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US House Passes Mobile Workforce Act

by Scott Hamilton,, Washington

22 September 2016

On September 21, the US House of Representatives passed the bipartisan Mobile Workforce State Income Tax Simplification Act, which would provide a uniform framework for when states may tax nonresident employees who travel to the taxing state to perform work.

States currently 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. A uniform standard would substantially simplify state income tax law compliance for both employers and employees.

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.

The Act provides that an employee's earnings would remain subject to full tax in the state of his or her residence. An employee would only be subject to another state's taxes if he or she works there more than 30 days per calendar year. Similarly, an employer would not be responsible for withholding on behalf of such an employee who is only temporarily present in the taxing state.

House Judiciary Committee Chairman Bob Goodlatte (R – Virginia) noted that "American small businesses should not face added regulatory burdens just because they must send their employees across state lines to conduct their business. When a small business owner is faced with additional compliance requirements for employees in different states, those costs can add up and ultimately hurt the growth of the business as a whole."

The Bill will now be introduced into the US Senate. The Senate Finance Committee has yet to consider a companion bill, which was referred to it in February last year.

TAGS: individuals | compliance | tax | small business | business | tax compliance | law | employees | legislation | United States | individual income tax | Expats | Working Abroad | Work | Working Abroad | Tax | Working Abroad

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