Team members; Indiana income; rules
Sec. 2.7. (a) As used in this section:
(1) "Bonus for services rendered as a team member" includes:
(A) a bonus earned as a result of play during the season,
such as a performance bonus, including a bonus paid for a
championship, playoff, or bowl game played by a team, or
for selection to an all-star league or other honorary position;
and
(B) a bonus paid for signing a contract, unless all of the
following conditions are met:
(i) The payment of the signing bonus is not conditional
upon the signee playing any games for the team,
performing any subsequent services for the team, or
making the team.
(ii) The signing bonus is payable separately from the
salary and any other compensation.
(iii) The signing bonus is nonrefundable.
(2) "Indiana duty days" means the number of total duty days
spent by a team member within Indiana rendering a service for
the team in any manner during the taxable year, except:
(A) travel days spent in Indiana that do not involve either a
game, practice, team meeting, promotional caravan, or other
similar team event; and
(B) those days spent in Indiana for which a team member is
on the disabled list.
(3) "Team" includes a professional baseball, basketball,
football, hockey, or soccer team that played games in Indiana or
that had services rendered in Indiana by a team member.
(4) "Team member" includes employees who are active players,
players on the disabled list, and any other individuals required
to travel and who do travel with and perform services on behalf
of a team on a regular basis. The term includes coaches,
managers, and trainers.
(5) "Total duty days" means all days during the taxable year
that a team member renders a service for the team, beginning
with the team's official preseason training period through the
last game in which the team competes or is scheduled to
compete. The term includes days on which a team member
renders a service for the team on a date that does not fall within
this period. The term includes:
(A) game days, practice days, days spent at team meetings,
days spent with a promotional caravan and at preseason
training camps, and days served with the team through all
postseason games in which the team competes or is
scheduled to compete;
(B) days spent conducting training and rehabilitation
activities, but only if the service is conducted at the facilities
of the team;
(C) travel days that do not involve either a game, practice,
team meeting, promotional caravan, or other similar team
event;
(D) days spent participating in instructional leagues and
all-star or pro bowl games; and
(E) days for which a team member is on the disabled list.
Total duty days for an individual who joins a team during the
season begin on the day the individual joins the team, and, for
an individual who leaves a team, end on the day the individual
leaves the team. When an individual changes teams during a
taxable year, a separate duty day calculation must be made for
the period the individual was with each team. Total duty days
do not include those days for which a team member is not
compensated and is not rendering a service for the team in any
manner, including days when the team member has been
suspended without pay and prohibited from performing any
services for the team.
(6) "Total income" means the total compensation received
during the taxable year for services rendered:
(A) from the beginning of the official preseason training
period through the last game in which the team competes or
is scheduled to compete during that taxable year; and
(B) on a date during the taxable year that does not fall within
the period described in clause (A), such as participation in
instructional leagues, an all-star or pro bowl game, or with
a promotional caravan.
The term includes salaries, wages, bonuses, and any other type
of compensation paid during the taxable year to a team member
for services rendered in that year. The term does not include
strike benefits, severance pay, termination pay, contract or
option year buy-out payments, expansion or relocation
payments, or any other payments not related to services
rendered to the team.
(b) For purposes of IC 6-3, Indiana income is the individual's total
income during the taxable year multiplied by the following fraction:
(1) The numerator of the fraction is the individual's Indiana
duty days for the taxable year.
(2) The denominator of the fraction is the individual's total duty
days for the taxable year.
(c) It is presumed that this section results in a fair and equitable
apportionment of the team member's compensation. However, if the
department demonstrates that the method provided under this section
does not fairly and equitably apportion a team member's
compensation, the department may require the team member to
apportion the team member's compensation under another method
that the department prescribes. The prescribed method must result in
a fair and equitable apportionment. A team member may submit a
proposal for an alternative method to apportion the team member's
compensation if the team member demonstrates that the method
provided under this section does not fairly and equitably apportion
the team member's compensation. If approved by the department, the
proposed method must be fully explained in the team member's
nonresident personal income tax return.
(d) The department may adopt rules under IC 4-22-2 to establish
either of the following methods of simplifying return filing for team
members of a team, if the team is not based in Indiana:
(1) A withholding system requiring a team to withhold adjusted
gross income tax for each team member and to remit the
withheld taxes to Indiana on an annual basis. The department
may require each team to submit information for each team
member regarding total income, Indiana income subject to tax
under this section, and the amount of tax withheld. Remittance
of the withholding and submission of the required information
satisfies the team member's tax liability and return filing
responsibilities under this article. A team that is required to
withhold and remit shall provide all participating team members
with a Form W-2 evidencing the amount of tax withheld and
remitted to Indiana. Even though a team is required to withhold
and remit, a team member may file an individual income tax
return to claim a refund if the amount remitted exceeds the
amount otherwise owed using the methodology under this
section. However, if the team member files an individual
income tax return to claim such a refund, the team member is
required to notify the team member's state of residence of the
filing.
(2) A composite return method that permits the filing of a
composite tax return by the team on behalf of each team
member. Other department rules concerning composite returns
apply to the extent these rules are not inconsistent with this
subsection. The team must obtain approval from the department
before filing a composite return. The team must obtain written
authorization each taxable year from each team member who
elects to participate in the composite return. The participating
team members must acknowledge through their elections that
the composite return constitutes an irrevocable filing and that
they may not file an individual income tax return in Indiana.
The team must maintain a power of attorney from each
participating team member that authorizes the team to represent
them in a protest or other appeal. The team and participating
team members must agree that the team is responsible for any
deficiencies, including penalties. The team shall withhold tax
from each participating team member's compensation and remit
it to the state of Indiana. The return must contain information
for each participating team member regarding total income,
Indiana income subject to tax using the methodology under this
section, and the amount of tax due. Filing of the return and
remittance of the tax satisfy the participating team member's tax
liability and return filing responsibilities under IC 6-3-4-1.
If the method under subdivision (1) or the method under subdivision
(2) is required, a team member's Indiana adjusted gross income may
not be reduced by using a deduction, an exemption, or an exclusion.
For a team member to participate in either method, a team member's
compensation from the team must be the only source of income
attributable to Indiana. If a team member leaves the team during a
taxable year, the team remains responsible for remitting the
appropriate tax and may either collect the tax paid from the team
member or absorb the cost itself.
As added by P.L.63-1997, SEC.2.
Last modified: May 28, 2006