State Income Tax News

Update: Remote Workers and Local Taxes

 

Posted on March 18, 2024

Written by Mark Nachbar and Mary Bernard 

Read Time: 10 minutes

Because of the conditions imposed by the pandemic beginning in 2020, many states announced waivers to companies impacted by mandatory work-from-home pronouncements. Some states used emergency powers to expand taxation to encompass work-from-home employees in localities other than their normal work location. Ohio, Missouri, and Pennsylvania have all addressed the issue recently.

Ohio

Schaad v. Adler1 was one of the five cases filed in the Ohio Supreme Court by the Buckeye Institute challenging the constitutionality of Ohio’s emergency-based local income tax system that extended municipal taxing authority.2 The question in these cases was: Is it constitutional for the work of employees, who were forced to work from home by state orders, to be deemed to be working and taxed in a city other than where the work is performed?
Prior to the pandemic, Josh Schaad of Blue Ash, Ohio, worked offsite for his employer and, in years past, had requested and received proportional refunds for his work performed outside the city limits of Cincinnati. When House Bill 197 was passed by the Legislature, all work performed elsewhere because of the health emergency was deemed to have been performed at the employee’s principal place of work for the purposes of levying income taxes. This change resulted in Mr. Schaad’s municipal income taxes increasing even though he had spent less time at his main office location in Cincinnati. 

In 2021, the Ohio Legislature enacted House Bill 110 (HB 110), which sunset the temporary withholding provisions after December 31, 2021, and allowed employees working remotely to claim refunds of tax paid to the principal-place-of-work municipalities, including tax that was withheld by their employers, for days that the employee worked elsewhere during 2021.  HB 110, however, did not expressly apply the refund provisions for employee personal income tax to 2020.
The Buckeye Institute filed a lawsuit on behalf of Mr. Schaad requesting a refund of 2020 taxes and challenging House Bill 197, Ohio’s emergency-based income tax system that deemed work he performed at his home to have been performed in the higher-taxed office location of Cincinnati for the purposes of taxation.

After being rejected at trial court and appellate court, Schaad’s appeal was accepted by the Ohio Supreme Court on the following three propositions of law: 

[1.] Section 29 of HB 197 is incompatible with Due Process and this Court’s Angell-Willacy line of decisions interpreting the Due Process requirements for municipal taxation. 
[2.] The General Assembly cannot authorize municipalities to engage in extraterritorial taxation. 
[3.] The General Assembly’s authority to pass “Emergency Laws” under Article II, Section 1d of the Ohio Constitution does not expand its substantive constitutional powers.

In a split decision,3 the majority opinion rejected the taxpayer's primary argument that Section 29 of HB 197 violated the Due Process Clause of the US Constitution, finding that the federal constitutional provisions govern interstate taxation and not intrastate taxation.  It was also noted that the United States Supreme Court has never applied federal constitutional limitations to purely intrastate taxation.  The majority also concluded that Section 29 of HB 197 did not violate the Home Rule provision of the Ohio Constitution. This provision limited the employees’ cities of residence from taxing the same income taxed by the primary workplace cities for employees working remotely. 

It was stated in the dissent, however, that, “The General Assembly lacks the power to compel Cincinnati to collect taxes on income earned or received by a nonresident while working outside the city limits.” Another dissenting opinion stated that the United States Supreme Court has never ruled on whether Due Process protections apply when a city tax is extended beyond the city's boundaries. The second dissent also expressed the view that “this court has recognized that there is a role for federal due process to play in matters of municipal taxation.” 

Missouri

On another local tax front, beginning on September 30, 2024, proposed Missouri House Bill 1516 specifies that the City of St. Louis shall not continue to impose an earnings tax on any work or services performed or rendered through telecommuting or otherwise performed or rendered remotely, unless the location where such remote work or services are performed is located in the city. The bill creates a cause of action for a taxpayer who is denied a refund for taxes paid for work or services not performed or rendered in the city. This bill is similar to last year’s House Bill 589, but with more time to consider the bill this year, it might just pass the Senate.  Opponents of the bill note that the city earnings tax accounts for approximately one-third of the city’s general fund revenue and may be difficult to replace.

