Congressman Chris Pappas is co-sponsoring legislation to prevent states, including Massachusetts, from collecting income tax on non-residents who are working at home due to the pandemic.
The proposed bill takes aim at an emergency order issued by Massachusetts in March that allows the state to continue to collect an income tax on non-resident workers employed by Massachusetts-based entities, even if those workers are no longer commuting into the state due to the coronavirus pandemic.
Previously, Massachusetts permitted non-residents to deduct a portion of their taxable income for any time spent working outside of the state. That policy benefited the tens of thousands of New Hampshire residents who commuted south on a daily basis before the pandemic.
The rule change has drawn bi-partisan ire in New Hampshire. Earlier this week, Gov. Chris Sununu ordered the state Attorney General to review the legality of Massashusetts’ emergency order.
“At a time when many New Hampshire residents are teleworking from home in order to keep their families and their communities safe, it is completely unfair for Massachusetts to levy an income tax on these workers,” said Pappas. “The Multi-State Workers Tax Fairness Act eliminates overly complex and unfair multi-state tax codes and ensures that employees will only be subject to the tax laws of their state when they telework.”
Pappas is co-sponsoring the bill with Connecticut Congressman Jim Himes.
Similar federal legislation put forward in 2016 failed in the face of opposition from some large states, including New York and Pennsylvania, which have similar income tax collection policies to Massachusetts.
Later this month, the Massachusetts Department of Revenue is holding a public hearing on whether to extend its policy through the end of the calendar year. It is set to expire in October.