Bill Simplifies State Tax Reporting for Employees Working in Multiple States

A bipartisan bill introduced in the Senate on November 5 looks to simplify and standardize state income tax collection for employees whose jobs temporarily take them across state lines. The American Institute of CPAs (AICPA), along with more than 250 other organizations and business groups, has expressed its support for the legislation. In a written statement, AICPA President and CEO Barry Melancon, CPA, CGMA, said the bill “strikes a balance between interests of the states in taxing work done within their borders and the needs of businesses to be able to operate efficiently.”

Currently, there are 41 different state income tax reporting requirements that vary based on length of stay (some for as little as one day of work), income earned, or both. The Mobile Workforce State Income Tax Simplification Act (S. 1645), which was introduced by US senators Sherrod Brown (D-OH) and John Thune (R-SD), would establish a 30-day threshold before determining tax liability in a nonresident state. This legislation would also help employers that have withholding and other reporting obligations.

According to Thune, the main goal is “preventing individuals from having to sort through the complicated tax reporting burdens from the multiple states where they travel for work.” He believes, “This legislation will greatly simplify state income tax filings, is fairer to those residents in states without an income tax, and should help to encourage tax compliance.”

IRS Expands Small Business Fast Track Settlement Program Nationwide

The Fast Track Settlement (FTS) program, which is jointly administered by the IRS Small Business/Self-Employed (SB/SE) Division and the IRS Office of Appeals, was expanded nationwide on November 6. The FTS program is a taxpayer-driven approach to settling audit issues that arise during the examination process using alternative dispute resolution techniques. It was designed with the goal of resolving issues within 60 days of acceptance of the required application in Appeals.

The process takes advantage of the mediation skills and settlement authority of the Office of Appeals. However, taxpayers choosing this option still have the right to appeal even if the FTS process is unsuccessful. The IRS created the program with the hope that disputes would be resolved while the examination was still open, thus avoiding subsequent costly appeals and possible litigation.

A taxpayer who is interested in participating in the SB/SE FTS, or who has questions about whether the program is suitable for his or her case, may contact the Examination or Specialty Program group manager assigned to the audit. To apply for the program, the taxpayer and the group manager need to submit Form 14017, Application for Fast Track Settlement, along with the taxpayer's concise response to the IRS’s position. The IRS has provided a short video to further clarify the process.