The Supreme Court refuses to take up the tax file of teleworkers

The United States Supreme Court on Monday rejected a New Hampshire request to file a lawsuit against Massachusetts in a case involving Massachusetts’ imposition of remote workers during the COVID-19 pandemic. The Supreme Court order said Judge Clarence Thomas and Judge Samuel Alito would have allowed the petition.

New Hampshire filed its movement for leave to file a complaint in October 2020, after Massachusetts issued a temporary emergency regulation (later adopted as a final rule) that said workers who normally work in Massachusetts but who, due to the COVID-19 pandemic, worked in other states would still be required to pay Massachusetts income tax. New Hampshire asked the court to bar Massachusetts from enforcing the settlement and to require Massachusetts to reimburse payments (plus interest) it received from non-residents. In its complaint, New Hampshire said, “Massachusetts has unilaterally imposed an income tax in New Hampshire which New Hampshire, in its sovereign discretion, has deliberately chosen not to impose” (Motion for Leave to File Bill of Complaint, p. 2).

New Hampshire argued that this rule was unconstitutional under the Commerce Clause and the Due Process Clause of the U.S. Constitution.

The Supreme Court did not explain its decision not to take up the case, but, in its reply at the request of New Hampshire, Massachusetts had argued that New Hampshire did not have standing to bring an action because it had not, as a state, suffered prejudice and had not no declared viable trade clause or due process claim. Massachusetts has generally described its regulations as maintaining the status quo.

A brief friend filed by the United States Department of Justice in May also urged the Court to dismiss the case, and described it as “not a suitable case for the exercise of the original jurisdiction of this Court” (Brief for the United States as Amicus Curiae, p. 4) primarily because the issue could be argued by residents of New Hampshire who were subject to Massachusetts income tax.

Alistair M. Nevius, JD, ([email protected]) is the JofAeditor-in-chief, taxation.

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