NH SUES OVER MASS. TAX ON COVID TELECOMMUTERS
New Hampshire Gov. Chris Sununu plans to take Massachusetts to court over the Bay State’s policy taxing the income of out-of-state residents telecommuting for Bay State companies amid the pandemic.
Sununu announced plans Friday to sue the Baker administration in the U.S. Supreme Court over the policy he called a “direct attack” on New Hampshire.
“The Commonwealth has launched a direct attack on the New Hampshire Advantage, attempting to pick the pockets of our citizens,” Sununu said in a statement. “We are going to fight this unconstitutional attempt to tax our citizens every step of the way, and we are going to win.”
The latest salvo in the ongoing income-tax border battle comes as the Massachusetts Department of Revenue on Friday finalized a temporary rule that imposes the state’s 5% income tax on employees of Massachusetts companies living and working remotely in other states as the public health crisis wears on.
“Within five minutes of learning of this rule change, I immediately directed the Department of Justice to file a lawsuit in the United States Supreme Court on Monday,” Sununu said.
The regulation published Friday extends the temporary rule through Dec. 31 or 90 days after Gov. Charlie Baker lifts the commonwealth’s COVID-19 state of emergency — whichever comes first.
Under the policy, employees who live outside Massachusetts are only taxed for the number of days during the week they would have physically commuted into the Bay State for work, which the state Department of Revenue said aligns with prepandemic taxation rules. Nearly 100,000 Granite Staters normally commute to work in Massachusetts, according to a 2017 study.
Department of Revenue spokeswoman Naysa
Woomer defended the policy in a statement saying, “The Commonwealth has implemented temporary regulations that are similar to those adopted by other New England states.” The administration said it would not comment on pending lawsuits.
Sununu, the Republican New Hampshire governor, had threatened to sue over what he called the “unconstitutional taxation” of Granite Staters back in August, when the extension of the policy was first proposed.
The Republican New Hampshire governor’s Justice Department reviewed the proposed rule at the time and found it “raised various legal concerns.”
Paul Craney of the Massachusetts Fiscal Alliance said in a statement Friday that the policy was “especially cruel” for residents of New Hampshire, where there is no state income tax, and warned it might prompt companies to leave Massachusetts.
“These workers are no longer using our state’s resources to do their jobs,” Craney said. “Taxing them at this point is a blind money grab with no fee for use aspect.”