Don’t know if this belongs in GD or P&E, feel free to move. In St Louis, resident of STL county is fighting with City of St Louis over personal income tax since he works remotely, and city claims since company is physically located in city, he owes. I know recently in Cleveland, Cleveland had to refund taxes after court decision that you work where you perform work (home). I suppose this is going on all over country since pandemic, but I’m wondering if this will wind up going to Supreme Court. Similar to online retailers now charging sales taxes based on where you live, but I don’t know if this was due to court ruling or if Amazon, EBay et al just quit fighting the states. Thoughts?
A state district court found for the taxpayer in January. St. Louis appealed, and then the taxpayer requested that the case go directly to the Missouri Supreme Court, bypassing the normal appeals process. AFAIK, the Supreme Court hasn’t yet ruled on whether it would accept the case, or require it to go to the state appellate court.
Amazon et al collect state and local sales taxes because they have a physical presence in every state, so they’re subject to that state’s taxes. That doesn’t apply to the St. Louis city earnings tax.
thanks for response
My company has employees located in multiple states. For each employee at a remote location, we follow all applicable laws and pay taxes accordingly. I don’t see how St. Louis taxes would apply to someone who is working outside the city. I find it odd that St. Louis could tax anyone’s income if they weren’t a city resident.
Most likely going to depend on state law . At least for now. It’s a long and sometimes confusing story but NYS taxes the NY source income of non residents - around 2004, a professor ( Zelinsky) who worked at a law school in NYC three days a week lost in the NY courts and had to pay NY tax on all the income from that job even though he worked two days a week from his home in Connecticut because he was working from home for his own convenience, not that of his employer. Supreme Court denied certiorari. Part 2 is now going on - because Covid remote was not for his own convenience and he’s also bringing up the constitutional issues again.
It’s true that that was state tax , not city- but until 1999ish, (when the legislature got rid of it) he would have also paid NYC commuter tax.
that’s what happened in Ohio (if you think it’s bad for employers, imagine an Uber or taxi driver contractor having to navigate 6 different taxing authorities), so state started program to centralize taxes. I mean when you’re taxing temporary entertainers or athletes it makes sense. Then there’s the issue of double taxation when you live in city (taxable) but work in county (also taxable)
We have to get special approval to hire people in Ohio because payroll considers it a pain in the butt.
You have to pay the Philadelphia income tax if you live or work in the city. And many Philadelphia suburbs have a similar, albeit lower, tax. You pay the higher if subject to both.
Because of COVID, Philly lost a lot of this tax base. For every day I worked from home in a no-local-income-tax suburb, I didn’t have to pay the Philadelphia income AKA wage tax. Vacation days were taxed proportionate to the percent of working days in the city. Yes it is complex to calculate.
Another issue is business trips out of the city. I could always have claimed a refund for those days, except it was too much trouble.
There’s no federal law on what sorts of tax localities can charge, so the states are each free to make whatever law they’d like on this subject. Which means there are going to be 50 different answers to how it works.
wild throw here–what about 'taxation without representation"? Maybe😁??
It’s going to depend on the state. In Michigan the cities are only allowed to tax the income of work actually performed in the city, but that doesn’t stop some companies from claiming that remote workers actually work in the office they are assigned to, and they don’t care one bit* that it means the employees have to have city taxes withheld and then potentially fight the city to get them refunded (because it’s an income tax, not a wage tax, so there’s always a tax return to file) without any proof of time not spent in the city because all your employer will say is that they’re assigned to a specific office. I’ve had multiple clients stuck in that situation, and when the city denies the refund, there’s nothing you can really do.
If there is federal law on this topic, I’m not aware of it, nor do I know particularly how federal law affects the ability of states to tax earnings of non-residents not physically present in the taxing state, which would presumably also apply to the local income taxes, as those are a creation of state law in the same way state income taxes are. If someone working in NY and living in CT has to go to court to prevent NYC taxes though, presumably the states aren’t directly prohibited from doing it. Most states play nice with each other in terms of income taxes though, where states you are resident of will give you a credit toward their income tax for any income taxed by another state also subject to tax in the resident state (which is most income, but usually not rental properties or other active businesses), though I do know that NY also makes (or at least made) it rough on those who only work part of the year in NY, where the employer is required to put the whole year of wages as NY wages and force the employee to allocate them, rather than letting the employer do that like every other state.
*The companies have to withhold city tax from most people anyway, and if their system is set up to withhold tax from each employee based on assigned location, and each employee has to be assigned to an actual physical location in their system for other reasons, then it would cost the company resources to reprogram their systems to allow for people to be physically located outside the city that they are assigned to in the employer’s system, and doesn’t cost the company anything if they don’t do that. That it costs the employees something is of no concern to the company, which tells you what these kind of companies think of their employees.
By that principle, visitors would not have pay sales tax in the U.S., nor value added tax in many/most countries. And Trump wouldn’t have to pay property tax on his homes outside Florida.
Non-citizen U.S. permanent residents, regardless of how documented, would no longer have to pay income tax.
Etc. Etc.
I feel a little bad about not being more patriotic on this, but taxation without representation is normal, reasonable, and nothing to get one’s knickers in a twist. I used Philadelphia services when I worked there, and it was fair for me to be taxed without having representation on the Philly city council.
P.S. I didn’t mean this as an opinion on whether D.C. should get senators. They should, but not because of taxes.
You also have representation in your state’s government, and if you liked, you could ask your representatives to change the state’s laws concerning local income tax.
But anyway, yeah, “No Taxation without Representation!” is a slogan, not a law.
I travel for work much less than I used to but I always wondered if I’d have states or smaller governments chasing me down for the X hours I billed in various locations.
I’d probably pay more for filing software than I would in taxes. And my company definitely isn’t withholding or issuing W-2s for anywhere.
No one can beat Denver for phrasology. If you work in Denver, your local tax is called the "Occupational Privilege Tax. You pay for the privilege of working in the Mile High City.