MA looking to tax NH residents working remotely. Looks like it will go to the SCOTUS

I found this a very interesting case that could have national implications:

I know that there are a number of people here who follow the Supreme Court so I was hoping to get your take on this.

Lemme see if they have filed for leave to file a bill of complaint.

Yes, you must file for permission to file. :smile:

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The case has been filed, but it has not been docketed, so it will not appear on the Supreme Court’s website yet.

The above link has the motion for leave to file a bill of complaint embedded. It is 79 pages in length.

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^
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Is it just me or will this be interesting?
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.WW, PSHS

As for the underlying issue, I think the Supreme Court would likely rule for New Hampshire, IF they take the case. And they are excellent at ducking their original jurisdiction. If they duck jurisdiction, New Hampshire would have to refile their case in United States District Court.

Should be a very interesting case.

Why just NH?

Wouldn’t this have to apply equally to any other state?

Hold on. The link is rough since it’s close to clickbait. How is this tax any different from regular income tax?

I would assume the tax rule would apply to other states as well. Say for example someone lives in Rhode Island and works in Massachusetts, then the same rule would apply.

Your seeing it in reference to New Hampshire because they are the ones petitioning the SCOTUS.
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.WW, PSHS

Normally the workers are physically working in MA, drawing a check from a company in MA.

Now they are working for a company in MA, but due to working from home, they are not physically present in MA yet working for a MA employer.

The fine point question is, where is the income earned? MA where the company has a physical present. NH which is where the worker is present?

In the past, if it’s similarly to other states (as I understand it), you pay income tax to the state where the work is performed. You may be liable to your home state for income tax on the other states income, but because you have to pay them income tax - your local state tax is reduced.

If the case goes for MA, then nothing really changes. However if NH wins, then they can probably expect to see an increase in their revenues from income tax because it will now be taxable to NH.

Don’t think this is about the worker paying less, it’s about which state gets the revenue.
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.WW, PSHS

Looks like it applies to those who telecommute:

Wage income paid to an individual that is subject to the Massachusetts personal income tax generally must be withheld upon for each payroll period by his or her employer. M.G.L. c. 62B, § 2. 830 CMR 62.5A.3 sets forth general rules applicable to non-resident employees who are telecommuting on behalf of an in-state business from a location outside the state due to the COVID-19 pandemic

Correct.

Employees that physically work in MA have to pay MA income tax.

Employees that used to physically work in MA, but due to COVID-19 are now telecommuting, have to pay MA income tax under this rule.

NH is challenging it because if the worker doesn’t pay MA income tax, then it will count as NH income. They (NH) see it as a way to increase tax revenues.
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.WW, PSHS

Except that New Hampshire has no state income tax.

:face_with_monocle:

If your primary residence is in NH then IMO, MA shouldn’t be able to do this.

Well that’s embarrassing. Thank you very much for pointing out.

Never lived in a state with no income tax. I stand corrected.
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.WW, PSHS

Ignoring the fact I just learned about NH.

Do you mean physical work, telecommuting, or both in terms of only the state where you have a primary residence should be able to tax income?
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.WW, PSHS

I haven’t either. In fact, we recently completed our 2019 taxes and our net state income tax rate was 7.5%. :neutral_face:

Good question. I’m still pondering it but my first thought is:

If your primary residence is in “X” state, you should be subject only to the taxes of that state and not another.

Well technically, I was a New York resident for 20 years and my taxable rate was 0.0%.

:slight_smile:
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.WW, PSHS

It’s a tough one. I’d be inclined that for telecommuters, it should be based on where you reside/work. That’s where you are consuming state and local resources, not the state of the company HQ.

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