Simplifying State Taxes for the Mobile Workforce

By November 17, 2011Taxation

Bipartisan action in Congress can happen and did occur today as lawmakers in the House Judiciary Committee favorably reported HR 1864, the “Mobile Workforce State Income Tax Simplification Act of 2011.”  This bill represents a commonsense tax simplification for both employers and employees by creating a bright line test to establish fair and uniform rules clarifying that states cannot assess income taxes on non-resident employees who temporarily work in a state.

If the bill is enacted, nonresident employees who work in a state for 30 days or fewer during a calendar year would not have to file a state income tax return or pay state income taxes to the nonresident state. Also, employers would no longer be required to calculate and remit state income tax withholdings for these short work periods.  Some 30 states currently have laws requiring non-resident employees to pay state income taxes based on working only one day in the non-resident state.

The yearly ritual of filing taxes causes enough nail biting and the thought of having to file an additional state income tax return simply because an employee worked one day in a non-resident state seems beyond absurd.  This prudent legislation would eliminate some of the unreasonable tax filing burdens imposed on both employees and employers.  HR 1864 would be a win-win situation bringing common sense tax change for job creators and workers and we will strongly advocate that this legislation be brought before the full House for a vote as soon as possible.

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