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Lawsuit seeking city of St. Louis earnings tax refunds moves to state court

For last year, refunds on the 1% tax, which often come because employers withhold the money, could be worth millions of dollars
Credit: KSDK

ST. LOUIS — The plaintiffs in a lawsuit seeking earnings tax refunds from the city of St. Louis have refiled the case in state court. It had been filed in federal court in March.

An attorney for the plaintiffs, Mark Milton, said they did not want to "waste weeks or months of time arguing over federal subject matter jurisdiction, the only argument the City and Collector (of Revenue) raised in their response" to the plaintiffs' motion for a temporary restraining order against the government, which was denied.

"We also added a plaintiff and class of people whose employers have been unlawfully instructed not to sign the new E-1R form," which allows non-city residents to seek refunds on the 1% tax for days they didn't work in the city, Milton said. "This goes to the heart of the Collector's unlawful and unconstitutional conduct — he changed the policy and form to thwart nonresidents from seeking refunds they are lawfully entitled to receive under the earnings tax ordinance."

A spokeswoman for Collector of Revenue Gregg Daly, Susan Ryan, said the plaintiffs' actions "affirms our position that this matter was improperly filed in Federal Court, as the Federal Court has no jurisdiction in this matter."

The lawsuit argues that the city is wrongly denying earnings tax refunds for nonresidents who are employed by firms in the city but worked at homes outside the jurisdiction during the pandemic. For last year, refunds on the 1% tax, which often come because employers withhold the money, could be worth millions of dollars.

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