High court rejects New Hampshire-Massachusetts tax dispute

FILE - This June 8, 2021, file photo shows the Supreme Court in Washington. (AP Photo/J. Scott Applewhite, FIle) (J. Scott Applewhite, Copyright 2021 The Associated Press. All rights reserved)

WASHINGTON – The Supreme Court on Monday refused to allow New Hampshire to sue neighboring Massachusetts over an income tax dispute involving people who have been working from home during the coronavirus pandemic.

The justices rejected New Hampshire's complaint without comment. The state objects to Massachusetts' collection of income tax from roughly 80,000 New Hampshire residents who are employed by Massachusetts companies, but who have been working remotely.

New Hampshire wanted the justices to declare Massachusetts' collections unconstitutional and order a refund to people who are paying taxes of just over 5%.

New Hampshire Gov. Chris Sununu said Monday that the court was “setting a costly precedent."

“This decision will have lasting ramifications for thousands of Granite State residents,” he said in a statement.

The issue is especially sensitive in New Hampshire, which lacks a state income tax. New Hampshire also drew support from New Jersey and Connecticut, among others.

Residents of those states who are employed by New York businesses also generally pay state income tax to New York.

The Biden administration recommended the justices stay out of the dispute. Justices Samuel Alito and Clarence Thomas said they would have allowed the lawsuit to go forward.

Members of New Hampshire’s Democratic Congressional delegation also criticized the decision. Sens. Jeanne Shaheen and Maggie Hassan, who last month introduced legislation to address the issue, said they would continue to pursue solutions to prevent workers for being penalized for putting the safety of their families and communities first.

“This decision is particularly brutal for those who fought to keep their heads above water amid the financial fallout of the pandemic – every action should be taken to make things easier for our working families as we recover from COVID-19, not harder,” said Shaheen.

Hassan said declining to hear the case was disappointing and short-sighted.

“What is happening to New Hampshire residents goes beyond New England and has a far-reaching impact on citizens across this country who are being forced to pay taxes for a state where they don’t even work or live,” she said.