U.S. Sens. John Thune (R-S.D.) and Sherrod Brown (D-Ohio), members of the tax-writing Senate Finance Committee, today introduced the Mobile Workforce State Income Tax Simplification Act, legislation that would simplify and standardize state income tax collection for employees who travel outside of their home state for temporary work assignments. The bill would also help employers who must file withholdings and reporting requirements. Currently, individuals and employers face up to 41 different state income tax reporting requirements that vary based on length of stay, income earned, or both.
“Our increasingly mobile workforce has created opportunities for businesses to grow and expand throughout the nation, but complex state tax reporting requirements place costly and time-consuming burdens on businesses with employees that work in multiple states,” said Thune. “Our legislation would establish a clear 30-day threshold test for state income tax purposes, preventing individuals from having to sort through complicated tax reporting burdens from the multiple states where they travel for work. This legislation will greatly simplify state income tax filings, is fairer to those residents in states without an income tax, and should help to encourage tax compliance.”
“This common-sense legislation will help simplify and standardize tax filing for employees and employers that conduct business in multiple states,” Brown said. “This is a great example of government working to reduce burdensome and confusing barriers to help ease the cost of doing business for employers and their workers.”
“Retailers welcome the introduction of this bill,” said National Retail Federation Vice President and Tax Counsel Rachelle Bernstein. “The current morass of state laws dealing with state income tax burdens for workers on business travel outside their home states creates confusion and undue compliance burdens for both employees and employers. This burden can be particularly onerous for the retail industry. Buyers for both large and small retailers frequently travel out of state to visit vendors or attend trade or fashion shows. Federal law to provide uniform rules for when these employees must file income tax returns in another state would greatly simplify this burden.”
“The current system is especially harmful to residents of states like South Dakota with no personal income tax, as these workers are forced to pay an out-of-pocket tax with no ability to obtain a home state credit or offset,” said Laura Coome, Executive Director of the South Dakota CPA Society. “This legislation would enhance compliance with state personal income tax laws and greatly simplify the onerous burdens placed on employees who travel outside of their resident states for temporary periods and on employers who have corresponding withholding and reporting requirements.”
“CPAs are extremely grateful to Senator Brown and Senator Thune for introducing Mobile Workforce legislation again in this Congress,” said Scott D. Wiley, CAE, president and CEO, The Ohio Society of CPAs. “It provides much-needed relief to businesses across the United States from the current web of inconsistent state income tax and withholding rules weighing down our nation’s employers and employees. This bill is an important step forward and extends the benefits businesses will see through a similar municipal income tax reform legislation passed in Ohio.”
While some states require state income tax filing for as little as one day of work in the state, the Mobile Workforce State Income Tax Simplification Act would establish a common-sense, 30-day threshold to help ensure that an equitable tax is paid to the state and local jurisdiction where the work is being performed while alleviating employees and employers from burdensome tax requirements.The Mobile Workforce State Income Tax Simplification Act is supported by over 250 organizations and business groups.