CLAYTON, Mo. – The City of St. Louis Circuit Judge Jason Sengheiser ruled on Thursday in favor of the taxpayers in the city earnings tax refund case.
Attorneys Bevis Schock and Mark Milton filed a suit on behalf of six taxpayers over refunds of earnings taxes. Before the COVID-19 pandemic, the St. Louis Collector of Revenue had allowed refunds to non-residents of the city for those days they had worked outside the city. As the pandemic began, the Collector changed course and began denying those refunds. The suit asked the court to require the Collector to pay the refunds.
“We said if you are teleworking because of the pandemic, the city should refund, they withheld one percent,” Schock said. “We have achieved a tremendous victory.”
According to the judge’s ruling on Jan. 19, the earnings tax ordinance means what it says, that the phrase “work performed or services rendered in the city” applies only to those who are physically present in the city. The judge waxes eloquent on the wonders of the rule of law and then directs the Collector to process the refunds.
“We have already received a number of inquiries and questions from other non-residents who either applied for earnings tax refunds that were denied or seeking them for various tax years,” Milton said. “This ruling is important because it makes it clear that these taxpayers should get refunds not only for 2020, but all future years.”
Early in the case, the court denied the plaintiffs’ class action status, which means that the ruling only applies to the six taxpayers involved. Still, the lawyers for the plaintiffs made a website called stlrefund.com and put up billboards to promote it. On this website, people could download forms to file a protest for the tax year 2020. The plaintiffs’ attorneys believe taxpayers will have until April 18 to apply for refunds for the tax year 2021.
The plaintiffs also made a claim under the Hancock Amendment, which is an amendment to the Missouri Constitution that states, in general, that there can only be a tax increase if the voters approve it.
The judge ruled that Hancock only applies to actions to raise taxes by the Legislative Branch, and because the Collector of Revenue is a member of the Executive Branch, his action to increase the tax “base” is not subject to Hancock.
“Hancock is only future-oriented, and so this is important to the city’s Collector going forward but also important to the viability of Hancock itself,” Milton said.
Schock and Milton plan to press forward on behalf of all teleworking taxpayers. They said they will appeal the denial of class-action status, if necessary. They also plan to continue to fight the Hancock issue.
A spokesperson for the St. Louis Collector of Revenue’s Office released the following statement:
“The judge’s nearly 20-page decision indicates how complex this issue is. We just received the court’s decision this evening. We believe our position is sound, and we are reviewing our options.”