ST. LOUIS 鈥 If you鈥檝e worked from home in the suburbs during the recent coronavirus shutdown instead of driving to your office in the city, don鈥檛 expect a break from paying the St. Louis earnings tax.
City officials say telecommuters staying home due to the pandemic won鈥檛 be eligible to file for refunds of the 1% earnings tax for days they鈥檙e not at their desks inside the city limits.
Those rebates have been available for years to workers traveling outside the metro area on business trips or working certain days at other locations maintained by their company outside the city limits.
But toiling at home during the recent city-ordered business shutdown is a different animal, says Collector of Revenue .
鈥淭his is a whole different set of circumstances,鈥 Daly said. 鈥淭he way we view it, you and your company have agreed (to have you) work at home. You鈥檙e still utilizing all the computer software that your company provides鈥 from its base in the city.
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Daly鈥檚 decision has spurred pushback from . Its top official says it鈥檚 possible that one of its member companies will file a court challenge.
鈥淔or the city to allow it sometimes and not others, they鈥檙e virtually admitting they don鈥檛 have authority to tax that income,鈥 said , the business group鈥檚 president and CEO. 鈥淭his is an issue our members really care about.鈥
Meanwhile, Bevis Schock, a Clayton attorney who has tangled with city government on a variety of issues, including red-light cameras and stay-at-home orders, said he 鈥渧ery strongly expects to file a class action lawsuit鈥 next year.
Last year, about $2.9 million in earnings tax payments were refunded to more than 4,000 people, said Deputy Collector Tom Vollmer.
Vollmer said those included some suburban-living telecommuters who arranged in advance with their employers to, for example, work a day a week from home and four at the office.
But that option will now be off the table for refunds.
Allowing pandemic telecommuters to get refunds would add further financial pressure to a city government already facing a steep decline in expected tax revenue due to layoffs, reduced business at stores and restaurants and the shutdown of pro sports and concert venues.
The earnings tax, a 1% levy on the earned income of anyone who either works or lives in the city, generated about $180 million in the fiscal year ending June 30. That funds more than a third of the city鈥檚 general revenue budget.
, a clinical professor of accounting at Indiana University and formerly of the University of Missouri-St. Louis, said tax authorities at all levels are concerned about much lower collections because of the pandemic-related slowdown.
鈥淲hether it stands up in a court of law, that is consistent with the concern,鈥 he said. 鈥淲hether the city of St. Louis tax collector is overreaching or not is unclear at this time.鈥
, a St. Louis University law professor and tax law expert, also said the issue is legally unsettled. 鈥淚 can鈥檛 say what the outcome will be if somebody decides to litigate,鈥 he said.
Any lawsuit isn鈥檛 likely to be filed until next year. The deadline for paying this year鈥檚 earnings taxes is April 15, 2021. Most people affected have the tax deducted from their paychecks.
David Luce, an attorney for the collector鈥檚 office, said the new rule for pandemic telecommuters is a reaction to the city stay-at-home order from Mayor Lyda Krewson鈥檚 administration that went into effect March 23. The city began lifting the order in mid-May.
Many businesses were required to shut down their offices in the city, he noted, but some of the others exempted as essential did so anyway.
And he said while in many cases employees began working from home outside the city as a result of the order, their employers weren鈥檛 specifically required by the order to allow that.
鈥淚n the big scheme of things, it just made sense to apply the tax pursuant 鈥 to if people鈥檚 jobs are still centered in St. Louis city,鈥 Luce said.
Kansas City, which also has an earnings tax and a stay-at-home order, took the opposite tack, allowing pandemic telecommuters outside the city to file for refunds.
鈥淲e鈥檙e using exactly the same process we鈥檝e always used,鈥 said city spokesman .
Vollmer said the St. Louis collector鈥檚 office hasn鈥檛 run any data in recent years to see what portion of the city鈥檚 earnings tax take is paid by suburbanites who work in St. Louis.
But a survey taken a decade ago of the city鈥檚 20 top employers provides a hint. At that time, he said, about three-fourths of their workers in the city commuted from outside the city limits.
The earnings tax has been a hot political topic for years, with critics complaining that it鈥檚 a detriment to attracting and keeping businesses. But over the years city leaders have concluded there鈥檚 no way to make ends meet without it.
One critic with deep pockets, retired investor Rex Sinquefield, went as far as spending more than $11 million on a successful campaign in 2010 to get voters statewide to require elections in St. Louis every five years on whether to keep the earnings tax. The measure also applies to Kansas City.
Voters in both cities in 2011 and 2016 retained the tax; the next such election is set for April.