    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

          MOBILE WORKFORCE STATE INCOME TAX SIMPLIFICATION ACT OF 2011

    =======================================================================

                                    HEARING

                                   BEFORE THE

                       SUBCOMMITTEE ON COURTS, COMMERCIAL
                             AND ADMINISTRATIVE LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 1864

                                   __________

                            WEDNESDAY, MAY 25, 2011

                                   __________

                               Serial No. 112-56

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

                                   ______

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                           COMMITTEE ON THE JUDICIARY

                          LAMAR SMITH, Texas, Chairman
    F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
        Wisconsin                        HOWARD L. BERMAN, California
    HOWARD COBLE, North Carolina         JERROLD NADLER, New York
    ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT,
    BOB GOODLATTE, Virginia                  Virginia
    DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
    STEVE CHABOT, Ohio                   ZOE LOFGREN, California
    DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
    MIKE PENCE, Indiana                  MAXINE WATERS, California
    J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
    STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
    TRENT FRANKS, Arizona                  Georgia
    LOUIE GOHMERT, Texas                 PEDRO PIERLUISI, Puerto Rico
    JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
    TED POE, Texas                       JUDY CHU, California
    JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
    TIM GRIFFIN, Arkansas                LINDA T. SANCHEZ, California
    TOM MARINO, Pennsylvania             DEBBIE WASSERMAN SCHULTZ, Florida
    TREY GOWDY, South Carolina
    DENNIS ROSS, Florida
    SANDY ADAMS, Florida
    BEN QUAYLE, Arizona
    [Vacant]

          Sean McLaughlin, Majority Chief of Staff and General Counsel
           Perry Apelbaum, Minority Staff Director and Chief Counsel
                                     ------

           Subcommittee on Courts, Commercial and Administrative Law

                     HOWARD COBLE, North Carolina, Chairman

                   TREY GOWDY, South Carolina, Vice-Chairman

    ELTON GALLEGLY, California           STEVE COHEN, Tennessee
    TRENT FRANKS, Arizona                HENRY C. ``HANK'' JOHNSON, Jr.,
    DENNIS ROSS, Florida                   Georgia
    [Vacant]                             MELVIN L. WATT, North Carolina
                                         MIKE QUIGLEY, Illinois

                          Daniel Flores, Chief Counsel

                          James Park, Minority Counsel

                                C O N T E N T S

                                  ----------

                            WEDNESDAY, MAY 25, 2011

                                                                       Page

                                    THE BILL

    H.R. 1874, the ``Mobile Workforce State Income Tax Simplification
      Act of 2011''..................................................     3

                               OPENING STATEMENTS

    The Honorable Howard Coble, a Representative in Congress from the
      State of North Carolina, and Chairman, Subcommittee on Courts,
      Commercial and Administrative Law..............................     1
    The Honorable Steve Cohen, a Representative in Congress from the
      State of Tennessee, and Ranking Member, Subcommittee on Courts,
      Commercial and Administrative Law..............................     9
    The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in
      Congress from the State of Georgia, and Member, Subcommittee on
      Courts, Commercial and Administrative Law......................    10

                                   WITNESSES

    Jeffrey A. Porter, Owner, Porter & Associates, CPAs, Huntington,
      West Virginia, on behalf of the American Institute of Certified
      Public Accountants
      Oral Testimony.................................................    12
      Prepared Statement.............................................    15
    Patrick T. Carter, Director, Delaware Division of Revenue,
      Wilmington, Delaware, on behalf of the Federation of Tax
      Administrators
      Oral Testimony.................................................    21
      Prepared Statement.............................................    23
    Joseph R. Crosby, Chief Operating Officer and Senior Director of
      Policy, Council on State Taxation, Washington, DC
      Oral Testimony.................................................    31
      Prepared Statement.............................................    33

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable Steve Cohen, a Representative
      in Congress from the State of Tennessee, and Ranking Member,
      Subcommittee on Courts, Commercial and Administrative Law......    52
    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan, and
      Ranking Member, Committee on the Judiciary.....................    56
    Prepared Statement of the Honorable Henry C. ``Hank'' Johnson,
      Jr., a Representative in Congress from the State of Georgia,
      and Member, Subcommittee on Courts, Commercial and
      Administrative Law.............................................    57
    Letter from Allan J. Stein, Vice President-Associate General
      Counsel, and Melissa W. Sheik, Vice President-Federal Affairs,
      American Insurance Association (AIA)...........................    58
    Letter from William Dunn, CPP, Senior Manager of Government
      Relations, American Payroll Association (APA)..................    60
    Letter from Keith G. Butler, Senior Vice President, Tax, Duke
      Energy.........................................................    63
    Letter from Jana L. Haynes, Director of Taxes, Hormel Foods
      Corporation....................................................    64
    Letter from Robert Melendres, Chief Legal Officer & Corporate
      Secretary, International Game Technology (IGT).................    66
    Prepared Statement of Lockheed Martin Corporation................    67
    Letter from Mary Ellen Peppard, Manager, Government Relations, NJ
      Chamber of Commerce............................................    69
    Letter from Nancy L. Miller, Assistant Treasurer, Unisys
      Corporation....................................................    70
    Submission from the Council On State Taxation (COST), and the
      American Payroll Association (APA).............................    71

