Lawsuit challenges St. Louis City’s ability to collect earnings tax from workers living outside city limits

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ST. LOUIS – A lawsuit is challenging the City of St. Louis’ ability to collect the earnings tax from workers whose employers are in the city but who have been working outside of the city for much of the pandemic.

If the plaintiffs win, the suit could have a big impact on a major revenue source for the city.

The suit seeks class-action status and was filed Monday in federal court by Attorney Bevis Schock.

There are three plaintiffs, two from St. Charles County and one from St. Louis County. The Post-Dispatch reported that in past years, the city has allowed refunds to employees for days where they traveled and worked outside of the city. That changed after the city’s collector of revenue Gregory F.X. Daly issued a policy that barred refunds for employees working outside of city limits.

The change is substantial given the fact that many employees have been working remotely from home during the pandemic. Daly told the Post-Dispatch in an interview last year, that even though employees may have been working from home, they are still utilizing computer software provided from their companies based in the city.

More than one-third of the city’s general revenue comes from the one percent earnings tax that is charged to city residents and nonresidents who work in the city. Last year, that reportedly added up to about $180 million.

The legal battle comes as voters decide whether to reauthorize the earnings tax on April 6. That vote comes every five years.

Schock is seeking a ruling that the city cannot collect the earnings tax from employees when they work outside of the city limits.

The Post-Dispatch reported that city officials would not comment on the suit because it is pending litigation.

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