(The Center Square) – Taxpayers who worked remotely during the pandemic and paid earnings taxes to the City of St. Louis are eligible for a refund, according to a settlement.
Attorneys Bevis Schock and Mark Milton announced the settlement on Friday, ending a three-year legal battle. They represented six plaintiffs who worked remotely during the pandemic, applied for refunds but were denied by Collector of Revenue Gregory Daly. The attorneys collected no fees for the case.
“The city and the collector have decided now to do the right thing,” Schock said during a press conference.
An appeals court upheld a trial court ruling stating the city can’t charge the 1% earnings tax on non-city residents whose work is performed outside the city.
“My office, along with the city, chose to fight this lawsuit because we believed our actions were consistent with the terms of the statute and the right thing to do on behalf of the people of the City of St. Louis,” Daly said in a statement. “While the Courts affirmed the majority of the collector’s and city’s positions, it determined that remote work for non-city residents would not be subjected to earnings and payroll taxes in the manner in which the city and the collector interpreted the statute.”
A media release from Daly’s office said he had a “statutory duty to collect the tax unless and until a Court told him he did not. While the city and the collector could have sought further review of the Court’s decision, the collector determined he had sufficient guidance from the Courts, and it was time to move forward.”
The appeals court denied a request for class action for all taxpayers.
“The city has essentially given us class action status,” Schock said. “They have waived the statute of limitations.”
The settlement states taxpayers eligible for a refund for remote work in 2020, 2021 and 2022 must file a claim during a 90-day period starting July 1 and ending Sept. 30. The city and the collector also will accept request for refunds already filed.
The attorneys said the city and the collector estimated approximately $25 million in refunds are at stake per year. City officials told multiple media outlets the cost of the refunds will be tens of millions of dollars.
Milton said the tax for remote workers often put employers against employees when it came to withholding taxes from payroll checks. Both attorneys said the city’s legal team was ethical and professional.
“They were all fair minded, followed the rules of court and we obliterated them,” Schock said.
The attorney’s offer to hold a joint press conference announcing the settlement was turned down and Daly and Mayor Tishaura Jones scheduled a press conference on the subject on Monday.
“I think this is good for taxpayers,” Milton said. “It’s good for the rule of law and ultimately it’s good for the City of St. Louis.”
The legislature held special committee hearings and legislation was filed to stop cities from collecting earnings taxes. Kansas City also collects a 1% earnings tax. Jones lifted a hiring freeze when the bill died at the end of the legislative session in May.
