Cleveland's "Jock Tax" Is Struck Down by Ohio Supreme Court. Tax Attorney Rob Wood Explains

Visiting professional athletes are perceived by many states and cities as heaven-sent revenue sources. Since they don’t live there, politicians don’t have to care what they think. But a city can go too far, as Cleveland, Ohio did with its “jock tax.” The Ohio Supreme Court struck down the tax in lawsuits filed by some retired NFL players. Tax attorney Rob Wood discusses the tax in this report based on his Forbes article, “Pro Athlete 'Jock Tax' Is Struck Down.”

Rob Wood

Rob Wood

Wood notes that the Cleveland tax was an attempt to go a little too far. The usual basis for taxation is the amount of performance time by the athlete in the city or state imposing the tax. This has been an issue in the past for Manny Pacquiao, whose tax problems have been the subject of a Rob Wood article. The question the Ohio court considered was whether the tax was based on work actually done in Cleveland or was the city “scooping up other income;” the Ohio court found that the latter was the case.

Wood says that he sees a lot of the professional athlete taxation in his home state of California, where money is chronically short. States are getting more aggressive in going after taxes from professional athletes. New York has changed its law so as to go after funds paid by trusts set up to bypass the state’s tax on professional athletes. Wood opines that, while the life of a professional athlete has many things about it that are pleasant, the tax affairs of any pro are complex and require careful handling.

Wood says that the same problem applies to professional golfers, who pay taxes on winnings they make in a state. State taxes, says Wood, are one of the reasons so many golfers life in Florida, which has no state income tax.

For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network.  The Legal Broadcast Network is a featured network of the Sequence Media Group.