BOSTON (CBS/AP) — The Supreme Court on Monday refused to allow New Hampshire to sue neighboring Massachusetts over an income tax dispute involving people who have been working from home during the coronavirus pandemic.

Last year the Granite State announced plans to file a lawsuit against its neighbor over its decision to continue taxing New Hampshire residents who normally work in Massachusetts but have worked remotely during the coronavirus pandemic.

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The Massachusetts regulation required income earned by non-resident employees who work remotely to be taxed. It also says if an employee worked in Massachusetts prior to the COVID-19 state of emergency, their income will “continue to be treated as Massachusetts source income.”

New Hampshire wanted the justices to declare Massachusetts’ collections unconstitutional and order a refund to people who are paying taxes of just over 5%.

Only justices Clarence Thomas and Samuel Alito said they would have granted permission for New Hampshire to sue Massachusetts in court.

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NH Gov. Chris Sununu had previously said “we are going to fight this unconstitutional attempt to tax our citizens every step of the way, and we are going to win.” He criticized the court’s ruling Monday.

“By siding with the Biden Administration and allowing inappropriate taxation of NH citizens, the Supreme Court is setting a costly precedent,” Sununu said in a statement. “This decision will have lasting ramifications for thousands of Granite State residents.”

About 100,000 New Hampshire residents regularly commute to Massachusetts for work. Massachusetts has a 5.05% income tax. New Hampshire has no income tax.

The Massachusetts regulation was set to remain in effect until 90 days after the coronavirus state of emergency in Massachusetts is lifted. The state of emergency was allowed to expire on June 15.

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(© Copyright 2021 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)

CBSBoston.com Staff