Taxing Interstate Remote Workers After New Hampshire v. Massachusetts The Current Status of the Debate

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Edward Zelinsky


Under the dormant Commerce Clause, Massachusetts, New York and other states emulating them violate their constitutional duty to apportion when they tax the income nonresident telecommuters earn remotely working at their out-of-state homes. Also for dormant Commerce Clause purposes, nonresident telecommuters lack substantial presence in their employer’s state when such nonresidents work at their out-of-state homes. New Hampshire argued correctly in New Hampshire v. Massachusetts that, for Due Process purposes, Massachusetts taxed extraterritorially and unconstitutionally when it taxed income earned by nonresident telecommuters from their homes outside Massachusetts’s borders.

This issue will now wind its way through the state courts and will hopefully reach the U.S. Supreme Court on the merits. When the Court does confront the constitutional substance of this debate, the dormant Court’s Commerce Clause and Due Process precedents compel protection for nonresident telecommuters who earn income at home. On the days interstate remote workers work at their out-of-state homes, they should not be income-taxed by the states in which their employers are located.

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