Pennsylvania
Pennsylvania passed Act 32 that provided for withholding rates for earned income tax (EIT) purposes.  The withholding rate is determined by comparing the employee’s resident EIT rate to the employee’s work location EIT rate and withholding at the higher rate. Philadelphia, however, is not covered under Act 32 and applies a ”convenience of employer” rule. If employees of Philadelphia-based employers choose to work from home outside the city, their wages for work performed remotely are subject to Philadelphia wage tax.
There are some circumstances where remote work will not be subject to Philadelphia wage tax:
⦁If the employee is merely assigned to the Philadelphia location but reports there less than twice per year and does not have a dedicated workspace or the option to work at the location;
⦁If the employee is working remotely as an accommodation under the Americans with Disabilities Act; or
⦁If the employee is unable to find adequate childcare. 

Other State Remote Worker Developments

It is possible that New York’s neighbors—Connecticut and New Jersey—may mount a challenge to the New York “convenience of employer” rule that has plagued remote workers since the 1950s.  This rule requires remote workers in other states to be taxed on income in New York if they work out of state for New York employers, for their own convenience. This rule has been unsuccessfully challenged previously by a law professor who resided in Connecticut and worked remotely during the pandemic.  Now the two neighboring states are changing the rules by establishing tax credits to their residents for challenging New York on taxes required to be paid to their nonresident state.
Although in the past, the US Supreme Court refused to review a case in the New Hampshire/Massachusetts dispute4 on the same issue, challengers believe that the only way to end this issue between the states is through the Supreme Court.

Future Consequences

Remote work will continue to pose challenges to employers and employees. The presence of employees working in states other than their office location presents several tax implications to employers now that many of the waivers issued during the pandemic have expired. Besides withholding tax issues, many employers might now be determined to be conducting business activities in new states, creating income and sales tax nexus. With the current shift towards flexible work locations, these issues could become more significant.
  1. Schaad v. Alder, 2022-Ohio-340.
  2. House Bill 197.
  3. Schaad v. Alder, Slip Opinion No. 2024-Ohio-525. Ohio Supreme Court, February 14, 2024.
  4. New Hampshire v. Massachusetts, Orig. No. 154.
TECHNICAL INFORMATION CONTACTS:
Mark L. Nachbar
Principal
Ryan
630.515.0477
mark.nachbar@ryan.com
Mary Bernard
Director
Ryan
401.272.3363
mary.bernard@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation.

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Property Tax and State Income Tax Symposium Highlights

 

Property & State Income Tax Symposium Highlights


A big congratulations to the planning committees for orchestrating outstanding Property Tax and State Income Tax Symposiums last month! Your hard work and dedication ensured exceptional programs that gave attendees valuable insights and meaningful takeaways.

Thank you to our presenters for delivering engaging and thought-provoking sessions on key topics, ranging from legislative updates to compliance strategies. Your expertise and commitment elevated the learning experience for all participants.

A special thank-you goes out to our attendees for your enthusiastic participation. The energy you brought to the sessions, discussions, and networking events was inspiring and contributed to the success of these Symposiums.

We look forward to seeing you at next year’s events!

Property Tax Symposium Chair Jessica L. MacLean, Esq. and State Income Tax Symposium Chair Jennifer C. Waryjas, Esq., give comments at the Opening Session.

Keynote speaker Corey Ciocchetti moved the audience with his presentation: “Inspire Integrity – Chase an Authentic Life.”

Participants get to know each other before hitting the links at the pre-symposium golf tournament. Congratulations to First Place winners PJ Birmingham, Brian Ess, and Lee Winston. Aaron Hohman, Moiz Mohammed, Shane Stewart, and Erik Wind were in second place. Other winners include: • Men’s Longest Drive: Ryan Armstrong • Women’s Longest Drive: Jennifer Wadland • Closet to the Pin: Kevin Dover

Jordan Goodman, Esq., CPA, and IPT Past President Janette Lohman, CMI, CCIP, CPA, Esq., inform and entertain attendees during a State Income Tax Symposium session titled “Monday Night Football Audit.”

