Massachusetts Files Brief and New Hampshire Responds with Reply Brief, Plus Six Amicus Briefs filed in New Hampshire v. Massachusetts; Court Denies Five SALT Petitions

On October 23, 2020, the State of New Hampshire brought an action before the Court against the Commonwealth of Massachusetts seeking to enjoin Massachusetts from enforcing its new telecommuting regulation against New Hampshire residents, in New Hampshire v. Commonwealth of Massachusetts (Docket No. 220154). As the 2020 year came to a close, Massachusetts filed its brief in opposition and New Hampshire responded with its reply brief, which are covered in this month's issue. In addition, six amicus briefs have been filed in support of New Hampshire's Motion for Leave to File Bill of Complaint, including two briefs amicus curiae of fourteen states (Ohio, Arkansas, Indiana, Kentucky, Louisiana, Missouri, Nebraska, Oklahoma, Texas, Utah, New Jersey, Connecticut, Hawaii and Iowa), which are also covered in this column.

A brief in opposition was also filed in Barnette v. HBI, LLC et al (Docket No. 20-321)1 , where the lower court found that the purchaser complied with the statutory notice requirements for obtaining a tax deed and such requirements did not violate due process. Also, the Court denied four of the five new petitions covered in last month's column, plus another petition involving the New Jersey Tax Commissioner's exercise of discretion in imposing alternative apportionment, discussed more fully below.

Finally, we continue to wait the issuance of the Special Master's Reports in the MoneyGram cases: Delaware v. Pennsylvania, 220145 and Arkansas et al. v. Delaware, 220146. These cases involve a dispute between Delaware and several other states concerning which states have priority rights to claim abandoned, uncashed MoneyGram official checks.

Massachusetts Brief in Opposition

On December 11, 2020, Massachusetts filed a brief in opposition to New Hampshire's Motion for Leave to File Complaint challenging the Court's original jurisdiction, New Hampshire's standing and alleging that New Hampshire's dormant Commerce Clause and Due Process Clause claims lack merit.

In its opening statement, Massachusetts discusses the origin and purpose of the telecommuting tax regulation at issue in New Hampshire v. Massachusetts (Docket No. 220154). The statement also discusses how the Massachusetts Department of Revenue adopted the initial April 21, 2020, temporary emergency tax regulation, in an effort to "maintain the pre-pandemic status quo for tax filing obligations and thereby sought to avoid uncertainty and spare employers additional compliance burdens amidst the unprecedented circumstances, when record-keeping employees might be scattered from the office, and remote-schedules might shift by the day or week." Massachusetts further explains that the April 21, 2020 temporary emergency regulation maintained the status quo for personal income tax withholding purposes. It notes that "Massachusetts businesses could simply continue withholding as before, without need for continual changes due to fluctuating remote-work circumstances over the course of the declared emergency."

In addition, Massachusetts explains that the "regulation similarly reduced disruption for out-of-state employers with Massachusetts-resident employees who were suddenly working from home due to the COVID-19 emergency." In this regard, it makes clear that "[i]f a Massachusetts resident employee continued to be required to pay income tax to that other state under a similar emergency-related sourcing rule, the employee would be eligible for a Massachusetts tax credit for taxes owed to the other state."

Massachusetts also updates the court on how the Department of Revenue adopted a second temporary emergency regulation on July 21, 2020 to address "reasons for telecommuting that would qualify as pandemic-related," and ultimately, on October 16, 2020, when a final formal administrative rule (the "Tax Regulation") was approved. The brief also mentions Massachusetts recent extension of the Tax Regulation on December 8, 2020, until 90 days after the date on which the Governor of the Commonwealth gives notice that the Massachusetts COVID-19 state of emergency is no longer in effect.

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1. Barnette v. HBI, LLC et al (Docket No. 20-321), ruling at Neb. S. Ct., Docket No. S-19-147 (04/10/2020).

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