142 Ohio St. 3d 528
Ohio2015Background
- Jeffrey B. Saturday, an Indianapolis Colts NFL player in 2008, was inactive for four games due to injury, including the Colts’ game in Cleveland; he remained in Indianapolis undergoing team-directed rehabilitation on that game day.
- The Colts withheld and remitted Cleveland municipal income tax based on CCA Regulation 8:02(E)(6), which apportioned nonresident professional-athlete income by a games-played ratio (games in Cleveland ÷ total games).
- Saturdays sought a full refund from Cleveland’s Central Collection Agency (CCA); CCA refunded a small math-error amount but denied the full refund.
- Cleveland Board of Review and the Board of Tax Appeals (BTA) upheld the denial, relying on the games-played regulation and prior precedent.
- Ohio Supreme Court reviews whether Cleveland’s ordinance/regulation authorized taxing a nonresident player who did not enter Cleveland and performed services elsewhere on game day.
Issues
| Issue | Plaintiff's Argument (Saturday) | Defendant's Argument (Cleveland) | Held |
|---|---|---|---|
| Whether Cleveland may tax nonresident player income when player did not perform services in Cleveland | Taxing Saturday’s wages is contrary to the ordinance and Ohio law because he performed no work in Cleveland | Ordinance and CCA regulation attribute wages to Cleveland via a games-played/apportionment rule, including games the player was excused from | Held for Saturday: Ordinance/regulation do not authorize tax where player was absent from Cleveland and performed duties elsewhere |
| Whether regulation’s phrase “entire amount of compensation earned for games that occur in the taxing community” covers players not present | Saturday: players are paid for a season of duties, not solely individual games; phrase cannot reach compensation when services were performed elsewhere | Cleveland: players are paid to play games; compensation relates to games in Cleveland even if player absent | Held: Phrase must be read narrowly; tax applies only when player actually was present/performing services in Cleveland for that game |
| Whether inclusion of games “excused from playing because of injury or illness” covers an absent player who was excused | Saturday: regulation is silent about an athlete’s physical absence from the taxing city; excusal does not equal presence or services in city | Cleveland: excused games are included in numerator/denominator, so tax applies | Held: Excusal language ambiguous and does not authorize taxing a player who was not in the city; ambiguity resolved for taxpayer |
| Whether Cleveland’s interpretation would improperly have extraterritorial effect or require broader constitutional/statutory analysis | Saturday: imposing tax here suggests extraterritorial taxation and must be strictly construed against the city | Cleveland: (relied on regulation and prior BTA/Hillenmeyer rulings) | Held: Court applies canons—strict construction of tax statutes and prohibition on extraterritorial taxation—and avoids reaching additional statutory/constitutional questions |
Key Cases Cited
- Columbia Gas Transmission Corp. v. Levin, 882 N.E.2d 400 (Ohio 2008) (tax statutes strictly construed against the state)
- Bosher v. Euclid Income Tax Bd. of Rev., 792 N.E.2d 181 (Ohio 2003) (same principle applied to municipal income tax)
- Schneider v. Laffoon, 212 N.E.2d 801 (Ohio 1965) (tax statutes have no extraterritorial effect)
- Gulf Oil Corp. v. Kosydar, 339 N.E.2d 820 (Ohio 1975) (foundation for strict construction of tax statutes)
- Gesler v. Worthington Income Tax Bd. of Appeals, 3 N.E.3d 1177 (Ohio 2013) (municipal taxing power and scope of administrative review)