Supreme Court stays out of Mass.-N.H. tax dispute
Although state clash ends, remote work issue remains
THE US SUPREME COURT declined to take up New Hampshire’s challenge of a Massachusetts regulation requiring out-of-state residents working remotely during the pandemic to pay Massachusetts income tax.
The Supreme Court announced Monday that it would not take the case, without providing any comment on the court’s reasoning. The announcement did say that Justices Clarence Thomas and Samuel Alito, both of whom are part of the court’s conservative wing, would have accepted the case.
Emergency regulations put forth by Gov. Charlie Baker and promulgated by the Department of Revenue during the COVID-19 pandemic stated that an employee of a Massachusetts company who is working remotely due to the pandemic must pay taxes in Massachusetts, regardless of whether the employee is physically living or working in Massachusetts. New Hampshire had challenged that rule as unconstitutional, saying Massachusetts should not be allowed to tax people living and working in New Hampshire just because they once commuted to Massachusetts. New Hampshire does not have a state income tax.
The Biden administration had urged the Supreme Court not to accept the case.
“These taxpayers are left to pursue their rights on an individual basis rather than on a collective basis,” Porter said.
According to the Massachusetts Department of Revenue, the emergency rule taxing remote work will remain in effect through September 13, 2021, which is 90 days after the state of emergency ended.
After that date, Massachusetts will return to its prior rule, in which it will only tax workers for work done when they are physically present in the state. So a New Hampshire resident who remains fully remote as of September 14 would no longer have to pay Massachusetts income taxes.
New Hampshire Attorney General John Formella said in a statement, “While we quickly took action to protect New Hampshire resident’s financial interests in fair taxation, the United States Supreme Court has determined not to allow New Hampshire’s case against Massachusetts to proceed. We are extremely disappointed that the United States Supreme Court did not recognize the harm inflicted by Massachusetts’ cross border taxation on many hardworking New Hampshire residents and the State itself.”Porter said some tax professionals had hoped the US Supreme Court would use this case to clarify rules in other states, like New York, Delaware, and Pennsylvania, which tax work done for in-state companies by out-of-state residents. But the court’s decision not to accept this case means that will not happen.
This story was updated with Formella’s statement.