Washington, D.C.—Today House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and the bill’s sponsor Rep. Mike Bishop (R-Mich.) issued the following statements upon the passage of the Mobile Workforce State Income Tax Simplification Act of 2015 (H.R. 2315), by the House of Representatives by voice vote.
Chairman Goodlatte: “American small businesses should not face added regulatory burdens just because they must send their employees across state lines to conduct their business. When a small business owner is faced with additional compliance requirements for employees in different states, those costs can add up and ultimately hurt the growth of the business as a whole.
“This bill also eases the compliance burden on hard-working Americans. One business owner told the Judiciary Committee that the compliance burdens from the patchwork of state laws falls on his employees, who “make less than $50,000 per year and have limited resources to seek professional advice.”
“The Mobile Workforce State Income Tax Simplification Act of 2015 eases the regulatory burdens on small businesses and their employees who work across state lines, while creating a fair balance with states wishing to collect taxes on income earned in the state.”
Congressman Bishop: “With so much red tape interwoven in today’s tax code, our Mobile Workforce bill is a commonsense way to cut through the clutter and simplify the filing process.
“By streamlining these requirements across states, we can reduce compliance costs and confusing paperwork for employees and employers alike. I urge the Senate to take up this bipartisan legislation to support our traveling workforce and help businesses grow and save.”
Background: The Mobile Workforce State Income Tax Simplification Act of 2015 is a bipartisan measure, which provides a clear, uniform framework for when states may tax nonresident employees who travel to the taxing state to perform work. In particular, the bill prevents states from imposing income tax compliance burdens on nonresidents who work in a foreign state for fewer than 31 days in a year. This uniform standard would substantially simplify state income tax law compliance for both employers and employees.
- Forty-three states and the District of Columbia levy a personal income tax on wages and partnership income.
- The state tax laws that determine when a nonresident must pay the foreign state’s income tax, and when employers must withhold this tax, are numerous and varied.
- The bill provides that an employee is not subject to income tax in a nonresident state unless the employee has worked for more than 30 days in that jurisdiction.
- Similarly, an employer is not responsible for withholding on behalf of such an employee who is only temporarily present in the taxing state.