Remote Work Taxation Case Declined by Supreme Court

At the end of June 2021, the U.S. Supreme Court denied New Hampshire’s request to file a bill of complaint against Massachusetts regarding the taxation of remote workers during the pandemic. New Hampshire filed their motion for leave to file a bill of complaint in October of 2020 after Massachusetts issued a temporary emergency regulation that said workers who normally work in Massachusetts but who, because of the COVID-19 pandemic, were working in other states would still be required to pay Massachusetts income tax.

In its complaint, New Hampshire had said that Massachusetts unilaterally imposed an income tax within New Hampshire that New Hampshire, in its sovereign discretion, has deliberately chosen not to impose. New Hampshire argued that this rule was unconstitutional under the Commerce Clause and the Due Process Clause of the U.S. Constitution. They asked the Court to enjoin Massachusetts from enforcing the regulation and to require Massachusetts to refund the payments, plus interest, that it collected from nonresidents.

While The Supreme Court did not explain its decision not to take up the case, they did reply to New Hampshire’s motion. Massachusetts had argued that New Hampshire lacked standing to sue because it did not, as a state, suffer an injury, and that it did not state a viable Commerce Clause or due process claim. Massachusetts broadly described its regulation as maintaining the status quo.

In May, an amicus brief filed by the U.S Justice Department urged the Court to dismiss the case. This case was described as not an appropriate case for the exercise of this Court’s original jurisdiction because the issue could be litigated by New Hampshire residents who were subject to the Massachusetts income tax.

With so many employers struggling with tax compliance within their remote work policies, this major case could have cleared up issues between states and their tax policies that ultimately impact employers and workforce mobility. The decision to decline the case means that resolving these issues is now in the hands of individuals impacted by remote work taxes.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.