The U.S. House of Representatives passed the Mobile Workforce State Income Tax Simplification Act of 2017, H.R. 1393, by a voice vote on June 20. The bill would simplify state income tax reporting and withholding rules for employees who sometimes work outside their home states and has long been supported by the American Institute of CPAs (AICPA) and the state CPA societies.
“The House’s passage of the Mobile Workforce State Income Tax Simplification Act of 2017 is a victory for taxpayers and their employers,” Barry C. Melancon, CPA, CGMA, president and CEO of the AICPA, stated, in a press release following passage of the bill.
In a June 20 letter to all members of the House urging them to support the legislation, Melancon wrote, “This bill is critically important to thousands of CPA firms and many of their business clients, as well as the thousands of CPAs employed by companies. Small businesses are particularly impacted...Thousands of CPA firms have employees who periodically work in states other than their home state. And these CPA firms have many business clients who have employees who work in more than one state for whom they calculate state tax withholding. CPAs employed by companies with multi-state operations are similarly affected. Because of the myriad of state income tax withholding laws, and varying de minimis exemption periods, compliance is extremely difficult and time consuming.”
H.R. 1393 would create a uniform national standard so that employee earnings would not be subject to state income tax and withholding outside their home state unless the employee worked in a state for more than 30 days during the calendar year. However, under H.R. 1393 notable individuals, such as professional athletes, professional entertainers and public figures, do not qualify for the 30-day de minimis exemption. They would still have to pay tax to the state where they are appearing. Non-headline performers, including dancers and musicians, would be covered by the 30-day national standard.
H.R. 1393 was introduced by Representatives Mike Bishop (R-Mich.) and Hank Johnson (D-Ga.). In the press release, Melancon stated, “We appreciate the leadership shown by Representatives Bishop and Johnson.”
Melancon added, “We urge the Senate to pass its companion bill soon so that thousands of employers and employees can be relieved of the burden imposed by inconsistent state tax laws.” The Senate bill, S. 540, sponsored by Senators John Thune (R-S.D.) and Sherrod Brown (D-Ohio), has 46 bipartisan co-sponsors.