A professional athlete who stays in his home city receiving treatment for an injury while the team plays a game in Cleveland is not subject to Cleveland’s income tax, the Ohio Supreme Court unanimously decided today.

The city had no authority to tax the then-center for the Indianapolis Colts in 2008 because none of the work he was paid for was done in Cleveland that year, Justice Paul E. Pfeifer wrote in the court’s opinion.

The court instructed the city to give Jeffrey B. Saturday, who is now retired, and his wife a full refund of the taxes they paid to Cleveland for 2008, plus interest if appropriate. The decision reverses the Board of Tax Appeals’ judgment.

The court also ruled today in a case from another NFL player that challenged Cleveland’s method of calculating the taxes owed by professional athletes. Saturday’s case, the court noted, was decided on different grounds.

Player Situation
During the 2008 season, Saturday did not attend the one game the Colts played against the Browns in Cleveland. Instead, he remained in Indianapolis undergoing physical rehabilitation ordered by the team for calf and knee injuries that kept him out of four games. However, Cleveland city income taxes were withheld from his paycheck.

In December 2009, Saturday and his wife filed for a full refund of these taxes. Cleveland’s tax agency rejected the request. On appeal with the city board of review and then the state tax appeals board, Saturday again lost.

Court’s Analysis
Cleveland’s regulation related to taxing visiting professional athletes utilizes the games-played method for calculating the portion of the athlete’s income to be taxed by the city and includes games the player was excused from participating in because of injury or illness.

Justice Pfeifer noted that the court held in today’s other ruling that NFL players are paid for more than just the games they play. And none of Saturday’s work was performed in Cleveland or attributable to the city, he added, because the player was doing his job duties in Indianapolis on game day.

“[T]he language of the regulation [about compensation earned in the taxing community] must be construed more narrowly under the present circumstances to permit the taxation of compensation only when the player was actually present at the Cleveland game and earning compensation for his presence at that game,” Justice Pfeifer wrote.

In addition, he reasoned, the injury/illness provision in the regulation “is at best ambiguous” because “it says nothing about what to do when the athlete is not even in the city where the game is being played.”

That ambiguity ultimately worked in Saturday’s favor. In tax cases, “‘a statute that imposes a tax requires strict construction against the state, with any doubt resolved in favor of the taxpayer,’” Pfeifer wrote.

In addition, tax statutes are not to have effect outside their jurisdiction. “Quite simply, Saturday’s absence from Cleveland and his performance of duties elsewhere on the same day raise a strong suggestion that the imposition of Cleveland tax would constitute extraterritorial taxation,” he concluded.

2014-0292. Saturday v. Cleveland Bd. of Rev., Slip Opinion No. 2015-Ohio-1625.

View oral argument video of this case.

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