JEFFERSON CITY — Remote workers who live outside ºüÀêÊÓƵ city limits would be largely exempt from paying the city’s 1% earnings tax under legislation given first-round approval Monday in the Missouri House.
The measure, sponsored by Rep. Jim Murphy, a south ºüÀêÊÓƵ County Republican, is tied to ongoing litigation involving workers who sued after the city denied their earnings tax refunds during the pandemic shutdowns of 2020.
The Missouri Court of Appeals in ºüÀêÊÓƵ heard the city’s appeal on Feb. 14 of a ºüÀêÊÓƵ circuit judge’s ruling that ordered the city to pay back six plaintiffs.
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Murphy said he doesn’t want to wait for the courts to act.
“It has been over a year now, and the courts have not made a determination. It’s time to fix that,†Murphy said.
Rep. Steve Butz, a Democrat from south ºüÀêÊÓƵ, urged his colleagues to wait for the courts to rule.
Prior to the pandemic, the city issued refunds to thousands of taxpayers for days traveled and worked outside ºüÀêÊÓƵ.
But as more employees began working remotely during the COVID-19 pandemic, Collector of Revenue Gregory F.X. Daly in 2020 began refusing refunds. He said employees were still using remote work software provided by companies based in the city.
The 1% levy to city residents and nonresidents whose employer is based or operating in the city.
Murphy’s legislation states that by Sept. 30, the city would be required to establish a process for requesting earnings tax refunds for remote work performed outside the city.
If the city refuses to refund taxes for covered work, the employee would be able to file a lawsuit to recover money owed, along with attorney’s fees.
Murphy said if a remote worker living outside the city is paying the tax, they would need to file for a refund.
The analysis said the state wasn’t able to determine how much remote work was performed by nonresidents. But it said that if all nonresidents worked entirely remote, the city could lose up to $98.3 million each year.
The city reported nearly $219 million in net earnings tax collections last fiscal year, according to the analysis.
The proposal needs a final vote in the House before it can advance to the Senate.
The legislation is .