Ted Sherman/The Star-Ledger January 26, 2014 at 6:15:00 EST
The tax man.
Indeed, every member of the two Super Bowl teams coming here this week will take a tax hit during their brief stay in New Jersey — every player, every coach and trainer and anyone else who regularly travels with two organizations.
The tax is essentially a super-sized commuter tax, based not just on the gameday itself, but how many days an athlete is in the state, imposed on a prorated portion of the player’s salary for the year.
A spokesman for the New Jersey Treasury Department said both basic pay for any games played in the state and any bonuses paid for championship, playoff or bowl games played by a team are covered by the state’s tax rules.
"For all professional athletes covered by this regulation, the average amount of income tax the state collects each year is about $10 million," said spokesman Christopher Santarelli.
That doesn’t include the taxes paid by members of the Giants, Jets and Devils who are New Jersey residents.
Raiola said states with an income tax have always had provisions to collect from nonresidents earning money while working in those states. But it was not until 1991 that professional athletes playing away from home became a major revenue stream for those states. That’s when California sent a tax bill to Michael Jordan and the Chicago Bulls after they had the temerity to beat the Los Angeles Lakers in the NBA Finals.
California’s income tax was (and still is) much higher than the Illinois tax rate, which meant Jordan — who received a credit for any out-of-state taxes applied against his Illinois return — was out of pocket for the difference. Jordan’s fans in the Illinois legislature were outraged.
They came up with a bill to get back at California, taxing athletes who came to Illinois to play, said Raiola. The bill was informally dubbed "Michael Jordan’s Revenge."
Around the same time, Nicholas Panarella, a lawyer who helped the city of Philadelphia rake in millions from tax dodgers, came up with the idea of targeting high-paid athletes who had visited the city of brotherly love. In 1992, Philadelphia mailed out tax notices to 4,500 nonresident team players from across the country, seeking city wage taxes for games they played in the city as far back to 1986.
Lawyers for the four major league players associations ultimately negotiated a settlement, limiting the Philadelphia tax collections to two years, while waiving all interest.
Pay to play
These days, that can mean a tangle of returns for any athlete. Football players may play eight or more games away from home, depending on whether they make the playoffs. Basketball and baseball players, who are on the road all the time, can file 20 or more state returns.
"Everywhere they play, they must pay," said Steven Piascik, a CPA and financial adviser whose Glen Allen, Va., firm specializes in sports accounting and has members of both Super Bowl teams as clients.
"If you travel with the team, you have to file," he said. And some get targeted even if they don’t travel.
Retired Indianapolis center Jeff Saturday is now in court in Ohio challenging a $3,294 tax bill he got in 2008 when injury caused him to sit out a game with the Cleveland Browns. He did not even go to Ohio with the team.
Hunter Hillenmeyer, a former linebacker with the Chicago Bears, is also suing the city, complaining that Cleveland calculates its jock tax on a per-game basis, hitting pro athletes with higher city income taxes than other nonresidents.
Adding it up
The jock tax will not be an insignificant hit to the pocketbook to those playing in Sunday’s Super Bowl, although Manning, with his considerable salary, will leave a lot more behind than most.
Raiola did the math. Manning is to be paid $15 million for the 2014-15 season. He received another $23,000 for winning the divisional playoffs, and $42,000 for the conference playoffs. In addition, each member of the winning team in the Super Bowl will get $92,000, while members of the losing team each receive $46,000.
Wilson, who earns far less, will see a much smaller tax bill. According to Raiola, the Seahawks quarterback, who will not see the Giants or Jets at home next season, will be allocating only 3.4 percent of his far more modest salary to New Jersey.
If the Seahawks win the Super Bowl, Wilson will get a tax bill of about $2,000 from Trenton, just about the same as if they lose, calculated Raiola.