Last week, former Indianapolis Colts center Jeff Saturday filed an appeal with the Ohio Supreme Court in response to his loss at the Ohio Board of Tax Appeal (BTA). Mr. Saturday’s appeal stems from Cleveland’s tax assessment against him for a game played between the Indianapolis Colts and Cleveland Browns in 2008. However, Mr. Saturday was not in Cleveland for the game and stayed in Indianapolis to rehabilitate his injury. In fact, Mr. Saturday was not in Cleveland for the entirety of 2008. In essence, Mr. Saturday’s Cleveland tax liability is based on the activities of his employer, the Indianapolis Colts. His BTA case was previously covered in the Multistate Tax Update.
Mr. Saturday claimed in his appeal to the BTA that Cleveland’s “jock tax” violates the Commerce Clause of the U.S. Constitution, the Due Process Clause of the U.S. and Ohio Constitutions, as well as Article XVIII of the Ohio Constitution.
In finding for the City of Cleveland, the BTA explicitly avoided any analysis or ruling on Mr. Saturday’s constitutional assignments of error. Such questions of constitutionality, the BTA explained, were not within the BTA’s subject matter jurisdiction and it therefore could not rule on those questions. Thus, Mr. Saturday did not have the entirety of his case heard. For these constitutional questions to be addressed, an appeal to the Ohio Supreme Court was necessary—which is exactly what Mr. Saturday has now done.
While state tax nexus has long been an area of contention, this case has the potential to be one of great precedential value as far as personal tax nexus is concerned. Only time will tell how the Ohio Supreme Court ultimately handles this case and how the outcome may affect tax nexus, at least in Ohio.