NY taxes: if you play here, you pay here

The Chicago Bears will arrive at Rich Stadium Sept. 29 to face the Buffalo Bills and 80,000 diehard fans.

Not to mention the state Department of Taxation and Finance.

The Bears’ players and coaches will be assessed New York income tax for their appearance in Orchard Park, though they are employees of an Illinois company.

It will be the Bears’ first experience with New York’s new program that taxes the players and coaches of out-of-state professional sports teams for every game they play in New York.

“This law goes way back, but what is new is the method of enforcement. It was ‘catch as catch can’ for many years. Now it is much more comprehensive,” said Karl Felsen, spokesman for the taxation department.

New York launched the program last year after reaching an agreement with Major League Baseball, the National Football League, National Basketball Association and National Hockey League.

The leagues agreed to have their teams annually supply New York’s taxation department with team schedules, rosters and salary figures.

The state uses that information to calculate the tax liability of out-of-state players and coaches who come to Buffalo and New York City for games.

The program applies to all teams that play the Bills, Sabres and five New York City franchises: the Yankees and Mets in baseball, Rangers and Islanders in hockey, and Knicks in basketball.

New York City’s two pro football teams, the Giants and Jets, are not included because they play in New Jersey.

Felsen said state law has long stipulated that out-of-state athletes must pay New York income taxes, but the taxation department didn’t begin blanket enforcement until late last year.

“The escalation of salaries is what attracted our attention,” Felsen said. “We have to be efficient with our enforcement resources. Based on what athletes used to be paid, it made more sense to concentrate on other areas.

“But now, players are a worthwhile target,” he said. “Even if a player only plays a small percentage of his games in New York, the state would still get a small percentage of a very big salary, and that can be a substantial amount.”

Bears running back Neal Anderson provides a case in point. He is the team’s highest-paid player at $1.65 million a year.

Anderson’s New York tax will be calculated on the percentage of his salary that is earned in the state. That is determined by dividing the number of Bears games in New York by the team’s total number of pre-season, regular season and playoff games.

That means Anderson’s New York income from the Sept. 29 game would be in the range of $71,700 to $82,500, depending on Chicago’s number of playoff games.

Joan Zmrhal, accounting supervisor for the Bears said she is a bit mystified as to how the New York law will affect the team’s bookkeeping.

“We are aware of the tax, but we haven’t gotten any notification so far,” she said. “This will be the first time we have played in New York in several years, so I don’t know what this tax involves.”

Felsen said visiting teams have no obligation beyond reporting their players’ and coaches’ salaries to the state, much as other employers supply wage information about their workers.

“We’re relying on voluntary compliance,” he said. “Players are expected to file state tax forms just like everyone else. If they don’t file, we use the same collection procedure, beginning with notification and warnings.”

Several states and cities have similar laws. California, Massachusetts, Minnesota, Ohio, Wisconsin and the cities of Cleveland and Detroit hold visiting professional athletes liable for income taxes.

California goes beyond New York’s policy of voluntary compliance. It requires out-of-state teams to withhold California income tax from players’ and coaches’ paychecks.

That means the Sabres, for example, must do extra accounting work every time they visit the Los Angeles Kings and San Jose Sharks.

New York’s taxation department last year raised the possibility of implementing a withholding system, but the major sports leagues resisted. The NHL retained the Buffalo law firm of Cohen, Swados, Wright, Hanifin, Bradford & Brett to handle its share of the negotiations.

“We weren’t representing the players on the question of whether tax was due; that wasn’t the issue. We stressed, on behalf of the teams, that withholding would be an administrative nightmare,” said Eugene Rudzinski, partner in the Buffalo firm.

New York officials emphasize that the state’s new program does not increase the overall tax bills of most players and coaches. They receive equivalent tax credits in their home states for the money sent to New York’s taxation department.

That, however, is of no help to residents of states without income taxes, such as Florida.

Miami Dolphins quarterback Dan Marino is rumored to receive $4.2 million a year, the highest salary in the NFL.

That figure, if true, would place Marino’s New York income from Miami’s annual trip to Rich Stadium in the range of $182,600 to $210,000, without the benefit of tax credits at home.

But not all professional players need to fear the New York tax collector when they visit Buffalo.

Opponents of the Buffalo Bisons will not be singled out for enforcement. Felsen said the state considers it a matter of simple economics.

“Do you know how much they make in the minor leagues?” he asked. “Sometimes a few hundred dollars a month. They have a hard enough time making ends meet.

“We expect them to pay their taxes, just like everyone else. But it is more efficient for us to use our enforcement resources somewhere else.”

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