How are wages received by Nathaniel Moore, a nonresident professional football player for the Miami Dolphins, allocated to New York State for the 1985 and 1986 tax years under section 632(c) of the Tax Law?

Plain-English summary

Nathaniel Moore, a Florida resident who played professional football for the Miami Dolphins, asked the Department how his wages should be allocated to New York State for the 1985 and 1986 tax years. Moore played twenty football games a year, counting both pre-season and regular season, and played at least one of those games each year in New York. The question was which apportionment method applied under Tax Law § 632(c) (later renumbered § 631(c)), which requires income from a business, trade, profession, or occupation carried on partly within and partly outside New York to be apportioned "under regulations of the tax commission."

The Department's regulations set a general default rule for nonresident employees: under 20 NYCRR 131.18(a), income is allocated to New York based on the ratio of working days employed in New York to total working days employed everywhere. But 20 NYCRR 131.23 lets the Tax Commission prescribe a different method when the standard days-worked formula wouldn't produce a "fair and equitable" allocation. The Department concluded that allocating a professional athlete's income by ordinary days worked does not fairly reflect how that income is earned - a player's compensation is tied to games, not office days - so the days-worked formula didn't apply here.

Instead, citing three prior State Tax Commission decisions - Matter of Roy H. and Linda White (basketball, 1980), Matter of Kareem Abdul-Jabbar (basketball, 1982), and Matter of Cleon Jones and Angela Jones (baseball, 1985) - the Department held that nonresident professional athletes allocate wages to New York based on the ratio of games played within New York to total games played. This opinion is notable because it doesn't just apply that existing rule to a new petitioner; it expressly extends and generalizes it, stating that the games-played policy "applies equally to all nonresident professional team athletes regardless of the sports in which they are engaged and regardless of whether their teams are based within New York or outside of New York." That made this 1989 opinion an early "jock tax" precedent confirming the games-played method as a general rule for every professional team sport - including football, for the first time - rather than a basketball- or baseball-specific one. Applying the rule, Moore's wages were allocated to New York based on his one-or-more games played in New York out of his roughly twenty games per year.

What this means for you

Professional athletes on visiting teams who play games in New York

If you're a nonresident professional athlete on a team based outside New York, and your team plays one or more games in New York during the season, this opinion (and the precedents it confirms) means your New York-source wages are calculated using the ratio of games played in New York to your total games played for the year - not a count of days spent traveling, practicing, or working in New York. This "games played" or "duty days" method has remained the standard analytical starting point for allocating nonresident athletes' income across states.

Sports agents and accountants handling multi-state athlete tax allocation

When preparing multi-state returns for a professional athlete client, don't default to the standard nonresident-employee days-worked allocation under 20 NYCRR 131.18(a). This opinion confirms the Department treats professional team athletes as a distinct category subject to the games-played method under 20 NYCRR 131.23, regardless of the sport the athlete plays or where the team is based. Track the athlete's total games (including pre-season, where applicable) and games played in New York for the year to compute the allocation fraction.

Team front offices and payroll departments withholding NY tax on visiting players

If your team travels to New York for games, this opinion's reasoning is part of the basis for how visiting players' wages get allocated (and withheld against) for New York purposes - on a per-game basis rather than a per-day basis. Payroll and player-services staff coordinating state tax withholding for traveling teams should apply the games-played fraction consistently across all team sports, not just the sports addressed in the specific precedents cited here.

Common questions

Q: Why don't professional athletes use the regular days-worked allocation rule that applies to other nonresident employees?
A: Because the Department determined that a days-worked formula doesn't produce a "fair and equitable" allocation for a professional athlete, as required by 20 NYCRR 131.23. An athlete's compensation is fundamentally tied to games - the events that actually generate ticket revenue, broadcast revenue, and the athlete's pay - not to an ordinary schedule of office or practice days. So the Department uses its authority under 131.23 to substitute a games-played ratio instead of the general 131.18(a) days-worked ratio.

Q: Does this games-played rule apply to sports other than football?
A: Yes - and that's the specific point this opinion adds to the three cases it cites. The White, Abdul-Jabbar, and Jones opinions had already established the games-played method for basketball and baseball players. This opinion extends the same rule to a football player and explicitly states that the policy "applies equally to all nonresident professional team athletes regardless of the sports in which they are engaged," making clear it's a general rule for professional team sports rather than one confined to the sports in the earlier cases.

Q: Does it matter whether the athlete's team is based in New York or elsewhere?
A: No. The opinion specifically states the rule applies "regardless of whether their teams are based within New York or outside of New York." A nonresident player on an out-of-state team who plays even a single game in New York is still subject to the games-played allocation for the portion of wages attributable to that appearance.

Q: Are pre-season games counted in the total games figure?
A: In this opinion, yes - Moore's twenty games per year included both pre-season and regular season games, and the Department accepted that combined total as the denominator for his allocation fraction, with his New York game(s) as the numerator.