Committee Member Dan Tucker, Esq. introduced John O'Neil, CMI and Gerry Amoroso, CMI at the breakout session “Beyond the Lease: The Analysis of the Whole Property Value.”

Many thanks for a job well done to the Symposium planning committees and their leadership. (L to R) State Income Tax Vice Chair Jeff Cook, CPA, State Income Tax Symposium Chair Jennifer C. Waryjas, Esq., IPT President Trisha Fortune, CMI, and IPT Executive Director Chris Muntifering, CMI.


Thanks to Property Tax Symposium Co-Vice Chair Jerry Aucoin, CMI, here with Property Tax Symposium Chair Jessica MacLean, Esq. (Not pictured Co-Vice Chair Gauri Samant, Esq.)

Everyone had a blast at Tuesday evening’s Bingo Night. IPT President Fortune had the chance to hang out with other Bingo enthusiasts.
Thank you for being a part of IPT!

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The IPT community Is Ready for You

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Property and State Income Tax Symposium Highlights
A big congratulations to the planning committees for orchestrating outstanding Property Tax and State Income Tax Symposiums last month!
Member News

President's Message

 

Happy holiday season!! As we close the book on 2024 and look ahead to 2025, I find myself reflecting on what an incredible year it has been for IPT. We ended on a high note with the successful conclusion of the Property Tax and State Income Tax Symposiums, held concurrently in Tucson, Arizona this November. Both programs delivered outstanding value through sessions that explored the latest developments in property and state income tax.

Attendees were especially captivated by our keynote speaker, Corey Ciocchetti, whose moving presentation set a tone of inspiration and purpose. The symposiums also offered dynamic discussion forums and breakout sessions designed to maximize learning opportunities.

The planning committees went above and beyond to create memorable networking experiences. Highlights included a pre-symposium golf tournament, a guided hike through Tucson’s beautiful terrain, and a networking lunch that fostered valuable connections. The evening receptions featured craft beer and tequila tastings, while late-night Bingo Night provided lighthearted fun. Of all the moments, seeing IPT’s new logo dramatically projected onto a nearby mountain stole the show—it was truly a crowd-stopper! 



Our deepest gratitude goes to the committees that made these events possible:

• Property Tax Symposium Committee: Special thanks to Chair Jessica L. McClean, Esq., Co-Vice Chairs Jerry Aucoin, CMI, and Gauri S. Samant, Esq., along with their incredible team.
• State Income Tax Symposium Committee: A heartfelt thank you to Chair Jennifer C. Waryjas, Esq. and Vice Chair Jeff J. Cook, CPA, and their dedicated Committee for countless hours of hard work and preparation.

Looking ahead to 2025, I am especially excited for IPT’s Annual Conference to be held at the Habor Beach resort in Fort Lauderdale, June 22nd through the 25th. The oceanfront location promises to be a fantastic setting. Our theme is “Club Pro Royale”. (I encourage you to watch Palm Royale if you are not already a fan and to get ready for our fun Casino Royale event on Tuesday night). In addition to a great program, we are planning a full slate of networking events that will guarantee a unique and engaging experience for all attendees.

And as we prepare to turn the calendar, I want to express my gratitude to everyone who served on a property tax or state income tax program committee this year, whether it was a school, symposium, webinar, or seminar. To all who volunteered on any IPT committee in 2024, thank you. Your time, talent, and dedication inspire us all and ensure IPT remains the premier resource for SALT professionals. To all who volunteered on any IPT committee in 2024, thank you. Your time, talent, and dedication inspire us all and ensure IPT remains the premier resource for SALT professionals.

