High court seeks advise in NH-Mass tax fight

Gov. Chris Sununu announced last fall a U.S. Supreme Court lawsuit against Massachusetts imposing its income tax on employees working from home in New Hampshire due to COVID-19. On Monday, the high court asked the nation’s solicitor general to weigh in before it would decide whether to take the case up.

The U.S. Supreme Court wants the opinion of the government’s top legal representative on whether it should take up New Hampshire’s suit against Massachusetts over taxing telecommuters during the pandemic.

In a one-sentence order Monday, the court asked Acting U.S. Solicitor General Elizabeth Prelogar to weigh in on whether it was constitutional for Massachusetts to reach across its borders to tax residents of another state.

New Hampshire’s lawsuit maintains Massachusetts’ decision last March to impose its income tax on out-of-state residents working remotely because of the pandemic violates the U.S. Constitution’s due process and commerce clauses.

While this case involves remote workers and the income tax, legal scholars have said the decision could be applied to many cross-border disputes.

Fourteen states have filed briefs supporting New Hampshire’s case either on the specifics of the tax issue or whether the state has the right to bring the suit.

In a reply brief filed last month, Elizabeth Napier Dewar of the Massachusetts Attorney General’s Office argued that the rule was fair, did not discriminate and was related to services provided by the state.

Before the pandemic, New Hampshire residents paid income taxes based on the number of days they actually worked in Massachusetts.

New Hampshire’s Department of Employment Security has reported that nearly 100,000 Granite Staters normally commuted to Massachusetts for work.

Last March 10, Massachusetts issued an emergency order requiring people who normally worked in-state and who were working from home for a pandemic-related reason to continue to be taxed on their income.

Gov. Chris Sununu immediately condemned the rule, urged Massachusetts Gov. Charles Baker to abandon it, and then a few weeks later announced plans to go to court to block it.

In October, Massachusetts extended the order indefinitely.

In the brief requested by the Supreme Court, the acting solicitor general is expected to offer an opinion on whether this is a case of “original jurisdiction,” which means New Hampshire’s case would not first have to go through the trial court process.

The solicitor general determines the cases in which Supreme Court review will be sought by the government and the positions the government will take before the court.

Another threshold legal issue in this court fight is whether the state of New Hampshire has “standing” to bring the case. Massachusetts maintains it does not, because the tax affects individual New Hampshire residents and not the state itself.

In response, New Hampshire’s legal team argues that the state has standing because this taxation of its residents invades New Hampshire’s exclusive right to tax activity within its borders.

Four states — New Jersey, Connecticut, Hawaii and Iowa — filed a brief supporting New Hampshire on the merits of the case. Another 10, led by Ohio, argued the Supreme Court could not refuse to hear an original-jurisdiction case such as this one.

A group of free market and conservative think tanks also supported New Hampshire in this lawsuit, including the National Taxpayers Union Foundation, the Buckeye Institute, the Cato Institute, the Center for a Free Economy, the Goldwater Institute and Americans for Prosperity-New Hampshire.