The current tangle of different—and sometimes conflicting— state laws on taxing temporary workers from out-of-state is a growing head ache for U.S. businesses and many companies and groups want to do something about it. Just this week, a group of 195 companies and associations —including many manufacturers – sent a letter to Senate leaders and the Senate Finance Committee leadership urging action on S. 3485, the Mobile Workforce State Income Tax Simplification Act.
This legislation would significantly untangle the current maze of state income tax laws that apply to employees who temporarily work in nonresident states and employers who are responsible for withholding nonresident state income taxes of these traveling employees. The House recognized the absurdity of this patchwork of different state income tax rules and last May passed companion bill HR 1864, which sets a bright line test of 30 days or less before a temporary worker could be required to pay out-of-state income taxes.
Many manufactures and their workers continue to get trapped by onerous compliance burdens and different state income tax liabilities. The compliance burden is particularly problematic for small and medium size companies that do not have in-house tax departments to calculate the employee’s tax liability and the necessary employer’s tax withholding requirements. On behalf manufacturers in all 50 states, we urge Senate passage this year of this bipartisan, common sense tax simplification legislation.
To learn more about the issue, click here for NAM’s explanation.