Washington, D.C.—House Judiciary Committee Chairman Bob Goodlatte (R-Va.) issued the following statement upon House Judiciary Committee approval of the Mobile Workforce State Income Tax Simplification Act of 2017 (H.R. 1393) by a vote of 19-2.
Chairman Goodlatte: “American small businesses are able to grow faster than ever before, and sometimes that requires sending employees out-of-state as the business expands into new markets. When a small business owner is faced with additional compliance requirements for employees working temporarily in different states, those costs can add up, hurting the growth of the business as a whole and penalizing success.
“The Mobile Workforce State Income Tax Simplification Act of 2017 eases the regulatory burdens on small businesses and their employees who work temporarily across state lines, while creating a fair balance with states wishing to collect taxes on income earned in the state.
“This bipartisan bill is one of the tools that we can give our nation’s small businesses to grow and ultimately succeed in the 21st century economy.”
Background: The Mobile Workforce State Income Tax Simplification Act of 2017 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 thirty days or fewer 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 during the calendar year.
- Similarly, an employer is not responsible for withholding on behalf of such an employee who is only temporarily present in the taxing state for thirty days or fewer.