“How Granting Cert in New Hampshire v. Massachusetts Could Impact Pennsylvania and Philadelphia”

Article by Jennifer Karpchuk on “How Granting Cert in New Hampshire v. Massachusetts Could Impact Pennsylvania and Philadelphia”

In an article published on February 22, 2021 in Bloomberg Tax, Chamberlain Philadelphia-based Shareholder Jennifer Karpchuk discusses how the U.S. Supreme Court is considering granting cert on a case that could impact Pennsylvania’s ability to collect income taxes from nonresidents and the city of Philadelphia’s ability to continue to apply its ‘‘requirement of employment’’ rule for the city’s wage tax.

“The U.S. Supreme Court has asked the acting solicitor general to weigh in on New Hampshire v. Massachusetts, a case in which New Hampshire is challenging Massachusetts’ practice of taxing nonresidents who previously worked in-state but now work remotely from home in New Hampshire,” explains Karpchuk. “In filing the case, New Hampshire invoked the Supreme Court’s original jurisdiction, which allows states to sue one another when their sovereign interests are at stake.”

Karpchuk further explains that in light of Covid, the Pennsylvania Department of Revenue stated that non-residents working remotely would continue to have Pennsylvania source income for tax purposes. If the Supreme Court grants cert in New Hampshire v. Massachusetts it could impact Pennsylvania’s ability to tax non-residents working remotely.

“With tax season on the horizon, many practitioners are questioning what position taxpayers should take on income and wage tax returns,” says Karpchuk. “If taxpayers take a filing position contrary to Pennsylvania or Philadelphia’s positions, they can expect an assessment and a lengthy court challenge. In today’s age, these ‘requirement of employment’ positions have become a relic—a reminder of how work used to be accomplished and blind to the shifting remote atmosphere and the corresponding constitutional challenges.”

To view the article on Bloomberg Tax click here.