What is the luxury tax amnesty provision?
This was a one-time opportunity for teams to waive one player and avoid having that player count in the team’s luxury tax computation. Teams had the opportunity to use this provision between August 2nd and 15th, 2005 (right after the CBA went into effect). It could be used only for players signed or acquired prior to June 21, 2005, or for players already waived when the current CBA went into effect. A team could waive only one player using this provision. Players waived using this provision are not counted in the team’s team salary (see question number 14) when computing the amount of luxury tax the team owes (see question number 16). For example, if a team waived a player with a $10 million salary, and ended up $15 million over the tax level, then they would only owe $5 million in luxury tax (saving $10 million). However, the tax savings does not necessarily equal the player’s salary — if the team ended up just $3 million over the tax level then they would only save $3 million (owing
