States are in conflict over the collection of income taxes for remotely working employees.
States like New Hampshire and Connecticut, who have large numbers of people who work in other states, are attempting to claw back taxes that would have been collected if they still went into the office:
The rise of remote workers during the Covid-19 pandemic has led to a showdown in the U.S. Supreme Court over which state gets to tax their income.
More than a dozen states submitted legal briefs this week to weigh in on a petition that New Hampshire filed with the court in October to stop Massachusetts from taxing residents working remotely. The petition says Massachusetts doesn’t have the right to tax the income of New Hampshire residents who previously commuted to their jobs in Massachusetts but now work from home.
The case hasn’t yet been scheduled for a private conference among Supreme Court justices, who will decide whether they will grant it a hearing. A ruling would have significant budget implications for states that have lost billions of dollars in tax revenue during the pandemic and could set a precedent on taxing remote workers that endures past the coronavirus crisis.
The U.S. Congress has for years discussed setting clearer rules for interstate taxation disputes, but hasn’t passed any legislation. New Hampshire took its complaint directly to the U.S. Supreme Court, which has original jurisdiction over disputes between two or more states.
This does raise some interesting issues, and I would expect it to make it to the Supreme Court, as this is a classic sort of interstate conflict that they resolve, but I’m an engineer, not a doctor, dammit!*
*I love it when I get to go all Dr. McCoy!