Media Coverage
Source: Tax Notes
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Olivia Thomas
02.11.21
Newly raised bill S.B. 873, introduced Feb. 10 by Connecticut's joint Finance, Revenue and Bonding Committee, would allow any Connecticut resident who paid income tax to another state with a convenience of the employer rule to obtain an income tax credit.
The bill would also provide a credit to residents who paid income tax to another state that has a law or rule requiring nonresident employees to pay nonresident income tax on income earned while working remotely during the COVID-19 pandemic if the employee was working in that other state before March 11, 2020. Under the bill, the Department of Revenue Services could not consider employees who worked remotely during the tax year solely because of COVID-19 when determining whether an employer has nexus with the state.
Evan Hamme, a State & Local Tax counsel at Pillsbury, told Tax Notes that Connecticut is in a unique situation because it is the only state he knows of that applies the convenience of the employer rule only for residents of other states that apply the rule.
Connecticut sources income to wherever a person is physically located while they’re working, but it has an exception that applies a convenience of the employer rule to states like New York that have one, as a way to capture tax from reverse commuters who live in New York, Hamme explained.
Hamme said he thinks the legislation’s approach is smart politically because regardless of the outcome of the Supreme Court litigation, Connecticut will benefit.
"They’ll either be able to continue collecting revenue from New York residents or they won’t have to grant credit to their own residents who pay tax to New York because New York won’t be able to apply the convenience of the employer rule anymore,” Hamme added.