Resolution Supporting the Mobile Workforce State Income Tax Simplification Act
The Resolution supports Congressional enactment of the Mobile Workforce State Income Tax Simplification Act. This Act is designed to simplify the highly complex and widely divergent tax treatment among states of the income workers earn while traveling away from home. It proposes a uniform national standard for the taxation of nonresidents who travel for work in which an employee’s earnings are subject to full tax in his/her State of residence. In addition, under The Act an employee’s earnings would be subject to tax in the nonresident State(s) to which the employee travels regularly for employment purposes.
WHEREAS, we live and work in an increasingly interconnected and mobile world with millions of Americans frequently traveling for work to States in which they do not reside; and
WHEREAS, these workers face highly complex and widely divergent tax treatment of the income they earn while traveling away from home and employers face similarly complex rules governing tax withholding for their traveling employees; and
WHEREAS, this issue affects all employees who travel for work and all employers—for-profit, not-for-profit and government employers alike and full compliance with the current laws is prohibitively expensive, and, for many employers, virtually impossible; and
WHEREAS, some States have thresholds below which nonresident employees are not required to report tax, the majority of States begin taxing nonresidents on the first day of work travel to the State. Similarly, employers are generally required to withhold taxes on these wages beginning on the first day of travel; and
WHEREAS, these laws impose costly administrative burdens on those employees and employers who attempt to comply, with compliance costs that can easily exceed the actual tax due for temporary travel into a nonresident State; and
WHEREAS, in most cases, no tax will ultimately be due, but nevertheless the employer is legally required to withhold taxes from the employee’s wages and the employee must file a tax return in order to receive their tax refund. As more employees and employers work to comply with these laws, additional costs are also borne by States as they process returns where little or no tax is due; and
WHEREAS, a uniform national standard for the taxation of nonresidents who travel for work would substantially reduce these administrative costs and burdens for employees, employers and States; and
WHEREAS, due to the fact that these traveling employees receive a credit on their home State tax returns for taxes paid to other states, an appropriate standard would have little or no revenue impact on most states and bring millions of American workers who are unwittingly flouting tax laws into compliance with them; and
WHEREAS, a uniform national standard would allow employers and their accountants to develop systems that promote compliance for those workers who travel more regularly to States in which they do not reside; and
NOW THEREFORE BE IT RESOLVED that [insert state] acknowledges the benefit of a uniform national threshold for the taxation of mobile workers to the nation’s economy; and
BE IT FURTHER RESOLVED that [insert state] supports Congressional enactment of the Mobile Workforce State Income Tax Simplification Act.
The Mobile Workforce State Income Tax Simplification Act (The Act herein) provides for a uniform, fair and easily administered law and would ensure that the correct amount of tax is withheld and paid to States without the undue burden that the current system places on employees and employers. Consistent with current law, The Act provides that an employee’s earnings are subject to full tax in his/her State of residence. In addition, under The Act, an employee’s earnings would be subject to tax in the nonresident State(s) to which the employee travels regularly for employment purposes. The Act does not preempt State authority to adopt standards that provide mobile workers with additional protection; State laws that provide full reciprocity for workers traveling between specific States would be unaffected by the Act.
Approved by the ALEC Board of Directors on September 16, 2011