State hires auditors to check sports revenue - East Valley Tribune: Business

State hires auditors to check sports revenue

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Posted: Tuesday, December 9, 2003 8:54 am | Updated: 1:58 pm, Thu Oct 6, 2011.

When the Florida Marlins come to town, Arizona wants the team to leave more than just a win for the Diamondbacks and some money for food and hotel.

The Department of Revenue wants some of the income from Florida players — especially those with the seven and eight-digit contracts.

That’s what the law now requires. But Leigh Cheatham, the department’s assistant director, said some players are ignoring their fiscal obligation to the state. And now the state intends to hire a couple of auditors to find out who has been balking.

Baseball players should not feel unfairly singled out. The state also wants a share of what members of football, basketball and hockey teams earn.

State law says that income earned in Arizona is subject to state income taxes. But the issue is complicated for those playing professional sports.

Take, for example, a player for the San Francisco Giants. The regular baseball season is 162 games, with half played at home. And the Giants might play eight games during a given season against the Diamondbacks in Phoenix.

Cheatham said that means that 4.94 percent of a player’s salary would be subject to the state’s personal income tax. She wants to assign the auditors to look at each team’s schedule and then compare the list of players — and their public salaries — to what they have reported in Arizona income.

How much the state is missing is not clear. Cheatham said the only computations done so far have been with the National Basketball Association. Based on current salaries, the number of games played here and the state’s tax rate, she figures the state should get somewhere between $500,000 and $700,000 a year.

Cheatham said she wants the auditors to check not only current but also prior tax years. She noted that there is no statute of limitations for people who fail to file returns.

The reason Cheatham said she needs two auditors is because it isn’t as simple as all that. For example, she said, it’s possible that someone plays under one name but actually files under a different name. More common is the possibility that a player was out sick and did not make the trip. Then that game doesn’t count.

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