Lastly, to all IPT members: thank you for your participation, commitment, and care for our organization. IPT is more than a professional association; it is a community where education meets opportunity and where connections lead to growth. Because when you know more, you PRO more. I wish you and your families a joyous holiday season and happy new year. And as we consider our new year resolutions, please consider putting becoming more involved in IPT in 2025 towards the top of your list.

Warmest regards,
Trisha Thank you for being a part of IPT!

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The IPT community Is Ready for You

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IPT Presidents December 2024 Message
Happy holiday season!! As we close the book on 2024 and look ahead to 2025, I find myself reflecting on what an incredible year it has been for IPT.

Why Investing in IPT Programs Is a Smart Move For Your SALT Team

You know firsthand that state and local tax (SALT) regulations evolve constantly. That’s why, for tax departments and professionals like you, it’s essential to stay ahead of these changes. Falling behind can lead to costly errors, missed opportunities, and compliance issues directly affecting your company’s bottom line.

IPT programs provide the structured, expert-led education you and your team need to stay compliant, effective, and strategically positioned. Let’s explore why IPT programs are a good fit for your team members.

The Challenge of Keeping Up with Change

The pace of change in SALT laws and regulations can feel relentless. Tax professionals face an overwhelming amount of new information each year, from complex legislative updates to shifting compliance requirements. IPT has a proven track record as a trusted partner that can keep your team informed and ready, offering training and insights that are immediately applicable.

The Unique Benefits of IPT Schools and Programs

IPT offers two distinct types of in-person learning experiences: schools and programs.

Each serves a specific purpose, and both are crucial to making a strategic investment in your team's professional growth.

IPT Schools: Building a Strong Foundation and Advanced Skills

IPT schools deliver comprehensive, hands-on training covering both fundamental principles and advanced concepts in SALT. These sessions dive deeply into essential tax topics, equipping attendees with the practical skills to address real-world challenges. Through interactive exercises, small group discussions, and mock presentations, your team members can return to work with actionable knowledge and the confidence to implement it effectively.

IPT Programs: Staying Ahead with Emerging Trends and Networking

IPT programs—like symposiums and conferences—focus on the latest developments, emerging trends, and strategic insights in SALT. These events offer a unique opportunity for your tax professionals to stay current with rapidly changing regulations, learn about cutting-edge strategies, and gain exposure to new technologies.

Programs also emphasize the importance of networking so your team can connect with industry leaders and peers, building a robust support system of professional contacts.

The Benefits of IPT Schools

IPT schools transform tax professionals into highly skilled, confident practitioners capable of navigating complex SALT challenges.

Expert-Led Curriculum

The curriculum at IPT schools isn’t off-the-shelf. Instead, it’s crafted and delivered by seasoned tax professionals facing state and local tax challenges daily. Your employees aren’t just learning theory—they’re absorbing practical knowledge from experts who understand the real-world implications of SALT issues.

Training includes mock presentations, small group exercises, and case studies mirroring problems your team may actually encounter, ensuring they leave with the ability to apply what they’ve learned immediately.

Hands-On Learning

IPT schools emphasize active participation and hands-on learning.

Attendees engage in interactive sessions that go beyond traditional lectures, offering practical exercises to prepare them to tackle complex tax issues head-on.

These experiences cultivate critical thinking and problem-solving skills, which translate directly into improved workplace performance. The result is a team that can effectively handle daily responsibilities and contribute to the overall efficiency of your tax department.

Return on Investment

Investing in IPT schools delivers a tangible return on your team’s time and budget.

Your team members can return equipped with the expertise to analyze and resolve tax challenges more effectively, minimizing risks and uncovering opportunities that directly benefit your business.

Practical skills gained through IPT’s rigorous training reduce the likelihood of costly mistakes and improve the overall strategic impact of your tax department.

The Advantages of Attending IPT Programs

IPT programs, including symposiums and conferences, are designed to keep your tax department at the forefront of the industry. These events equip your team with the connections and knowledge they need to excel in a constantly shifting tax landscape. Best of all, they are scheduled with the important dates on the SALT calendar in mind so your team members can attend because the timing works for them.

