House passes mobile workforce tax simplification bill

Register now

The House passed legislation Tuesday to simplify state income tax rules for employees who travel across state lines.

The Mobile Workforce State Income Tax Simplification Act of 2017 passed by voice vote in the House, but still awaits action in the Senate, where it has also been introduced.

The bipartisan bill, sponsored in the House by Rep. Mike Bishop, R-Mich., and Hank Johnson, D-Ga., has been a longtime priority of the American Institute of CPAs. The 2017 version of the bill attracted 57 Republican and Democratic cosponsors. It has been introduced and reintroduced in Congress ever since 2006. Last year, it passed the House, but failed to advance in the Senate.

A companion bill, S. 540, has been introduced in the Senate by Sen. John Thune, R-S.D., and Sherrod Brown, D-Ohio. Under the bill, employees would only be subject to another state’s taxes if they worked there more than 30 days per calendar year. An employee’s earnings would still be subject to full tax in their state of residence, however.

“The House has taken a major step toward streamlining the state income tax reporting and filing process today,” Bishop said in a statement Tuesday. “Currently, employers and their traveling employees must navigate their way through a complicated maze of varying state income tax laws when they leave their home state for work. By simplifying these requirements across America, we can reduce compliance costs and confusing paperwork for everyone involved. I applaud the House for passing our bipartisan legislation and urge the Senate to join us in supporting our mobile workforce and economy.”

The AICPA praised lawmakers for once again passing the bill. “The House’s passage of the Mobile Workforce State Income Tax Simplification Act of 2017 is a victory for taxpayers and their employers,” said AICPA president and CEO Barry C. Melancon in a statement. “Enactment of H.R. 1393 would eliminate the need for much of the complex recordkeeping that employers face when their employees cross state lines to work. It also would relieve many workers of the burden of filing state income tax returns for states in which they worked only a few days during the year.”

He noted that the bill would create a uniform national standard, eliminating a compliance maze faced by many employers and employees, who need to keep track of numerous state income tax withholding laws and varying de minimis exemption periods. Employee earnings wouldn’t be subject to state income tax and withholding outside their home state unless the employee worked in a state for more than 30 days during the calendar year. However, professional athletes, professional entertainers and other public figures wouldn’t qualify for the 30-day de minimis exemption. They would still need to pay tax to the state where they are appearing. Non-headline performers, including dancers and musicians, would be covered by the 30-day national standard.

“The AICPA has strongly supported the passage of mobile workforce legislation for many years, and we appreciate the leadership shown by Representatives Bishop and Johnson,” said Melancon. “We urge the Senate to pass its companion bill soon so that thousands of employers and employees can be relieved of the burden imposed by inconsistent state tax laws.”

For reprint and licensing requests for this article, click here.