Policy

Get Involved: Tell Congress to Simplify Nonresident Income Tax Laws


by FEI Daily Staff

FEI and nearly 300 companies and organizations have formed the Mobile Workforce Coalition to urge Congress to simplify nonresident income tax laws for America’s traveling workforce.

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States have inconsistent requirements for employees to file personal income tax returns when travelling to a nonresident state for temporary work periods, and for employers to withhold tax on employees who travel outside of their state of residence for temporary work periods. In some cases, the requirements for employees and employers are not the same.

Employees who travel for business purposes are subject to onerous administrative burdens because they may be legally required to file an income tax return in every state into which they traveled, even if they were only there for one day. Similarly, employers are required to incur extraordinary expenses in their efforts to comply with states’ widely divergent withholding requirements for employees’ travel to nonresident states for temporary work periods. More than half of the states that have a personal income tax require employers to withhold tax from a nonresident employee’s wages beginning with the first day the nonresident employee travels to the state for business purposes.

The Mobile Workforce State Income Tax Simplification Act (H.R. 2315 in the U.S. House of Representatives and S. 386 in the U.S. Senate) provides for a uniform, fair and easily administered law that helps to ensure the correct amount of tax is withheld and paid to states, without the undue burden the current system places on employees and employers. The Act provides a uniform 30-day threshold before liability attaches and withholding is required. After 30 days, existing state laws would apply.

Consistent with current law, the Act provides that an employee’s earnings are subject to the full tax in his or her state of residence. Furthermore, nonresident employees who visit a state for longer than 30 days (and are therefore subject to that state’s nonresident filing and withholding rules) will still be able to take a credit against their resident state personal income tax liability for amounts paid to other states.

There is currently a bipartisan group of 163 cosponsors in the House (138) and Senate (25) that support the Mobile Workforce State Income Tax Simplification Act. However, we need you to help us tell Congress about the importance of this legislation to your company and its employees, and to urge your Senators and Representative to cosponsor the bill. The more cosponsors we can add to the bill, the more likely leadership in the House and Senate will make the bill a priority for a vote this year.

To contact your members of Congress directly, we invite you to use the portal on the Mobile Workforce Coalition’s website by clicking here. You will also find more information about the problem, your state’s income tax laws, and the proposed solution on the Mobile Workforce Coalition’s website.

For additional information, contact Karen Lapsevic at 202-626-7809 or klapsevic@financialexecutives.org.