Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 302 - Determination of Net Income › Rule 701-302.46 - Taxation of Compensation of Nonresident Members of Professional Athletic Teams

Current through Register Vol. 47, No. 3, July 24, 2024
Effective for tax years beginning on or after January 1,
				  1995, the Iowa source income of a nonresident individual who is a member of a
				  professional athletic team includes the portion of the individual's total
				  compensation for services provided for the athletic team that is in the ratio
				  that the number of duty days spent in Iowa rendering services for the team
				  during the tax year bears to the total number of duty days spent both within
				  and without Iowa in the tax year. Thus, if a nonresident member of a
				  professional athletic team has $50,000 in total compensation from the team in
				  1995 and the athlete has 20 Iowa duty days and 180 total duty days for the team
				  in 1995, $5,556 of the compensation would be taxable to Iowa ($50,000 Ã—
				  20/180 = $5,556).
The following subrules include definitions, examples, and
				  other information which clarify Iowa's taxation of nonresident members of
				  professional athletic teams:
(1)
Definitions.
a. The term
				"professional athletic team" includes, but is not limited to, any professional
				baseball, basketball, football, soccer, or hockey team.
b. The term "member of a professional
				athletic team" includes those employees who are active players, players on the
				disabled list, and any other persons required to travel and who travel with and
				perform services on behalf of a professional athletic team on a regular basis.
				This includes, but is not limited to, coaches, managers, and
				trainers.
c. The term "total
				compensation for services rendered as a member of a professional athletic team"
				means the total compensation received during the taxable year for services
				rendered. "Total compensation" includes, but is not limited to, salaries,
				wages, bonuses (as described in subparagraph (1) of this paragraph), and any
				other type of compensation paid during the taxable year to a member of a
				professional athletic team for services performed in that year. Such
				compensation does not include strike benefits, severance pay, termination pay,
				contract or option year buy-out payments, expansion or relocation payments, and
				any other payments not related to services rendered for the team.
For purposes of this paragraph, "bonuses" included in "total
				  compensation for services rendered as a member of a professional athletic team"
				  subject to the allocation described in this rule are:
(1) Bonuses earned as a result of play (i.e.,
				performance bonuses) during the season, including bonuses paid for
				championship, playoff, or "bowl" games played by a team, or for the member's
				selection to all-star, league, or other honorary positions; and
(2) Bonuses paid for signing a contract,
				unless all of the following conditions are met:
1. The payment of the signing bonus is not
				conditional upon the signee playing any games for the team, or performing any
				subsequent services for the team, or even making the team;
2. The signing bonus is payable separately
				from the salary and any other compensation; and
3. The signing bonus is
				nonrefundable.
d. Except as provided in subparagraphs (4)
				and (5) of this paragraph, the term "duty days" means all days during the
				taxable year from the beginning of the professional athletic team's official
				preseason training period through the last game in which the team competes or
				is scheduled to compete. Duty days are included in the allocation described in
				this rule for the tax year in which they occur, including where a team's
				official preseason training period through the last game in which the team
				competes, or is scheduled to compete, occurs during more than one tax year.
(1) Duty days also includes days on which a
				member of a professional athletic team renders a service for a team on a date
				which does not fall within the previously mentioned period (e.g., participation
				in instructional leagues, the "Pro Bowl" or promotional "caravans"). Rendering
				a service includes conducting training and rehabilitation activities, but only
				if conducted at the facilities of the team.
(2) Included within duty days are game days,
				practice days, days spent at team meetings, promotional caravans and preseason
				training camps, and days served with the team through all postseason games in
				which the team competes or is scheduled to compete.
(3) Duty days for any person who joins a team
				during the period from the beginning of the professional athletic team's
				official preseason training period through the last game in which the team
				competes, or is scheduled to compete, begins on the day the person joins the
				team. Conversely, duty days for any person who leaves a team during such period
				ends on the day the person leaves the team. When a person switches teams during
				a taxable year, separate duty day calculations are to be made for the period
				the person was with each team.
(4)
				Days for which a member of a professional athletic team is not compensated and
				is not rendering services for the team in any manner, including days when the
				member of a professional athletic team has been suspended without pay and
				prohibited from performing any services for the team, are not to be treated as
				duty days.
(5) Days for which a
				member of a professional athletic team is on the disabled list and does not
				conduct rehabilitation activities at facilities of the team and is not
				otherwise rendering services for the team in Iowa, are not to be considered
				duty days spent in Iowa. However, all days on the disability list are
				considered to be included in total duty days spent both within and outside the
				state of Iowa.
(6) Total duty days
				for members of a professional athletic team that are not professional athletes
				are the number of days in the year that the members are employed by the
				professional athletic team. Thus, in the case of a coach of a professional
				athletic team who was coach for the entire year of 1995, the coach's total duty
				days for 1995 would be 365.
(7)
				Travel days in Iowa by a team member that do not involve a game, practice, team
				meeting, all-star game, or other personal service for the team are not
				considered to be duty days in Iowa. However, to the extent these days fall
				within the period from the team's preseason training period through the team's
				final game, these Iowa travel days will be considered in the total duty days
				spent within and outside Iowa, for team members who are professional
				athletes.
(8) Duty days in Iowa do
				not include days a team member performs personal services for the professional
				athletic team in Iowa on those days that the team member is a bona fide
				resident of a state with which Iowa has a reciprocal tax agreement. See rule
				701-38.13(422).