Court Overturns Ohio's 'Jock Tax'

by | May 4, 2015

By Randy Ludlow

Cleveland's unusual method of taxing professional athletes is illegal, the Ohio Supreme Court ruled unanimously in a pair of opinions released this morning.

Former Chicago Bears linebacker Hunter Hillenmeyer and ex-Indianapolis Colts center Jeff Saturday contended they were improperly and excessively taxed for games played in Ohio -- even when one never set foot in Cleveland.

The justices agreed, saying Cleveland's scheme improperly served to tax income that the players earned outside the city and deprived them of due process.

Cleveland's method, which asserts that pro athletes are paid only for games, illegally taxes visiting athletes for income earned out of state for practices, meetings and other activities, the players' lawyers argued.

"By using the games-played method, Cleveland has reached extraterritorially, beyond its power to tax," Justice Judith Ann Lanzinger wrote about Hillenmeyer's case.

"Cleveland's power to tax reaches only that portion of a nonresident's compensation that was earned by work performed in Cleveland," she wrote.

The court's rulings overturned decisions by the state Board of Tax Appeals.

In Hillenmeyer's case, he was taxed about 5 percent (one game in Cleveland out of 20 or 21 played) in 2004, 2005 and 2006. The court ordered he receive a refund of about $5,500, plus interest.

Most cities, including Columbus, tax pro athletes based on the number of "duty days" in their season and days spent in the city. Under that method, Hillenmeyer's tax bill would have totaled about 1 percent each year (two days spent in Cleveland out of 157 duty days).

In Saturday's case, the court found he was illegally required to pay tax on a " sick day" for a 2008 Colts game in Cleveland when he was injured and did not travel to the city. The justices also awarded him an unspecified refund with interest.

Linda Bickerstaff, a lawyer representing Cleveland, had argued the city's "games-played" tax method is legal. "Games-played correctly recognizes what pro athletes are hired to do, which is to play in games," she said.

Cleveland is the only major-league city that taxes visiting players based on the games played in the city divided by the total number of games their team plays in a year, according to court filings.

The court did not rule on claims that state law discriminates against pro athletes -- and entertainers -- by allowing them to be taxed while all other non-residents who work 12 days or less in a city cannot be taxed by that municipality.

A ruling overturning the law would have affected how Columbus and other cities tax athletes and entertainers.

(c)2015 The Columbus Dispatch (Columbus, Ohio)