On NH v. Mass. Remote Tax Case – Should SCOTUS Pass or Play? Reactions to the SG’s Brief

Sullivan & Worcester

The Solicitor General has weighed in on New Hampshire's attempt to get #SCOTUS to strike down Massachusetts' temporary tax rules for remote workers. On the threshold question of whether the Court should take the case, the Solicitor General advises against. A few comments and reactions to the SG’s brief:

Most of the time, #SCOTUS follows the SG's advice as to whether a case should be heard. Now we wait for the Court, but NH's suit appears to be approaching a dead end.

The SG's opinion should surprise no one. Oversimplifying, there are two conditions that should exist for the Supreme Court to take on a State-on-State suit: 1. The complaining state suffers direct injury, and 2. there is no other adequate forum for recourse. IMO, neither condition exists here. NH's court papers and blustery press statements complain of harm in the abstract (MA infringes on its "sovereign right to control its own tax and economic policies"), but no actual harm. To be sure, some NH residents, i.e., those telecommuting for their MA employers, can claim direct harm. But NH itself is not deprived of any tax revenue, and its coffers are not affected by Massachusetts’ temporary tax rule. (Contrast with, say, CT or NJ, which lose revenue in the form of tax credits for residents subject to the NY's constitutionally-questionable "convenience of the employer" rule.) Also, the NH residents subject to the MA telecommuter tax rule are not without recourse - they have at least one forum to raise and litigate their objections in Massachusetts.

Even so, I've seen a lot of disappointed, even angry, reactions to the SGs brief. Why? I'll suggest two reasons.

  1. We have a state tax rule that treats you as if you are working in the state even when you are not working in the state. All of our Due Process and Commerce Clause alarms are going off, and it just *deserves* to be addressed by the Supreme Court; especially now, with the explosion of telecommuting employees. So I think the sentiment is that the Court should just grab this opportunity, now, even if it is imperfectly presented.
  2. It's not just about the Mass. rule; it's all states with similar rules, and especially those with a permanent "convenience of the employer" rule. I imagine that those subject to NY's rule, and the #SALT practitioners who love them, see the NH suit as their opportunity to get a fair shake. The NY Court of Appeals have repeatedly rejected the appeals of CT and NJ residents remotely working for NY employers, but on the constitutional merits, those decisions were less than thorough or convincing.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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