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Tuesday, February 19, 2008
Did Derek Jeter Receive Preferential Treatment from the NY Department of Taxation and Finance?

Professor Edward Zelinsky, a distinguished tax law expert at Cardozo Law School, has a terrific post on the Oxford University Press Blog questioning why Derek Jeter's tax settlement has not been made public.

Jeter recently entered into a deal with the NY Department of Taxation and Finance on income taxes he owed the state. No details have been revealed, and Professor Zelinsky examines potentially troubling implications of this non-disclosure. Here is an excerpt from his post:
I am nevertheless troubled by the possibility that the Department may be implementing a double standard favoring this millionaire celebrity-athlete. The Department takes a persistently hard line toward nonresidents, like me, who are not celebrities. Most notably, New York, under its so-called “convenience of the employer” rule, routinely imposes its state income tax on nonresidents for days when such nonresidents work at their out-of-state homes. While we do not know the terms of Mr. Jeter’s settlement with the New York Department of Taxation and Finance, it seems possible, perhaps likely, that the final tax treatment he negotiated is more favorable than the treatment we less famous nonresidents routinely receive from the New York tax collector. The mere fact of this settlement suggests the possibility that Mr. Jeter received more reasonable treatment from New York’s tax commissioner than the harsh treatment the New York commissioner routinely dispenses to other nonresidents.
For the rest of the post, click here. It's a fascinating read.


I'm not following his basis for stating that not disclosing the terms of a settlement means or implies that athletes receive preferential treatment. Professor Zelinsky (and the others he mentioned) elected to fight their cases through the court system and lost. Jeter chose to settle rather than do that -- I would hope that the settlement would be much less than he would otherwise owe if he had fought it through the courts and lost. Otherwise, what incentive would there be for anybody to settle!

Blogger Rick Karcher -- 2/19/2008 1:44 PM  


I agree with you that Professor Zelinsky's implication seems flimsy at best--I would suggest that Professor Zelinsky brings up the issue of possible preferential treatment merely to supplement his argument that the State of New York is (unfairly) overreaching its bounds regarding taxation of non-voting, non-residents.
However, the anecdotal support for his argument was, evidently, dissuaded by the court(s).

Anonymous Anonymous -- 2/20/2008 12:36 AM  

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