TN to refund $3.2M in ‘jock tax’ payments to hockey players

Hundreds of current and former NHL players should start getting refund checks this summer as part of a $3.32 million settlement with the state of Tennessee over a possibly unconstitutional “jock tax” tax on professional athletes, reports the Washington Post.

Started in 2009, Tennessee’s jock tax was unique for a few reasons. It was a flat tax: $2,500 per game in Tennessee for all NHL and NBA players, with a maximum tax bill of $7,500 per year.

While a $2,500 tax bill is not a hardship for players like Kobe Bryant, with his $23.5 million salary, for players making the league minimum – $507,336 this season, or $2,537 per day according to a 200-day work year – a trip to Tennessee to play the Memphis Grizzlies meant basically working for free.

Another way Tennessee’s tax was unusual: the money didn’t go to government, it went back to the Memphis Grizzlies and Nashville Predators. The clubs defended the tax – which generated $1.5 million to $2 million per year per club – as important money they used to lure big musical acts like Paul McCartney and Elton John for events that generated tax revenue for their cities. (Professional football was not included in Tennessee’s jock tax, so it did not apply to the Tennessee Titans or their opponents.)

The NHL players’ settlement, first reported by SportsBusiness Daily, will result in the Tennessee Department of Revenue cutting checks of between $1,250 and $11,250 for more than 800 current and former players hit with the tax between 2009 and 2012. Each player will get back about half of what he paid Tennessee.

A similar lawsuit filed by about 140 current and former NBA players is pending, according to Stephen Kidder, a tax lawyer representing the players. Last summer, the Tennessee Legislature repealed the tax, officially called the “Professional Privilege Tax on Professional Athletes.”

…The settlement in Tennessee comes just months after the Ohio Supreme Court struck down the city of Cleveland’s jock tax as unconstitutional. That ruling, issued in April, came after lawsuits filed by former NFL players Jeff Saturday and Hunter Hillenmeyer. Cleveland is challenging the ruling, which found the city unconstitutionally taxed athletes for work they performed when not actually in Cleveland.