While the Supreme Court did not say the state’s lawsuit was invalid, it did rule that they can bring it directly before the bench.
The U.S. Supreme Court has rejected New Hampshire’s work-from-home taxation lawsuit against neighboring Massachusetts.
According to The Boston Globe, the Granite State had sought to challenge Massachusetts’ practice of levying state income taxes on residents who began telecommuting from elsewhere during the coronavirus pandemic.
While the justices did not reject New Hampshire’s lawsuit outright, the bench did refuse to let the state take its case directly to the high court.
The Globe observes that New Hampshire’s complaint could have impacted similar, permanent tax laws in states such as New York and Pennsylvania. Arkansas, Delaware, and Nebraska also levy taxes on residents who do remote work for in-state employers.
Several states—including New Jersey and Connecticut—had actually sided with New Hampshire, urging the bench to accept the lawsuit, as New Jersey and Connecticut have both lost massive sums of money to neighboring states with remote-work taxation legislation.
New Jersey, for instance, said that it expects to credit well over $1 billion to its residents for taxes they already paid in New York.
However, states with remote-work laws have defended them. Massachusetts said that the pandemic led many people who would ordinarily be working in Boston or other large cities to flee to their vacation homes in Vermont, New Hampshire, and Maine.
“Massachusetts businesses could simply continue withholding as before, without need for continual changes due to fluctuating remote-work circumstances over the course of the declared emergency,” state attorneys argued.
Massachusetts also observed that its remote-work taxation policy ended midway through June.
But in its filing, New Hampshire alleged that its neighbor was attempting to tax work that happened entirely outside its borders.
New Hampshire, notes Bloomberg, does not impose any income tax on its residents, and suggested that Massachusetts was violating the Constitution’s commerce and due process clauses.
“The Commonwealth of Massachusetts has launched a direct attack on a defining feature of the State of New Hampshire’s sovereignty,” New Hampshire argued.
However, the Boston Globe suggests that New Hampshire’s case took a big blow when the Biden administration refused to prove it any backing, with Washington saying that the state’s lawsuit does not involve the type of sovereign interests needed to invoke the Supreme Court’s “original jurisdiction.”
According to the Globe, states wishing to file original jurisdiction lawsuits must typically ask for prior permission; they must also demonstrate that they have no alternative venue in which to pursue their claims.