JEFFERSON CITY, Mo. – The Missouri Court of Appeals just issued an opinion on the 1% earnings tax in the city of St. Louis. Some workers said that they had to pay the tax while working remotely during the pandemic. The court says that they are owed refunds.
The main issue was whether this tax applied to non-residents who worked remotely. A trial court ruled in favor of the employees, stating that remote work performed outside the city was not subject to the earnings tax and that the employees were entitled to tax refunds.
The City of St. Louis appealed, arguing that the trial court misinterpreted the ordinance. The Appeals Court affirmed the trial court’s decision, saying that the ordinance’s language was unambiguous in applying the tax only to work done or services performed within the city’s geographic boundaries.
The trial court also denied the class action certification as well as a request for attorneys’ fees. The appeals court upheld these denials.
This is one of several efforts to overturn the earnings tax. The Missouri State House recently passed a bill that exempts employees who work remotely outside the city of St. Louis from paying the 1% earnings tax. During the previous legislative session, the state Senate did not review that bill.
The St. Louis Post-Dispatch reports that city officials in St. Louis are preparing for a significant loss of $26 million in earnings and payroll taxes due to threats from state Republican lawmakers and ongoing lawsuits. New budget estimates suggest the city could lose about 10% of its current revenues from these taxes in the upcoming fiscal year starting July 1.
