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New Hampshire Sues Massachusetts Over Pandemic-Related Taxation, Nexus Issues

BY: Mavanee Anderson, Esq. | 11/09/20

The New Hampshire Attorney General filed a lawsuit on October 19 in the U.S. Supreme Court against the state of Massachusetts over its taxation of nonresident telecommuter income earned for services performed entirely outside the state during the COVID-19 pandemic.

During the pandemic, New Hampshire residents – who normally work in Massachusetts but are temporarily working remotely from their homes in New Hampshire – continue to have Massachusetts state income tax withheld from income earned for services performed entirely within New Hampshire. New Hampshire’s lawsuit claims states do not have the power to tax a nonresident on income earned for work performed entirely outside the state.

COVID-19 Nexus and Withholding Guidance

Many jurisdictions have issued guidance meant to alleviate headaches associated with newly created nexus and changes to withholding based on where an employee is performing work. If the U.S. Supreme Court decides to weigh in on the issue, its decision could have far reaching implications that impact nexus and withholding requirements across the country.

Separately, many jurisdictions intended the waiver of nexus and related guidance to be a short-term solution during the pandemic. As the pandemic continues to linger, jurisdictions might begin to reconsider whether a new work location is really so temporary after all.

APA provides related guidance on its Multi-State Taxation Compliance Hot Topic.

Interested in more state and local payroll coverage? APA’s PayState Update eNewsletter is perfect for you.


Mavanee Anderson, Esq., is an Editor of PayState Update and Payroll Information Resources for the APA.