Pittsburgh 'Jock Tax' Lawsuit is Likely Last One, Attorney Says

By Christopher Jardine, Tax Notes

A challenge to Pittsburgh’s so-called jock tax is likely the last major lawsuit of its kind, according to an attorney who represents the players’ associations for the four major professional sports leagues.

Speaking during a March 13 panel at the 2023 American Bar Association/Institute for Professionals in Taxation Advanced Tax Seminar in New Orleans, attorney Stephen Kidder of Hemenway & Barnes LLP told attendees that Francoeur v. City of Pittsburgh — which is on appeal — is the last foreseeable challenge to cities’ jock taxes that will involve any significant funds.

Kidder has represented the players’ associations for the National Football League, the National Basketball Association, Major League Baseball, and the National Hockey League for more than 30 years in litigation involving the taxes imposed by cities on visiting athletes who play there. He predicts that Francoeur will be the last major challenge to jock taxes because most states have changed from taxing based on game days to taxing based on duty days, which he stated was a major hurdle in previous litigation.

According to Kidder, the tax was originally pioneered by California and New York but gained prominence when California imposed taxes on Michael Jordan after the Chicago Bulls beat the Los Angeles Lakers in the 1991 NBA Finals. After the story gained national media attention, Illinois — in what Kidder called a “classic retaliatory tax” — enacted a statute taxing any professional athlete playing for a team based in a state that taxed athletes playing for an Illinois team. Following Illinois’s lead, several other states then began looking to impose jock taxes.

The states quickly realized there was little downside to jock taxes, Kidder said, noting that visiting athletes have “not just negligible but non-existent” influence in states where they play as visitors and that professional athletes have public salaries with public schedules for games, making athletes a “tempting target, and frankly an easy target.”

According to Kidder, after the jock tax gained popularity, a private tax collector in Philadelphia mailed tax notices to over 20,000 nonresident professional athletes in 1992, requesting payment of taxes owed dating back to 1986. Kidder said that a resolution was reached in which athletes would file going back to only 1991, and retired athletes were exempted. The action led to a multistate task force of the Federation of Tax Administrators issuing a recommendation that states take a uniform approach to using duty days rather than games played for the imposition of taxes.

Over the next several decades, the players’ associations were involved in litigation over the jock taxes, with several of the cases decided in the players’ favor, including Radinsky v. Illinois, Hillenmeyer v. Cleveland, and Saturday v. Cleveland. According to Kidder, although the players’ associations made both due process and equal protection arguments, the courts found merit with only the due process claims.

In Francoeur, former Philadelphia Phillies baseball player Jeff Francoeur, former Pittsburgh Penguins hockey player Scott Wilson, New York Islanders hockey player Kyle Palmieri, and the players’ associations for the NHL, MLB, and the NFL filed suit challenging the constitutionality of Pittsburgh's nonresident sports facility usage fee. The city imposed a 3 percent levy on personal income earned by nonresident professional athletes while using the city's sports venues but did not apply the fee to resident athletes.

The judge in Francoeur found the fee unconstitutional in September 2022, determining that it is a tax and thus violates the state constitution's uniformity provisions by discriminating against out-of-state residents. Because Pennsylvania allows judges to update their opinions based on the allegations of error in an appeal, an updated opinion was released in January.

Kidder said that although Pittsburgh argued that the judge could remedy the statute by striking the word nonresident from it, the judge refused to reform the statute. Kidder noted that Pittsburgh has appealed the decision and that the city’s brief was due the week of March 6, but the city asked for a three-week extension.

According to Kidder, the city is arguing that it “can charge taxpayers different income tax rates based on their profession.” He said the plaintiffs he represents are “pretty comfortable if that’s their best argument.” He claimed that some of the athletes are filing taxes in up to 12 jurisdictions with jock taxes, and that the athletes’ tax preparation costs often exceed the taxes owed.