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'Tens of thousands' may be eligible for St. Louis earnings tax refunds

The earnings tax generates more than $150 million per year for the City of St. Louis, and the lawsuit estimates nonresidents pay about 75% of the total.
Credit: KSDK

ST. LOUIS — A Circuit Court decision could make “tens of thousands" of workers who didn't live in the city of St. Louis eligible for a refund from the city’s earnings tax if they worked from home during the pandemic for a city-based employer, a plaintiff’s attorney said Friday.

On Thursday, Circuit Court Judge Jason Sengheiser ordered the city’s Collector of Revenue, Gregory Daly, to refund $8,361 plus interest to six employees who lived outside the city but were working remotely for employers within the city limits in 2020. Their wages were taxed under the city’s 1% earnings tax.

Sengheiser said Daly’s office had paid refunds for remote hours worked in previous years, but rejected those requests for 2020.

"So beginning in tax year 2020, despite no changes in the Earning Tax law, the collector stopped issuing refunds for work conducted outside of the city, unless the work was done while traveling, a distinction that was not previously made," the ruling said.

Attorney Mark Milton, who represents the six plaintiffs with co-counsel W. Bevis Schock, said they are evaluating whether to seek class-action status for nonresident taxpayers. Circuit Court Judge Christopher McGraugh in January 2022 denied the case class-action status because state law already allows taxpayers to obtain a refund of earnings tax paid under protest. Milton, however, said he's considering asking the state Court of Appeals to reverse that ruling.

“To have every single person affected by this file small claims or individual lawsuits would be insane,” Milton said.

If a class-action lawsuit prevailed, that could blow a massive hole in the city’s budget. The earnings tax generates more than $150 million per year, and the lawsuit estimated that nonresidents pay about 75% of the total.

A spokesperson for Daly said a decision has not been made on whether to appeal Sengheiser’s decision. The spokesperson initially said it’s too late now for a nonresident taxpayer to file for a refund for tax year 2020. Later Friday, the spokesperson, Susan Ryan of SC Ryan Consulting LLC, said she had misspoken earlier. Ryan said in a filing as part of the lawsuit, Daly's office said those who filed a refund request for tax year 2020 still could be eligible, depending on the lawsuit's outcome. 

Under the statute, anyone who would want to file for a refund for tax year 2021 would have until April 18 to file that paperwork, she said. There isn't a deadline for those who want to file for a refund for tax year 2020, Ryan said, adding that Daly's office is encouraging people to also file by April 18.

Ryan said she didn’t have a figure for the number of people who did request refunds for tax years 2020 and 2021 and were rejected.

Click here to read the full story on the St. Louis Business Journal.

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