28 September 2016 House passes the Mobile Workforce State Income Tax Simplification bill — moves now to Senate for consideration On September 21, 2016, the House of Representatives passed the Mobile Workforce State Income Tax Simplification Act of 2015 (H.R. 2315). The bill now moves to the Senate for consideration. As previously reported (Tax Alert 2015-506), last year Senator John Thune (R-South Dakota) and 7 co-sponsors introduced the Senate companion bill, S. 386, Mobile Workforce State Income Tax Simplification Act of 2015. Identical to S. 386, the House bill would simplify and streamline nonresident income tax for individuals and employers by prohibiting states from imposing income tax on individuals who work within a nonresident state for 30 or fewer days in the calendar year. For applicable nonresident employees, employers would be relieved of withholding nonresident income tax and meeting any related information reporting requirements. Recordkeeping would also be simplified by releasing employers from withholding or reporting penalties if they rely on an employee's annual determination of time to be spent working in the nonresident state (assuming there is no fraud or collusion). This is not the first time this bill has seen hopeful progress toward enactment. The House last passed the measure in the 112th Congress (2012) but it was not considered by the Senate before adjournment. A similar outcome is expected this year given the opposition to the legislation by such influential states as New York and other similarly situated states that would be adversely impacted by the loss in tax revenue from nonresidents. Should this bill not be enacted before Congress adjourns for 2016, it will need to be reintroduced next year. Businesses with employees working in more than one state need to continue to be vigilant in meeting their nonresident income tax withholding and information reporting requirements, keeping in mind that currently only 23 states waive their nonresident income tax requirements based on de minimis earnings and/or time spent in the state. Enforcement of employers' withholding and reporting obligations continues to be aggressive in some states. Read more about mobile workforce income tax compliance in our special report. For videos, single-frames and other helpful documents on mobile workforce payroll taxes, visit our website.
Document ID: 2016-1645 | ||||||||||||||||||||
