7Investigates: Telecommuting Taxes

(WHDH) — He has lived and worked in Massachusetts for decades. But his job disappeared because of an obscure state tax law.

Dan Baker drew up the plans for his family’s house himself. For more than 20 years, he lived with his family in Harwich and worked at the Pilgrim Nuclear Power Station in Plymouth, helping to buy the complex parts needed to keep nuclear plants running.

But an obscure Massachusetts tax law cost him his career.

“I just think it’s so wrong,” Baker said.

Pilgrim shut down in June. Months before the closure, the company that ran the nuclear plant had offered to let Baker – and several other employees – keep working for the company remotely from their homes in Massachusetts.

But just weeks before Pilgrim closed for good, Baker got bad news.

“The tax department got wind of it and cautioned that Massachusetts taxes telecommuting,” Baker said. “I couldn’t believe it. I said, ‘That cannot be true. I’ve got to dig into this.’”

Baker was given a choice: Lose his job, or move to Vermont.

“It would just turn our life upside down,” Baker said.

The company that ran Pilgrim found out that even if a company has no physical presence in Massachusetts, and does no business here, if a single employee works anywhere in the Bay State – even from their own home – that company must pay corporate tax here. That means the owner of the plant would have been hit with a big tax bill.

When asked whether Massachusetts is essentially telling Baker to leave the state, his state representative, Rep. Sarah Peake, D-Provincetown, replied, “Yes. Unfortunately, that’s the practical outcome.”

When Baker called Peake’s office about the issue, she was floored that Massachusetts, and many other states, are essentially taxing telecommuting.

“It sounded crazy and it’s antithetical to everything that we’re trying to do,” Peake said.

Peake is now working to find out how many people would be affected if the law were changed, and how much it would cost the state in lost tax revenue. But she’s adamant that Massachusetts should be offering incentives for people to work from home – not stopping them from doing so.

“Every person that moves away – that is a family that’s lost, that’s resources to the community,” Peake said.

Baker stayed in Massachusetts, but was forced to take a severance package. He said he wants the law changed to save the jobs of other workers.

“It prevents jobs in Massachusetts,” Baker said.

Gov. Charlie Baker is pushing tax credits for companies that allow their workers to telecommute – in part, to ease traffic congestion. He said it’s the kind of policy Massachusetts needs.

“In today’s connected world, there probably are many kinds of jobs and employment opportunities where a telecommuting option would make sense,” Gov. Baker said.

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