Here are just a few of the reasons why your team members can benefit from IPT’s annual programming.

Cutting-Edge Knowledge

IPT programs ensure your employees stay well-informed on the latest trends, regulations, and strategic developments in state and local taxation. Sessions are packed with insights into emerging technologies, complex SALT issues, and legislative updates. By staying current, your team is equipped to anticipate and navigate changes, maintaining a competitive edge in the field.

Industry-Specific and Regional Focus

Understanding that tax issues can vary significantly by industry and region, IPT programs offer sessions tailored to meet the specific needs of your team members. No matter the sector your teams work in, they’ll receive targeted, relevant knowledge. This focused approach allows tax professionals to more effectively address industry-specific challenges and implement strategies that can directly impact your business operations.

Valuable Networking Opportunities

One of the most significant benefits of IPT programs is the opportunity to build a network of peers and industry leaders across multiple tax disciplines. These connections can be invaluable when your team faces complex challenges, offering a go-to resource for advice and collaboration.

Establishing relationships at these events not only fosters professional growth but also creates a support system for your teams that extends well beyond the conference room.

The Strategic Value of Investing in IPT Programs

Investing in IPT programs isn’t just about professional development—it’s a strategic decision for your business that can yield substantial returns. Here’s why investing in IPT membership for your team members makes good business sense.

Efficient Access to Resources

The sheer volume and specificity of information shared at IPT events are unparalleled. Unlike piecemeal, independent research, IPT programs consolidate critical SALT updates and advanced strategies into a single, cohesive learning experience. The efficiency saves your team members time and ensures they receive insights that are both current and comprehensive.

Additionally, the perspective that your team members can gain from industry leaders will help them apply their new skills on a practical level. Your teams will benefit from nuanced interpretations of regulations and real-world case studies, giving them the tools to make well-informed decisions at work.

Impact on the Bottom Line

Well-trained tax professionals are more adept at navigating intricate regulations, meaning fewer costly errors and more opportunities to optimize tax positions.

Consider the financial implications: an error in tax compliance or a missed opportunity for tax optimization can have serious repercussions.

IPT-trained employees are equipped to minimize risks and capitalize on tax-saving strategies. The return on investment isn’t theoretical—it translates to measurable financial gains and increased operational efficiency.

Long-Term Benefits

Beyond the immediate impact, IPT programs foster long-term growth and stability. Employees with this level of specialized training develop into confident, knowledgeable professionals who can easily handle evolving tax challenges. This continuous upskilling reduces the need for constant retraining and positions your department as a strategic asset rather than a reactive cost center.
Further, investing in your employees’ education reinforces your commitment to professional development, improving retention, and helping you attract top talent.

Staying ahead in the industry isn’t just about compliance; it’s about cultivating a tax team driving value year after year.

Help Your Team Stay Prepared and Current

A well-prepared, knowledgeable tax team is a necessity. IPT schools deliver both foundational and advanced training, giving your team members practical, real-world skills they can apply immediately. IPT programs  ensure your team stays ahead of industry changes with timely updates and strategic insights so your tax department is more agile and effective.

Investing in IPT memberships for your team is a smart, strategic way to maximize your education budget. The ROI is clear: a more capable, confident, and efficient tax team that can navigate SALT complexities with precision. Learn more about specific IPT programs and take the next step toward strengthening your tax department today.

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Why Investing in IPT Programs Is a Smart Move For Your SALT Team
Discover how IPT programs empower your SALT team with expert-led training, cutting-edge insights, and networking to stay compliant and ahead of changes.
Get Involved with IPT

The IPT community Is Ready for You

Join a diverse community of more than 6,600 members and achieve educational excellence, earn professional certification, and gain access to a world-class network. With IPT, you can advocate for equitable administration of state and local taxes, participate in volunteer opportunities to grow your leadership skills, and establish a stronger professional reputation by participating on our committees.