U.S. Sens. John Thune (R-S.D.) and Sherrod Brown (D-Ohio), members of the tax-writing Senate Finance Committee, today reintroduced the Mobile Workforce State Income Tax Simplification Act, legislation that would simplify and standardize state income tax collection for employees who travel outside of their home state for temporary work assignments. The bill would also help employers who must comply with withholding and reporting requirements. Under current law, individuals and employers face different state income tax reporting requirements in almost every state that vary based on length of stay, income earned, or both.
While some states require state income tax filing for as little as one day of work in the state, the Mobile Workforce State Income Tax Simplification Act would establish a common-sense 30-day threshold to help ensure that an equitable tax is paid to the state and local jurisdiction where the work is being performed while alleviating burdensome tax requirements on employees and employers.
“In an increasingly mobile economy with an increasingly mobile workforce, the lack of consistent standards between states has become an enormous burden for taxpayers who try to comply with the law when they travel across state lines for business,” said Thune. “These compliance requirements cost time and money that could otherwise be spent growing a small business and creating more good-paying jobs. If enacted, this bipartisan legislation would create a clear and universal threshold that would help simplify state income tax filings and make it fairer for residents in states, like South Dakota, that don’t have an income tax.”
“Filing a tax return can already be confusing enough – we shouldn’t make it tougher for folks who do business in multiple states,” said Brown. “With a simple fix, we can make filing taxes easier for workers who travel while also cutting burdensome red tape on businesses so they can focus on job creation instead of keeping up with dozens of state tax requirements.”
The bipartisan Mobile Workforce State Income Tax Simplification Act is supported by over 300 organizations and business groups nationwide, including the South Dakota CPA Society.
Download legislation here.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.