The Supreme Court, today, denied New Hampshire’s motion for leave to file a bill of complaint challenging Massachusetts’ COVID-related tax regulations. The decision comes little more than a month after the Acting Solicitor General of the United States filed an amicus brief urging the court to deny the motion. In addition to New Hampshire, the decision will leave New Jersey and other states (nearly fourteen states had filed amicus briefs urging the Court to take the case) disappointed. The case was seen as an indirect threat to New York’s convenience of the employer rule, which operates similarly to the temporary regulations adopted by Massachusetts. See earlier coverage here and here.
The Acting Solicitor General argued that the case was a poor vehicle for challenging New York’s rule given the unique factual circumstances under which Massachusetts adopted the rule and the temporary nature of the Massachusetts regulation. (Indeed, Massachusetts noted in a supplemental brief filed with the Court on June 15 that the COVID-related state of emergency ended on that date and that the temporary regulation would expire 90 days later.) As we discussed in our most recent coverage of the case, the case was viewed as somewhat of longshot given the Court’s general reluctance to exercise its original jurisdiction, and the United States’ amicus brief made the eventual outcome even less of a surprise.
It remains to be seen whether one of the states affected by New York’s long-arm taxing statute will seek to file a direct challenge to the New York rule that echoes the arguments made by New Hampshire. Until then, an employee telecommuting from home whose office is in New York, one of the handful of other states that apply the convenience of the employer rule, or, for the next couple of months, Massachusetts, will remain subject to income tax in the state where his or her office is located even when working from home in another state.