Massachusetts issued an emergency order on March 10 requiring weekday workers in Massachusetts to continue to pay Massachusetts income tax if they change to work from home due to the epidemic. The state of New Hampshire took Massachusetts to the Supreme Court on this provision, and 14 states recently sided with New Hampshire and called on the Supreme Court to accept it.
Before the pandemic, Sununu residents who worked for Massachusetts companies paid income taxes based on the number of days they worked in the state, according to the New Hampshire Union Leader. The Massachusetts telework tax between pandemics is expected to affect thousands of New Hampshire residents. In February, the New Hampshire Department of Employment Security reported that nearly 100,000 residents of the state commuted to Massachusetts to work.
On Oct. 19, New Hampshire Attorney General Gordon MacDonald took the first step in challenging the tax by filing a petition with the Supreme Court to hear the case.
In response, Massachusetts Attorney General Maura Healey said that Massachusetts is not hurting New Hampshire and that any court challenge should be brought by individual New Hampshire residents, not the state. She also said the tax changes are only temporary.
New Hampshire maintains that Massachusetts’ taxes discourage it from recruiting residents and businesses. In short, the state wrote in its legal filing response, Massachusetts has targeted the defining characteristics of New Hampshire’s sovereign status through unconstitutional means.
New Jersey, Connecticut, Hawaii and Iowa recently filed a court filing urging the Supreme Court to take up the case, and other supporting states include Texas, Louisiana and Utah, among others. Five other states also plan to tax work-at-home nonresidents, including Arkansas, Delaware, Nebraska, New York and Pennsylvania, the brief said.
The states supporting New Hampshire state that the state is required to issue tax credits to telecommuters who pay taxes in their employer’s state. The legal document mentions that if another state imposes an impermissible tax on nonresidents, the home state pays the price.
Another 18 organizations, mostly free-market and conservative think tanks, supported New Hampshire’s filing of the lawsuit, and these organizations filed supporting documents with the Supreme Court last week.
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