Keeping track of income tax withholding for employees is difficult enough. The task of doing so for employees that travel often and stay in different states for extended periods of time is much more difficult.
While comprehensive tax reform is still on the horizon, Congress took an early step towards this goal by passing legislation that covers employees who cross state lines. The Mobile Workforce State Income Tax Simplification Act of 2017 will ostensibly create a uniform standard that employers can follow in ensuring compliance with state tax laws regarding withholding.
Basically, employees would not be subject to state income taxes in a different state unless they worked for more than 30 days in the state. This ostensibly will simplify tax preparation and compliance by eliminating the various record keeping requirements employers must adhere to for tax purposes. Mobile employees will still be subject to tax laws in their state of residence.
The bill’s sponsors, Mike Bishop (R-Mich) and Hank Johnson (D- Ga.) were joined by 57 Democrat and Republican sponsors. A similar bill is being introduced in the Senate by senators Jon Thune (R-S.D.) and Sherrod Brown (D-Ohio). The bill has been introduced and re-introduced every year since 2006. It still remains to be voted on in the Senate.
In the meantime, it remains to be seen whether the bill will eventually make life easier for businesses and employees to keep accurate records and make proper reporting, but it exemplifies the need for an experienced tax attorney when it comes to handling (and possibly avoiding) tax inquiries.