US Bill Would Simplify Multistate Workers’ Taxation
The bipartisan Mobile Workforce State Income Tax Simplification Act, which which would simplify tax reporting requirements for those workers employed in multiple state US jurisdictions, has been introduced into the House of Representatives by Hank Johnson (D – Georgia) and Mike Bishop (R – Michigan).
States currently have widely varying and inconsistent requirements on employers to withhold income tax and to file personal income tax returns when traveling to a state temporarily where they are non-resident.
Employees who travel outside of their state of residence for business purposes may be subject to onerous administrative burdens because, in addition to filing federal and resident state income tax returns, they may also be legally required to file an income tax return in every other state they have conducted business, even if they were there for only one day.
The Act provides that an employee’s earnings remain subject to full tax in the state of his or her residence. An employee would only be subject to another state’s taxes if he or she works there more than 30 days per calendar year.
“The tax system is already too complicated as it is,” Johnson said. “This important bipartisan legislation simplifies the tax code and would help Americans who work across multiple jurisdictions from being taxed by state and local governments other than the places in which they live or perform duties over an extended period.”
“If signed into law, it would not just simplify the tax burden, but protect workers and businesses – large and small – from the costs of compliance with the hodgepodge of 50 different tax systems, thus enhancing investment and productivity,” he continued. “It will vastly simplify the patchwork of existing inconsistent and confusing state rules. It would also reduce administrative costs to states and lessen compliance burdens on consumers.”