Even for TOUR players, tax season is no fun

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Have you ever wondered if rich people hate taxes, too? I got to be almost rich for a year or two and hated them even more. One of my former friends told me that paying taxes was a "happy problem -- it means that you are making money." Thank God for caller ID so that I don't have to talk to him anymore.

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More money means more taxes -- even TOUR players can't avoid Uncle Sam.

These days your average PGA TOUR player makes as much money as some CEOs. Of course, there is no golden parachute for when you get indicted for cooking the books. When performance lags for a golfer you will be summarily demoted and replaced without consideration to your sky high mortgage or your partial private jet commitment. This is why players go to incredible lengths to limit their tax liability.

As independent contractors most players on the PGA TOUR have formed an LLC or Limited Liability Corporation. If you are a benefited employee of a large corporation you are probably dreading April 15th but you don't have any need to know about an LLC. I know this because I brought it up to the guy who asked me if I wanted to supersize my lunch and he looked at me like I was nuts. Of course he doesn't speak a lot of English anyway.

The reason players form corporations is because the tax benefits for companies are far greater than for individuals. The prize money, endorsement dollars and appearance fees all run through the corporation and a salary is paid out to its employees. For most players those employees total exactly one. Others include their wives as officers of the company. Even fewer put their caddy on the payroll and offer him/her benefits like insurance. The reason this is unpopular is because it makes caddies harder to fire. The same is true for wives but few of us were smart enough to think that far ahead.

Of course, if you are going to be a PGA TOUR player and the president of your own little company you have to follow the rules. One of those rules is that you are required to pay quarterly estimated taxes and payroll tax. Unlike most of the country, the government doesn't tap dance on PGA TOUR players pay checks. When you read in the paper that a player makes $100,000 for finishing ninth he actually gets the whole amount deposited in his account the following Tuesday.

That is, unless he made that money in California or Hawaii or one of the other states that decide that they don't want to wait for their tax dollars and take them right off the top. It is not the federal government that really hammers your friendly neighborhood TOUR player, it is the states where they play.

In short, a player has to file a tax return in every state where he tees it up. If you got paid $1,200 to play the Monday pro-am in Milwaukee last year and then missed the cut, you still have to file a tax return there with all your travel receipts and pay taxes on that income. Play in 25 tournaments in 20 different states and you are filing 22 tax returns. Don't forget your home state and the Feds.

As a resident of a state where there is a state income tax system, you will be required to pay taxes there, too. The interesting thing about that is that you pay taxes on all your income in your home state -- regardless of where you made that income. If you thought that the players on the PGA TOUR chose Florida or Arizona for the weather -- think again. More TOUR players live in Florida, Arizona and Texas than the other 47 states combined. You guessed it; no state income tax in any of them. Nevada has its fair share of TOUR players, as well, and there is no state income tax there, either.

Finding an accountant to handle all this is not easy. Some of the larger sports management companies do have tax departments, but that is risky for the agency. If your client gets audited because of something the tax department did, you could be out one very unhappy and talkative client. With that in mind, those tax departments that do work with agencies tend to be more conservative than most TOUR players care to be. If your window of opportunity for making big dollars is limited you want to hang on to as much of that cash as you possibly can.

PGA TOUR players get into tax trouble just like other Americans. The one thing that you can count on is that if you don't pay your fair share (fair being a relative term) the government can -- and will -- find out. If one doesn't, another one will. Remember, TOUR players are dealing with dozens of state governments as well as the Feds.

I have found it helps while you are signing all those returns and filling out all those checks if you hum a few bars of "God Bless America" at the same time. That, and a stiff drink.