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Volume 25 No. 90
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NHL Players Reach Settlement With State Of Tennessee About Jock Tax

NHL players have reached a settlement with the state of Tennessee in which players will receive back $3.32M, about half of what they paid out, under the state’s so-called “jock tax” law. NHLPA attorneys negotiated the settlement with the Tennessee Dept. of Revenue, and the union informed the players of the details of the deal yesterday. More than 850 NHL players are expected to receive checks in September for about half of the approximately $6.6M they paid under the Tennessee tax during the ‘09-10, '10-11 and ‘11-12 NHL seasons. The players agreed to the settlement with the state instead of filing a lawsuit, said NHLPA Special Counsel Steve Fehr. “The executive board said we should explore filing the lawsuit and when the settlement opportunity was there, we consulted the players before we decided to go forward with it,” Fehr said. “We would have had to go into court and file a lawsuit claiming this tax was unconstitutional, and we had a good chance to win, but it’s not certain. We got some money back, the tax is going away, so it seemed a good thing to do.” Under the tax, which was first passed in '09, NHL and NBA players had to pay $2,500 every time they played a game in the state, with a maximum tax of $7,500 per player per year.  Under the settlement, NHL players who were affected paid a maximum of $22,500 and a minimum of $2,500. They will receive checks for about half of the money they paid individually. The settlement is the third part of a three-pronged attack the NHLPA launched on the Tennessee tax. The union initially was successful in negotiating into the '13 NHL CBA a provision in which the league paid the tax for the players. The NHLPA then successfully lobbied against the tax in the state of Tennessee, and the legislature last year voted to repeal it. The tax for NHL players was repealed last year, with a repeal for NBA players coming in '16. The NBPA late last year filed a civil lawsuit to overturn the tax, and that lawsuit is in its early stages.

DIFFERENT FROM OTHER STATES: Other states have taxed pro athletes in the past, and high-earning people, including doctors and lawyers, pay privilege taxes in some states. But the Tennessee jock tax was unusual in many ways, including that the revenue was going to the owners of the Predators and Grizzlies. “One of the reasons why we found this tax to be one of the more egregious jock taxes in the country is because it was so targeted to NHL and NBA players, no other professional athletes, no other employees in those clubs, no other entertainers who performed in those same arenas. And it was so high,” NHLPA General Counsel Don Zavelo said.  Every NHL player had to pay the tax, regardless of his salary. Players on the low end of the salary scale actually lost money by playing in Nashville.