Businesses, including small businesses and family businesses that operate interstate, are subject to a significant regulatory burden with regard to compliance with nonresident state income tax withholding laws. Rep. Howard Coble, a Republican from North Carolina, and Rep. Hank Johnson, a Democrat from Georgia, have introduced H.R. 1129, the Mobile Workforce State Income Tax Simplification Act of 2013, to address this problem.
The AICPA supports H.R. 1129 because a uniform national standard would eliminate an unnecessary burden on small business and the bill strikes a balance between interests of the states in taxing work being done within their borders and the needs of businesses to be able to operate efficiently, especially in the current economic climate.
There are 41 states that impose a personal income tax on wages and partnership income, and there are many differing tax requirements regarding the withholding for income tax of nonresidents among those 41 states. Having a uniform national standard for state nonresident income tax withholding would significantly ameliorate the current complex system of nonresident income tax withholding laws and increase compliance.
H.R. 1129 would create a uniform national standard and limited state or local taxation of the compensation of any employee who performs duties in more than one state or locality to: (1) the state or locality of the employee's residence; and (2) the state or locality in which the employee is physically present performing duties for more than 30 days.
H.R. 1129 is the same bill sponsored by Reps. Coble and Johnson in the last Congress. That measure passed the House but stalled in the Senate. Sen. Sherrod Brown (D-OH) and former Sen. Kay Bailey Hutchison (R-TX) sponsored the same legislation in the Senate in the last Congress.
Copy of Legislation
A copy of the bill is available on the Library of Congress's THOMAS website, by using the advanced search function and searching for H.R. 1129 by bill number.
112th Congress Issue Paper: Background, AICPA Position, and AICPA Legislative Recommendation Regarding Workforce Mobility
November 15, 2011 AICPA letter to all Members of the House Judiciary Committee
May 25, 2011 AICPA Written Testimony before the House Judiciary Subcommittee on Commercial and Administrative Law on H.R. 1864, the "Mobile Workforce State Income Tax Simplification Act of 2011"
November 1, 2007 AICPA Written Testimony before the House Judiciary Subcommittee on Commercial and Administrative Law on H.R.3359, The “Mobile Workforce State Income Tax Fairness and Simplification Act of 2007”
Outside Media Coverage
March 22, 2010 New York Times Economix Blog Article, Taxes, Taxes Everywhere
Director, Congressional Affairs