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Tennessee’s Tax on NHL and NBA Athletes Unconstitutional

Hearings concerning controversial tax matter scheduled for later this week

Is Tennessee’s version of the “jock tax” unconstitutional?  Authors Alan Pogroszewski and Kari Smoker examined this very question in their recent law review article and conclude that it is.

Is Tennessee’s Version of the “Jock Tax” Unconstitutional? appears in the spring edition of the Marquette Sports Law Review and examines the law using the framework established by the US Supreme Court for determining the constitutionality of state tax measures under both the Due Process Clause and the Commerce Clause.  The authors revisit the Supreme Court’s 1977 landmark case, Complete Auto Transit, as well as subsequent case law and conclude that Tennessee’s Professional Privilege Tax, as applied to professional athletes in the NHL and NBA, fails Commerce Clause scrutiny because the tax is not fairly apportioned, it discriminates against interstate commerce, and it is not fairly related to the services provided by the state of Tennessee.

The authors cite the following in support of their claim:

Tennessee’s Professional Privilege Tax, as applied to professional athletes in the NHL and NBA, is not fairly apportioned.

  1. Tennessee’s Professional Privilege Tax (assessed at $2500 for each game an athlete in the NHL or NBA plays in Tennessee, up to $7500 maximum each year) is not fairly apportioned to the athlete’s income or other tax base.  It raises serious questions as to the value that Tennessee is taxing and whether that value is fairly attributable to economic activity within its borders.

  2. A non-resident hockey player who earns the league minimum of $525,000 (or $2,536.23 each working day) will be taxed at a rate of 98.57% of his daily income, while a player earning $2,500,000 (or $12,077.29 each working day) will be taxed at a rate of 20.7%–double California’s maximum income tax rate of 10.3%.

Tennessee’s Professional Privilege Tax, as applied to professional athletes in the NHL and NBA, discriminates against interstate commerce.

  1. “A professional hockey player who plays for the Nashville Predators and is a resident of Tennessee is subject to a flat tax of $2,500 for each game he plays in Tennessee, up to a maximum of three games.  The maximum tax is thus $7,500.  However, he will play 41 games in Tennessee.  If we allocate the total $7,500 over all 41 games, the result is that he is subject to a pro-rated tax of $182.93 per game.”

  2. Tennessee’s Professional Privilege Tax “[d]iscriminates against non-resident athletes by subjecting them to a much higher charge per game than resident athletes.   Compare, for instance, the $2,500 fee paid per game by a non-resident who plays 3 games in Tennessee with the $182.53 fee paid per game by a resident athlete who plays 41 games in Tennessee.”

  3. Tennessee’s Professional Privilege Tax, as assessed to non-resident athletes, “is actually 13.67 times the cost imposed on in-state taxpayers.”

Tennessee’s Professional Privilege Tax, as applied to professional athletes in the NHL and NBA, is not fairly related to the services provided.

  1. Although the tax is called a “Professional Privilege Tax”, it appears to assess a fee to NHL and NBA players for the use of Tennessee’s sports facilities.

  2.  “[T]he fact that a $2,500 per game fee is assessed raises series concerns about whether it is a fair approximation of the use or privilege for use of the state’s sports facilities.  It also raises serious concerns as to whether the fee is excessive in comparison with the governmental benefit conferred.”

The publication of this article is timely, in that Tennessee will be holding a summer study hearing scheduled for Thursday, July 25th to review the tax.  The hearing will be held by a three member panel:  Senators Jack Johnson, Bo Watson, and Reggie Tate.  The panel is tasked with studying the issue and proposing legislative options to address it.  Witnesses scheduled to address the panel include, at this time, the authors as well as representatives from the NHLPA, NHL, NBPA, the Cities of Nashville and Memphis, and the Tennessee Department of Revenue.

A link to the entire article may be found at:

Alan Pogroszewski is an Assistant Professor of Sports Studies at St. John Fisher College and the President of his own tax consulting business, AFP Consulting LLC, whose clientele include professional athletes performing services on three separate continents. Prior to accepting his position at St. John Fisher College, Mr. Pogroszewski was the Vice President of Business Operations for Sports Consulting Group, a firm that specializes in the representation of professional hockey players. Mr. Pogroszewski received his M.B.A. from Rochester Institute of Technology in 1996 and his M.S. in Taxation from St. John Fisher in 2003.

Kari Smoker is an Assistant Professor of Accounting at the State University of New York, The College at Brockport, and a past president of the Greater Rochester Association for Women Attorneys, a chapter of the Women’s Bar Association of the State of New York. Ms. Smoker received her JD from The Ohio State University in 2000 and was admitted to the New York State Bar in 2001 and the U.S. District Court for the Western District of New York in 2002. She earned her M.S. in Taxation from Golden Gate University in 2010.


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