U.S. Sen. John Thune (R-S.D.) today urged Congress to protect doctors and nurses who worked across state lines and those who have been working remotely during the pandemic from surprise state income tax bills. The long-standing issue for the mobile workforce has been heightened due to the pandemic, as medical professionals have traveled to hard-hit areas around the country and more workers have been forced to work remotely. Thune discussed his bipartisan legislation, the Remote and Mobile Worker Relief Act, which would create a uniform standard for mobile workers and how they are taxed and address particular challenges faced by remote and mobile workers as a result of the coronavirus pandemic.
Thune’s remarks below (as prepared for delivery):
“Mr. President, I’m hoping that we will be able to pass a COVID relief bill before Christmas.
“As the leader has said, we don’t need to resolve all of our differences to pass a bill.
“We can pass targeted legislation that focuses on the priorities we all agree need to be addressed.
“I hope members of the Democrat leadership will decide that they’re willing to move forward to meet our country’s most critical COVID priorities.
“Mr. President, on the subject of COVID relief, there’s another issue we should address before the end of the year, and that is tax relief for remote and mobile workers.
“The complicated tax situation facing mobile workers has been an issue for a while now, but it’s been thrown into especially sharp relief by the pandemic.
“As everyone knows, medical professionals from around the country have traveled to hard-hit areas this year to help hospitals deal with the influx of COVID cases.
“But what many people don’t realize is that these medical professionals – like other mobile workers – are likely to face a complicated tax situation this year as a result.
“For the majority of Americans, state income tax is fairly uncomplicated.
“Most Americans work in the same state in which they reside, so there’s no question as to what state will be taxing their income.
“For mobile workers, however – like traveling nurses or technicians, or the medical professionals who responded to COVID in hard-hit states – the situation is a lot more complicated.
“Like most Americans, their income is subject to taxation in the state in which their permanent home is located.
“But any income they earned in a state other than their state of residence is also subject to taxation in the state in which they earned it.
“Now, individuals can generally receive a tax credit in their home state for income tax paid to another state, thus avoiding double taxation of their income.
“But mobile workers’ income tax situation is still extremely complicated, as they generally have to file tax returns in multiple states.
“And it’s made even more complicated by the fact that states have a multitude of different rules governing just when income earned in their state starts to be taxed.
“Some states give up to a 60-day window before income earned by mobile workers in their state is subject to taxation.
“Other states start taxing mobile workers immediately.
“Navigating different states’ requirements can make for a miserable tax season for mobile workers.
“And it can also be a real burden for their employers.
“It’s particularly challenging for smaller businesses, who frequently lack the in-house tax staff and tracking capabilities of larger organizations.
“The situation has long cried out for a solution.
“For the past four Congresses, I’ve introduced legislation – the Mobile Workforce State Income Tax Simplification Act – to create a uniform standard for mobile workers.
“Under my bill, if you spent 30 days or fewer working in a different state, you would be taxed as normal by your home state.
“If you spent more than 30 days working in a different state, you would be subject to that other state’s income tax in addition to income tax from your home state.
“In June of this year, I introduced an updated version of my Mobile Workforce bill – the Remote and Mobile Worker Relief Act.
“Like my original Mobile Workforce bill, the Remote and Mobile Worker Relief Act would create a uniform 30-day standard governing state income tax liability for mobile workers.
“But my new bill goes further and addresses some of the particular challenges faced by mobile and remote workers as a result of the coronavirus.
“The Remote and Mobile Worker Relief Act would establish a special 90-day standard for health care workers who travel to another state to help during the pandemic.
“This should ensure that these workers don’t face an unexpected tax bill for the contributions they make to fighting the coronavirus.
“My new bill also addresses the possible tax complications that could face remote workers as a result of the pandemic.
“During the coronavirus crisis, many workers who usually travel to their offices every day have ended up working from home.
“This doesn’t present a tax problem for most employees, but it does present a possible problem for workers who live in a different state than the one they work in.
“Under current state tax laws, these workers usually pay most or all of their state income taxes to the state in which they earn their income, rather than their state of residence.
“However, now that some workers who usually work in a different state have been working from home, there’s a risk that their state of residence could consider the resulting income as allocated to and taxable by it as well.
“That could mean a higher tax bill for a lot of workers.
“My bill would preempt this problem by codifying the pre-pandemic status quo.
“Under my bill, if you planned to work in North Carolina but had to work from home in South Carolina during the pandemic, your income would still be taxed as if you were going in to the office in North Carolina every day, just as it would have been if the pandemic had never happened.
“Mr. President, relief for mobile workers is a bipartisan idea.
“A version of my original Mobile Workforce bill has passed the House of Representatives multiple times, and the only reason it hasn’t advanced so far in the Senate is because of the opposition of a handful of states – like New York – that aggressively tax temporary workers.
“New York, of course, was the epicenter of the pandemic in the United States early on, and medical professionals from across the country came to New York to work and help out.
“One would think that their presence would be an occasion for profound gratitude.
“But New York Governor Andrew Cuomo apparently also regards them as an opportunity for a tax windfall.
“Despite the fact that these workers provided indispensable help to New York in its worst period during the pandemic, in May Governor Cuomo announced that these workers would nevertheless be subjected to New York’s substantial income tax for the time they spent working in the state.
“Mr. President, it’s unconscionable that we would allow health care professionals who risked their own lives to care for individuals in coronavirus-stricken states to be punished with unexpected tax bills.
“And we need to make sure that Americans who worked from home to help slow the spread of the virus don’t face a complicated tax situation – or an unexpectedly high tax bill – as a result.
“It would be wonderful to see the Democrat leader, who of course hails from New York, speak up to endorse remote and mobile worker relief.
“He should make it clear whether he agrees with Governor Cuomo’s decision to cash in on COVID relief workers’ assistance, or whether he thinks these vital medical professionals should be spared unexpected tax bills.
“I really hope that he is not actively standing in the way of my bill in order to protect Governor Cuomo’s effort to boost New York’s coffers – at health care workers’ expense.
“I encourage him to make it clear where he stands on this issue.
“Mr. President, I intend to do everything I can to ensure that my bill receives a vote in the Senate before Christmas.
“Passing this legislation would spare a lot of workers a lot of misery in April.
“Americans have been through enough over the past year.
“Let’s not add unexpected tax bills to the equation.”