Cleveland May Owe Visiting Players Millions Due to "Jock Tax" Refunds

First Energy Browns Stadium (PHOTO: Brian Bull)
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by David C. Barnett

Professional athletes across football, basesball, basketball and other sports are looking over their records for the past three years and weighing the financial benefits of applying for a tax refund from the city of Cleveland.  Last week, the US Supreme Court declined to hear the city's appeal of a state ruling against the city's so-called "jock tax."  

Back in April, the Ohio Supreme Court ruled that Cleveland's method of calculating an income tax on visiting professional athletes was unconstitutional, and that the city needed to refund the players.  John Karaffa is president of the Virginia-based accounting firm ProSport CPA, which represents 400 professional athletes, including 100 football players, and his firm is currently trying to determine who's eligible.  He thinks the price tag for Cleveland could be hefty.

"Cleveland is only responsible for refunding the last few years," he notes,  "so they've gotten away with this for a very long time, but they're only having to refund from the 2012 tax year.  So, I would absolutely say this is in the tens of millions, that they should really pay back."      

But, Karaffa expects that the paperwork involved in filing for the refund won't be worth it for anyone but the top-dollar athletes.  Whatever those athletes decide, Cleveland spokesperson Dan Williams says the city will meet its obligations.

"We went through the appeals process, and exhausted our ability to do that," says Williams.  "And so, we are going to comply with the law."

Williams says the city expects to make-up for the loss of jock tax income from other unspecified revenue sources.

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