Stability Made Simple

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.”