The House passed legislation this week to simplify the complex tax rules faced by workers who travel across state lines to do business.
The bill has been a priority of the American Institute of CPAs since 2007 and was also passed by the House in 2012 (see House Approves Mobile Workforce Tax Relief Bill). However, the Senate has still not approved the legislation, and with the congressional term coming to an end this year, its prospects are uncertain.
The bipartisan legislation was championed by Rep. Mike Bishop, R-Mich., and Hank Johnson, D-Ga., in the House, and Senators John Thune, R-S.D., and Sherrod Brown, D-Ohio, in the Senate, along with other lawmakers.
The bill, known as the Mobile Workforce State Income Tax Simplification Act of 2015, H.R. 2315, passed by a voice vote Wednesday night, but has attracted 179 co-sponsors in the House from both parties. It would streamline the state income tax code across the country by setting a 30-day threshold before nonresident state income taxes take effect for employees who need to travel for work. An employee’s earnings would still be subject to full taxation in the state of his or her residence, but would only be subject to another state’s taxes if the employee works there more than 30 days in a calendar year.
Many employees are now legally required to file an income tax return in each state where they travel for work, even if it’s only for a single day, while businesses have to comply with each state’s different withholding requirements for employee travel.
“Under current law, some workers must file income tax forms for doing work in states other than where they reside or their employer is headquartered,” Johnson said in a statement. “This is too burdensome and hurts small businesses and individuals. The bipartisan Mobile Workforce legislation not only simplifies the system, but makes it uniform for people who work in multiple jurisdictions.”
AICPA president and CEO Barry Melancon hailed passage of the legislation in the House and said he hoped it would move the legislation forward in the Senate. “We believe House passage sends a strong message to the Senate that this legislation needs to pass before year’s end,” he said in a statement. “The AICPA strongly supports H.R. 2315 and congratulates the House on passing the mobile workforce bill. It is a vital step toward providing relief to taxpayers and their employers from the current maze of inconsistent and confusing state income tax and withholding rules that apply to employees who travel across state lines to temporarily work in another state. The bill strikes a reasonable balance that ensures states can collect the taxes due to them.”
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