Section 6-3-2-2.7 - Team members; Indiana income; rules(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.