Since the start of the COVID pandemic, states with big cities have been angling to retain some of the tax revenue put in jeopardy by the pandemic. Specifically, these states are continuing to tax telecommuters, even though many of these workers are working remotely in their home state.  Pre-COVID, states such as Massachusetts, New York, and Pennsylvania saw many workers enter their state from neighboring states to work in the big cities/financial centers. Since the pandemic, many of these workers are working remotely and not traveling into the office. Massachusetts continued to tax non-resident workers in 2020, even though many worked from their home state and did not even have an open office to work from in the state of Massachusetts.  New Hampshire took issue with Massachusetts’ position and requested the Supreme Court take up the case. New Hampshire argued Massachusetts violated the commerce clause and due process clause of the Constitution.  Several of the neighboring states argued that the court should hear the case because there are billions of dollars at stake. The court declined to take up the case.

We may not have heard the last of these types of cases.  However, it has emboldened the taxing authorities in states like New York.  New York has publicly stated they are reviewing 2020 non-resident returns filed in New York where the work patterns have changed. Stay tuned.