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State bill would force earnings tax refunds for telecommuting work, which St. Louis is resisting

The pandemic sent many employees who'd work every day in the city to their homes, often outside the jurisdiction
Credit: KSDK

ST. LOUIS — A state bill introduced this month would force the City of St. Louis to refund earnings tax proceeds for work done outside the city through telecommuting, a measure that, if passed, could prove extremely costly to the local government.

The pandemic sent many employees who'd work every day in the city to their homes, often outside the jurisdiction. That set up a fight over the city's 1% earnings tax, which applies to anyone who lives or works within city limits.

St. Louis, through its collector of revenue, Gregg Daly, has said it will not issue refunds "if your place of employment remains in the city while you are working virtually."

That prompted a lawsuit threat from a well-known local lawyer, who said the policy violates the city's earnings tax ordinance. Normally, workers who spend only part of their time in the city can apply for a refund for days they were outside its borders. The refund, issued in the spring, comes because employers often withhold the earnings tax money.

The bill from state Sen. Andrew Koenig, R-Manchester, would seem to force the city's hand. Kansas City would also figure to be affected. The legislation defines wages subject to the earnings tax as not including "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."

It also says that if a taxpayer is denied a refund for work not performed in the city, he or she can sue the government to recover what's owed, plus attorney's fees.

Koenig said the city's earnings tax ordinance should already be "clear," but that his bill is meant to let the local government "know you can't do this and if you do you're going to get sued."

A spokesman for Mayor Lyda Krewson had no immediate comment.

Read the full story on the St. Louis Business Journal website.