Q: What statute and regulations does this allocation method rest on?
A: Tax Law § 632(c) (renumbered § 631(c) effective for tax years after 1987) requires apportionment of income from a trade, business, profession, or occupation carried on partly within and partly outside New York, "as determined under regulations of the tax commission." The default method is 20 NYCRR 131.18(a) (days-worked ratio), but 20 NYCRR 131.23 authorizes the Tax Commission to prescribe an alternative, fair-and-equitable method - which for professional athletes is the games-played ratio established in the White, Abdul-Jabbar, and Jones opinions and confirmed here.

Citations and references

• Tax Law § 632(c) (renumbered § 631(c) by L.1987, ch.28, eff. Apr. 20, 1987, applicable tax years after 1987) - requires apportionment/allocation, under Tax Commission regulations, of income from a business, trade, profession, or occupation carried on partly within and partly outside New York
• 20 NYCRR 131.18(a) - default nonresident-employee allocation rule based on the ratio of working days employed in New York to total working days employed everywhere
• 20 NYCRR 131.23 - lets the Tax Commission prescribe an alternative allocation method when the standard methods don't produce a fair and equitable result
• Matter of Roy H. and Linda White, State Tax Commission, TSB-H-80(93)I (June 20, 1980) - established the games-played allocation method for a nonresident professional basketball player
• Matter of Kareem Abdul-Jabbar, State Tax Commission, TSB-H-82(76)I (April 9, 1982) - applied the games-played allocation method to another nonresident professional basketball player
• Matter of Cleon Jones and Angela Jones, State Tax Commission, TSB-H-85(33)I (August 20, 1985) - applied the games-played allocation method to a nonresident professional baseball player

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1989.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a89_2i.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-89 (2) I
Income Tax
February 14, 1989

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I881006A

On October 6, 1988, a Petition for Advisory Opinion was received from Nathaniel and
Patricia Moore, 810 N.W. 151st Street, Miami, Florida 33169.
The issue raised is how wages received by Petitioner, a nonresident professional football
player, are allocated to New York State for taxable years 1985 and 1986 pursuant to section 632(c)
of the Tax Law.
Petitioner is a professional football player with the Miami Dolphins and is a Florida resident.
Petitioner plays in twenty football games per year which include both pre-season and regular season
games. Petitioner plays at least one football game per year within New York State.
Pursuant to Section 632(c) of the Tax Law, "[i]f a business, trade, profession or occupation
is carried on partly within and partly without this state, as determined under regulations of the tax
commission, the items of income, gain, loss and deduction derived from or connected with New
York sources shall be determined by apportionment and allocation under such regulations." (Note:
Section 632(c) of the Tax Law was renumbered section 631(c) by Chapter 28 of the Laws of 1987,
effective April 20, 1987, and applicable for taxable years beginning after 1987).
Section 131.18 of the personal income tax regulations provides, in part, that:
If a nonresident employee . . . performs services for his employer both within and
without New York State, his income derived from New York State sources includes
that proportion of his total compensation for services rendered as an employee which
the total number of working days employed within New York State bears to the total
number of working days employed both within and without New York State.
20NYCRR 131.18(a)
Section 131.23 of the personal income tax regulations provides, in part, that:
Sections 131.15 through 131.22 of this Part are designed to apportion
and allocate to New York State, in a fair and equitable manner, a
nonresident's items of income, gain, loss and deduction attributable
to a business, trade, profession or occupation carried on partly within
and partly without New York State. Where the methods provided
under those sections do not so allocate and apportion those items, the
Tax Commission may require a taxpayer to apportion and allocate
those items under such method as it prescribes, as long as the
prescribed method results in a fair and equitable apportionment and
allocation. 20 NYCRR 131.23

-2­
TSB-A-89 (2) I
Income Tax
February 14, 1989

The allocation of income earned by Petitioner as a professional football player for services
rendered as such on the basis of days worked within and without New York during the year does not
result in a fair and equitable allocation of income.
Pursuant to personal income tax regulation section 131.23, nonresident professional athletes
are required to allocate their wages to New York State on the basis of games played within and
without the State. Matter of Roy H. and Linda White, State Tax Commission, June 20, 1980, TSBH-80(93)I, Matter of Kareem Abdul Jabbar, State Tax Commission, April 9, 1982, TSB-H-82(76)I,
and Matter of Cleon Jones and Angela Jones, State Tax Commission, August 20, 1985, TSB-H­
85(33)I. The policy enunciated in the above-cited Tax Commission Decisions applies equally to all
nonresident professional team athletes regardless of the sports in which they are engaged and
regardless of whether their teams are based within New York or outside of New York.
Accordingly, Petitioner's wages are subject to tax on the basis of games played within and
without New York State pursuant to Section 632(c) of the Tax Law and regulation section 131.23.

DATED: February 14, 1989

s/FRANK J. PUCCIA
Director
Technical Services

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.