New Hampshire Attorney General Gordon MacDonald has presented Gov. Chris Sununu with a report on how the state can confront — and potentially stop — Massachusetts’ new tax policy targeting former commuters from New Hampshire.

When the COVID-19 lockdown began in March and Gov. Charlie Baker ordered businesses to send workers home, the Massachusetts Department of Revenue issued an order via fiat declaring out-of-state work would be treated as in-state for the purposes of taxation.

Asked about criticism of his muted response to what many believe is mistreatment of New Hampshire workers and violation of his state’s sovereignty, Sununu told NHJournal the DOJ is charting multiple pathways for a challenge.

“First, on constitutionality,” Sununu said. “Whether you can tax somebody who isn’t within your jurisdiction.

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“Then, consistency: the fact that if you’re an out-of-state worker temporarily working in Massachusetts now, you’re not subject to this rule, while folks who were regularly working in Massachusetts but have to work remotely in New Hampshire are having this rule applied to just them.

“And fairness: the fact that individuals were forced by state order to work remotely and then essentially penalized for that. There’s a variety of different areas where the Attorney General is looking,” Sununu said.

Sununu also mentioned the possibility of going to court, though sources close to the matter tell NHJournal that’s not the preferred solution at this time.

Asked about the status of New Hampshire’s review, Senior Assistant Attorney General Jill A. Perlow told NHJournal:

“In terms of the process, the Department of Justice’s Civil Bureau is leading this review, which will involve assessing whether efforts to tax New Hampshire residents conform to the law. At this point, it is premature to draw any conclusions on possible next steps.”

If Sununu decides to take his case to court, it’s likely the issue of sovereignty will be at the heart of any challenge. During his arguments in the South Dakota v. Wayfair case, over the ability of states to force out-of-state businesses to collect their local sales taxes, prominent interstate taxation attorney George Isaacson put state sovereignty at the center of his case.

“Borders count. States exercise their sovereignty based upon borders, territorial limits. It’s a key part of horizontal federalism in this country. So, if there’s going to be some standard that determines when is a company subject to the tax jurisdiction of a state, using the territorial limits of that state makes sense.”

Unfortunately for New Hampshire, the Supreme Court ruled 5-4 in favor of South Dakota and against out-of-state retailers. However, sales taxes and income taxes aren’t the same, and Massachusetts’ actions go beyond Wayfair, taxing activities entirely outside its border.

Grover Norquist, founder and president of Americans for Tax Reform, was more aggressive in his response.

“Massachusetts is trying to use the ‘East Germany’ model of taxation: There is no escape,” Norquist told NHJournal. “They’re essentially admitting they’re a loser state — losing businesses and taxpayers to other, low-tax states with a better quality of life.”

Norquist, who was in Bedford, N.H., Tuesday for a Granite State Taxpayers fundraiser, says this fight is bigger than Massachusetts versus New Hampshire.

“This is an existential threat to the New Hampshire Advantage, but it’s also the first shot in a fight by states like New York and California to change the rules that allow jobs and revenue to flow to other, better-run states. They’ve spent themselves into a hole with incompetence and costly pension systems and they want the rest of us to subsidize commitments they’ve made that they can never meet,” Norquist said.