New Hampshire Gov. Chris Sununu announced Friday that he plans to take Massachusetts to the U.S. Supreme Court after their Department of Revenue published a final rule imposing state income tax on Granite State residents who are working at home for Massachusetts companies.
“Within five minutes of learning of this rule change, I immediately directed the Department of Justice to file a lawsuit in the United States Supreme Court on Monday,” Sununu said in a statement. “The Commonwealth has launched a direct attack on the New Hampshire Advantage, attempting to pick the pockets of our citizens. We are going to fight this unconstitutional attempt to tax our citizens every step of the way, and we are going to win."
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Massachusetts established a rule in March that would tax out-of-state workers who used to commute to Massachusetts. The state said the rule was aimed at helping companies avoid having to overhaul their payroll systems.
The rule was extended Friday through the end of the year or until the Massachusetts COVID-19 state of emergency is no longer in effect.
Sununu took issue with the move, saying that Massachusetts and other high-tax states were "pickpocketing" New Hampshire residents by taxing out-of-state employees who were no longer commuting into their states to work due to the coronavirus pandemic.
"They're coming after our citizens," the Republican governor told CNBC. "And we're going to put up a fight for it."
Before the coronavirus pandemic hit, about 15% of New Hampshire commuters were driving to Massachusetts for work.
Congressman Chris Pappas, a Democrat, released a statement Friday criticizing Massachusetts' tax on New Hampshire's remote workers as "completely unfair" while not commenting on Sununu's lawsuit.
"The long arm of the Massachusetts tax collector should not be reaching into New Hampshire residents’ wallets," Pappas said, adding that he's pushing for legislation that would change tax law so workers would only be taxed in the state where they're working from.
Tax experts told The Boston Globe in August that the rule was likely to face legal challenges.