The state Department of Justice is reviewing whether other states are improperly collecting income tax from New Hampshire residents working from home, Gov. Chris Sununu announced Wednesday.
“We will take immediate steps to stop any attempts to impose income taxes on Granite Staters in a manner that violates the law or the New Hampshire or United States Constitution,” the governor said in a statement.
The review was prompted by a report in the New Hampshire Sunday News about an emergency measure passed by Massachusetts to collect income tax from workers who commute there from neighboring states but have been working from home since the pandemic.
Legislators from both major parties backed the review and criticized Massachusetts.
The governor said the state Department of Justice will conduct a review of each state’s actions to determine whether any state is engaging in improper taxation of New Hampshire residents.
“I am proud that New Hampshire remains an income tax-free state,” Sununu said. “We need to maintain that New Hampshire Advantage at all costs.”
Massachusetts issued an emergency order effective March 10 requiring people who normally worked in Massachusetts and who were working from home for a pandemic-related reason to continue to be taxed on their income.
The Bay State has extended that at least until October, a spokesman for the Massachusetts Executive Office for Administration and Finance said last week. On Wednesday, that same spokesman wouldn’t specifically comment on New Hampshire’s review of other states.
In the past, Massachusetts credited taxpayers for days spent working out of state.
The Massachusetts Department of Revenue, which didn’t respond to an email seeking comment Wednesday, will hold a public hearing on the issue remotely Aug. 27. Officials also are considering a non-emergency regulation that would extend the practice through Dec. 31 or 90 days after a state of emergency in Massachusetts is lifted, whichever is earlier.
New Hampshire’s move to review whether other states are improperly collecting income tax from Granite State residents working from home isn’t the first time the state has worked to guard against other states’ taxation.
“New Hampshire has always been more aggressive in protecting its taxpayers against taxes from other states,” said Jared Walczak, vice president of state projects for the Washington-based Tax Foundation, an independent tax policy nonprofit.
“It’s not surprising that New Hampshire is taking the lead on this,” said Walczak, citing New Hampshire’s unsuccessful efforts in a U.S. Supreme Court case a few years back to protect New Hampshire’s online sellers from being required to collect sales tax for states and municipalities.
New Hampshire Senior Assistant Attorney General Jill Perlow said attorneys in the Department of Justice’s Civil Bureau are leading the review.
“They will draw on other resources as necessary. The review will involve assessing whether efforts to tax New Hampshire residents conforms to the law,” she said in a statement. “As of now, we have no information about additional states engaging in this conduct. It is premature to draw any conclusions about possible next steps. We will move as quickly as possible.”
Legislators supported the review.
“The New Hampshire Advantage should be defended from all enemies — both in-state, and out of state,” said House Republican Leader Dick Hinch, R-Merrimack, in a statement. “If other states are in violation of any state or federal law or constitutional provision, they should get their hands out of our workers’ wallets immediately.”
Democratic Sens. Lou D’Allesandro and Dan Feltes, who is running for governor, sent a letter Wednesday to Geoffrey E. Snyder, commissioner of the Massachusetts Department of Revenue asking Massachusetts not to tax New Hampshire commuters working from home.
“That’s unfair, that’s anti-worker, that’s anti-public health, and it rests on, at best, shaky legal grounds,” the senators wrote. “In the interest of public health, protecting workers, and protecting our regional relationship, we respectfully encourage you to withdraw the tax rule change penalizing New Hampshire residents who now work remotely due to COVID-19.”
Senator Jeb Bradley, R-Wolfeboro, also supported the review.
“In New Hampshire, we balance budgets while meeting the needs of our citizens without broad-based taxes and we should not have to foot the bill for other states that cannot do the same,” Bradley said.