A bicameral bill reintroduced in both the House and Senate this week aims to simplify state income tax requirements for employees who work multiple days per year outside their home state.
The Mobile Workforce State Income Tax Simplification Act of 2017 was introduced in the House by Reps. Mike Bishop (R-MI) and Hank Johnson (D-GA), and in the Senate by Sens. John Thune (R-SD) and Sherrod Brown (D-OH).
“With a simple fix, we can make filing taxes easier for workers who travel while also cutting burdensome red tape on businesses so they can focus on job creation instead of keeping up with dozens of state tax requirements,” Brown said.
Currently, all states have different income tax reporting requirements for employees who work part-time in their states on temporary assignments. Some states require employees who work just a few days a year there to file income tax forms in that state. Businesses must also comply with the states’ varying withholding requirements for their employees’ travel.
This legislation would establish a minimum threshold of 30 days, which means 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. An employee’s earnings remain subject to full tax in the state of his or her residence.
“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 said.
The bill was first introduced in the 114th Congress and advanced the House in September 2016.
“This important bipartisan effort streamlines the tax code, while reflecting the needs of a various industries throughout the country,” Johnson said. “Simplifying our tax system in this manner will help Americans who work across multiple jurisdictions from paying local or state taxes in places other than where they live or work for an extended period of time.”
More than 300 organizations have endorsed the legislation.
“In an increasingly mobile economy with an increasingly mobile workforce, the lack of consistent standards between states has become an enormous burden for taxpayers who try to comply with the law when they travel across state lines for business,” Thune said. “These compliance requirements cost time and money that could otherwise be spent growing a small business and creating more good-paying jobs.”