your income to a state based on the number of games you played in Cleveland divided by the numbers of games you played in the entire tax year. For NFL players visiting Cleveland the “games played” method would allow Cleveland to tax 6% of a player’s salary while the “duty days” method would allow Cleveland to only tax around 0.6% of that player’s salary. By Cleveland using the “games played” method, they were able to tax up to 420% more of Hillenmeyer’s salary in 2006 than they would have under the “duty-day” method. 

• Hillenmeyer and Saturday are raising the following arguments in their case against Cleveland:

• The “games-played” method violates Ohio law.
  
• The “games-played” method violates the U.S. Constitution’s Due Process clause.
  
• The “games-played” method violates the U.S. Constitution’s Commerce Clause.
  
• Cleveland exempting everyone from municipal tax unless they have worked in Cleveland for 12 days – with the exception of professional athletes and entertainers – violates Ohio’s Constitution and the U.S. Constitution’s Equal Protection clause.
  

• The Players Association for the MLB, NBA, NFL, and NHL have all filed an Amicus Curiae brief together in support of Hunter Hillenmeyer’s position in this dispute. 
  
• Jeff Saturday’s case raises two additional issues. Saturday actually never went to Cleveland to play against the Browns! He was injured for four games of the 2008 season. One of those games was against Cleveland and he stayed in Indianapolis to rehab instead of going with the team to Cleveland. However, Cleveland required the Colts to withhold income tax from Saturday’s check for that game “played” in Cleveland. Because of this, Saturday raises the two following issues:
  
• Cleveland taxing nonresidents who never perform a work or service in the city violates the U.S. Constitution’s Due Process and Commerce Clause.
  
• Cleveland taxing nonresidents who never perform a work or service in the city violates the Ohio and Cleveland law.
  

If you wish to research the topic further, you can read official oral arguments previews of these cases here. TaxaBall will provide updates with the case as they occur. 

You can watch video of the oral arguments here. (Jeff Saturday's Oral Arguments) (Hunter Hillenmeyer's Oral Arguments)

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