On January 19, 2023, a St. Louis judge ordered the city of St. Louis to reimburse six employees who had their remote work wages taxed under the city’s 1% earnings tax (Mark Boles, et al., v. City of St. Louis, et al.). Collector of Revenue Gregory Daly has not decided whether to appeal this decision. The plaintiffs were not at any time residents of St. Louis, but they were employed in the city and paid the earnings tax.
As background, the city adopted the earnings tax in 1959. Since then, the city has imposed a 1% tax on the earnings of nonresidents of the city “for work done or services performed or rendered in the City.” Prior to the COVID-19 pandemic in early 2020, the Collector of Revenue did not distinguish virtual work outside the city from business travel outside the city for purposes of issuing earnings tax refunds. However, for tax year 2020 and later, the Collector was not issuing earnings tax refunds for virtual work outside the city but is issuing earnings tax refunds for business travel outside the city.
To the extent nonresident employees were taxed on 100% of their income in St. Louis and the employee did not perform those services within the city every day, the employee could be due a refund for days worked outside the city. To file a refund, the employee should complete and file Form E-1R and E-1RV. The due date to file these forms for the 2022 tax year is April 18, 2023. There is a one-year statute of limitations on refund claims. Therefore, taxpayers can still file refund claims for the 2021 tax year since the form was due April 18, 2022.
As it relates to the 2020 tax year, we encourage taxpayers to file refund claims for this year as well. Whether the city issues refunds on the 2020 tax year will depend on the outcome of this case; however, there is no downside to submitting a claim.
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