Connecticut lawmakers have introduced a proposal intended to prevent the double taxation of residents who normally work in New York but are teleworking because of the COVID-19 pandemic.
Under Proposed Bill 6183, introduced by Reps. Lucy Dathan (D) and Stephen R. Meskers (D), the Connecticut Department of Revenue Services would not be able to disallow credits claimed by residents or part-year residents for the tax year starting January 1, 2020, for income taxes paid in other states solely because they worked from home during the pandemic.
The proposal was referred to the Joint Finance, Revenue, and Bonding Committee and must go through the committee process to become a fully drafted bill.
Dathan told Tax Notes in an email that the bill is designed to protect Connecticut residents from double taxation, since normally workers would have to pay tax in Connecticut for the time they worked in Connecticut.
Dathan said many Connecticut residents that customarily work in and pay income taxes to New York state receive a credit on their Connecticut income taxes, but because of COVID-19 stay-at-home orders they were forced to work from home in Connecticut. “We are asking for these workers [to] be considered to have worked in New York state and eligible for a credit on their Connecticut income taxes for income taxes paid to New York state,” she said.
Meskers told Tax Notes that he’s trying to protect his constituents from double taxation because Connecticut’s tax law is unclear and because neighboring New York recently issued telecommuting guidance that requires nonresident employees who are teleworking to pay income taxes to the state.
Meskers said the bill was also prompted by New Hampshire’s dispute with Massachusetts over the latter state's regulation allowing it to source and tax the income of nonresident workers who would normally work in Massachusetts but are telecommuting because of the pandemic. New Hampshire, which does not have an income tax, is arguing that the Massachusetts regulation violates the commerce and due process clauses by taxing New Hampshire residents for work performed entirely in-state.
Connecticut is among the states that have urged the U.S. Supreme Court to take up New Hampshire v. Massachusetts.