The U.S. Supreme Court on Monday denied a request by New Hampshire to file a bill of complaint against Massachusetts in a case involving Massachusetts’s taxation of remote workers during the COVID-19 pandemic. The Supreme Court’s order indicated that Justice Clarence Thomas and Justice Samuel Alito would have granted the motion.
New Hampshire filed its motion for leave to file a bill of complaint in October 2020, after Massachusetts issued a temporary emergency regulation (later adopted as a final rule) that said workers who normally work in Massachusetts but who, because of the COVID-19 pandemic, were working in other states would still be required to pay Massachusetts income tax. New Hampshire asked the Court to enjoin Massachusetts from enforcing the regulation and to require Massachusetts to refund the payments (plus interest) that it collected from nonresidents. In its complaint, New Hampshire said, “Massachusetts has unilaterally imposed an income tax within New Hampshire that New Hampshire, in its sovereign discretion, has deliberately chosen not to impose” (Motion for Leave to File Bill of Complaint, p. 2).
New Hampshire argued that this rule was unconstitutional under the Commerce Clause and the Due Process Clause of the U.S. Constitution.
The Supreme Court did not explain its decision not to take up the case, but, in its reply to New Hampshire’s motion, Massachusetts had argued that New Hampshire lacked standing to sue because it did not, as a state, suffer an injury, and that it did not state a viable Commerce Clause or due process claim. Massachusetts generally described its regulation as maintaining the status quo.
An amicus brief filed by the U.S. Justice Department in May also urged the Court to dismiss the case, and described it as “not an appropriate case for the exercise of this Court’s original jurisdiction” (Brief for the United States as Amicus Curiae, p. 4), especially because the issue could be litigated by New Hampshire residents who were subject to the Massachusetts income tax.
— Alistair M. Nevius, J.D., (Alistair.Nevius@aicpa-cima.com) is the JofA’s editor-in-chief, tax.