Please enter your email address to receive a password reminder.
Log into Tax-News+
Legislation has been reintroduced into the United States Congress to simplify state income tax requirements for employees who work multiple days per year outside the state of their residence.
The Mobile Workforce State Income Tax Simplification Act of 2017, introduced simultaneously in the House of Representatives and the Senate on March 7, provides a uniform framework for when states may tax non-resident employees who travel to the taxing state to perform work.
At present, states have widely varying and inconsistent requirements on the withholding of income tax and filing of personal income tax returns when employees travel to another state temporarily. For example, individuals are subject to state tax withholding after working 59 days in Arizona, 15 days in New Mexico, or 14 days in Connecticut, but, depending on their work plans, employees may be legally required to file an income tax return in every state in which they have conducted business, even if they were there for only one day.
A uniform standard would, according to Rep. Mike Bishop (R - Michigan), the sponsor of the House bill, substantially simplify state income tax law compliance for both employers and employees.
"Our state income tax structure is too complicated and costly for today's workforce," said Bishop. "Right now, workers who must travel out of state and their respective employers face dozens of erroneous reporting requirements, many of which depend on varying length of travel and income levels. The goal of our bipartisan legislation is to create one simplified system for Americans to do their state income taxes, eliminating the burdensome paperwork and reducing compliance costs for everyone involved."
Bishop's bill provides that an employee's earnings remain subject to full tax in the state of his or her residence. An employee would only be subject to another state's income taxes if he or she works there more than 30 days per calendar year.
Commenting on the bill, the American Institute of Certified Public Accountants (AICPA) said that it "strongly supports" the proposals.
"This legislation strikes an equitable balance, and we urge Congress to take swift action so the bill can become law and relieve the burden imposed on countless US employers and employees by inconsistent state tax laws," said Barry C. Melancon, President and CEO of the AICPA.
The same bill was approved by the House in September 2016, but was not taken up by the Senate before Congress expired in December. The proposals did, however, attract wide bipartisan support.
IMPORTANT NOTICE: Wolters Kluwer TAA Limited has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
All rights reserved. © 2017 Wolters Kluwer