House Passes Mobile Workforce State Income Tax Simplification Act of 2017

(Parker Tax Publishing June 2017)

The House of Representatives has passed the Mobile Workforce State Income Tax Simplification Act of 2017, and a similar bill is expected to pass the Senate. The legislation, which has bipartisan support, is aimed at simplifying the complex tax reporting rules faced by employers and employees as a result of numerous state income tax withholding laws when employees work outside their home states. H.R. 1393 (6/20/17).

On June 20, the House of Representatives passed the Mobile Workforce State Income Tax Simplification Act of 2017. The bill prohibits the wages or other remuneration earned by an employee who performs employment duties in more than one state from being subject to income tax in any state other than:

(1) the state of the employee's residence; and

(2) the state within which the employee is present and performing employment duties for more than 30 days during the calendar year.

The bill exempts employers from state income tax withholding and information reporting requirements for employees not subject to income tax in the state under this bill. For the purposes of determining penalties relating to an employer's state income tax withholding or reporting requirements, an employer may rely on an employee's annual determination of the time expected to be spent working in a state in the absence of fraud or collusion by such employee.

Under the bill, the term "employee" excludes: professional athletes; professional entertainers; production employees who perform services in connection with certain film, television, or other commercial video productions; and public figures who are persons of prominence who perform services for wages or other remuneration on a per-event basis.

A companion bill, S. 540, has been introduced in the Senate and is expected to easily pass.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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