          MOBILE WORKFORCE STATE INCOME TAX SIMPLIFICATION ACT OF 2011

                                  ----------

                            WEDNESDAY, MAY 25, 2011

                  House of Representatives,
                        Subcommittee on Courts,
                     Commercial and Administrative Law,
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to call, at 1:27 p.m., in
    room 2141, Rayburn House Office Building, the Honorable Howard
    Coble (Chairman of the Subcommittee) presiding.
        Present: Representatives Coble, Gowdy, Franks, Cohen, and
    Johnson.
        Staff Present: (Majority) Travis Norton, Counsel; Johnny
    Mautz, Counsel; Allison Rose, Professional Staff Member; Anne
    Woods Hawks, Professional Staff Member; Ashley Lewis, Clerk;
    (Minority) Norberto Salinas, Counsel; and James Park, Counsel.
        Mr. Coble. Ladies and gentlemen, good to have all of you
    here, by the way. And I have been told that there is a vote on
    now, and I have furthermore been told that it may last as long
    as an hour, an hour and a half.
        And I apologize to you all for that, but I think with that
    in mind, our best bet is to just stand in recess until that
    last vote is taken.
        Staff will be here to advise the hearing room attendees
    what will happen. So I apologize to you for that, but best-laid
    plans of mice and men, you know, sometimes go awry.
        So if you all will just stand easy and see you in an hour,
    an hour and a half. And meanwhile, we will stand in recess
    until that time.
        Thank you.
        [Recess.]
        Mr. Coble. I apologize to you all for the untimely delay.
    Thank you for your patience, and we will get underway here as
    soon as another Member shows up.
        Thank you.
        [Pause.]
        Mr. Coble. We will come out of recess and reconvene, and
    again, thank you all for your patience.
        And before I give my opening statement, I want to take the
    liberty of extending a sincere happy birthday greeting to the
    distinguished gentleman from Memphis, and I will not divulge
    the age, but he is still a young man.
        Mr. Cohen. Thank you, thank you, thank you.
        Mr. Coble. Ladies and gentlemen, on the way back to
    Washington, D.C., this past weekend, I looked around in the
    airport back home and saw a number of business travelers
    getting ready to board airplanes, leaving North Carolina to
    perform work in another State. This occurs practically every
    day in America, involving every State in America.
        The American workforce is more mobile in the 21st century
    than it has ever been. Nonetheless, a patchwork of State income
    tax laws place a significant burden on people who travel for
    work and their employers, many of which are small businesses.
    Currently, 41 States tax the income earned by nonresidents for
    worked performed there.
        I do not take issue with the right of those States to
    impose an income tax, but I am concerned that the disparity of
    tax rules among those States is, in many instances, damaging
    small businesses and stifling economic growth. For example,
    some States require a nonresident to pay income tax if he or
    she works in that State for just 1 day. Other States do not
    collect tax until the nonresident works for a certain number of
    days in the jurisdiction.
        Small businesses must expend considerable resources just to
    figure out how much they must withhold for their traveling
    employees in 41 different jurisdictions. Employees are also
    confused about when their tax liability is triggered and in
    which States they must file a tax return.
        Such wide variety among State income tax laws is
    unnecessarily cumbersome. Many nonresidents who file a tax
    return in a State end up getting all of their tax refunded to
    them. In those cases, all of the time and energy that employees
    and small businesses spend figuring out where the taxes are
    owed and filling out income tax returns is ultimately wasted.
        On May 12, I introduced H.R. 1864, the Mobile Workforce
    State Income Tax Simplification Act, along with the gentleman
    from Georgia, Mr. Johnson, a Member of this Subcommittee who
    has worked on this bill previously.
        The bill we have introduced would establish a uniform
    Federal framework for State income tax liability. It would
    simplify State income tax rules for employees and employers by
    requiring that a nonresident employee perform work in a State
    for at least 30 days before tax liability or employer
    withholding is triggered. States would then remain free to
    impose any tax rate they choose.
        Small businesses are the engine that will drive the
    American economy. Tax simplification at both the Federal and
    State levels will allow small businesses to predict their
    liabilities with accuracy and expend fewer resources
    researching the nuances of each State's tax law. The money they
    would have spent hiring accountants and tax attorneys can then
    be spent in creating meaningful jobs and growing the economy.
        I look forward to hearing from our distinguished panel of
    witnesses today and in working with Mr. Johnson furthermore to
    enact a Federal framework for State income tax simplification.
        I am now pleased to recognize the distinguished gentleman
    from Memphis, the birthday boy, Mr. Cohen, for his opening
    statement, at which time I will then recognize Mr. Johnson.
        [The bill, H.R. 1864, follows:]

                                   __________
        Mr. Cohen. Thank you, Mr. Chairman.
        I appreciate your recognition and your greetings and your
    birthday greetings. Every birthday is a good birthday.
        Mobility has long been the lifeblood of the modern American
    economy. Entire metropolitan areas depend on regional
    workforces where workers regularly cross State lines. Indeed,
    in my home city of Memphis, we buttress Mississippi and
    Arkansas, and lots of folks work in those States by automobile,
    and others fly through our great hub airport to other places in
    the country and do business.
        Businesses rely sometimes on their most skilled employees
    to travel, spend extended period of times away from home to
    work on projects. For such employers, skills and expertise are
    essential. FedEx sends folks all around the country all the
    time, doing work for FedEx and coming back.
        States, meanwhile, have a legitimate interest in taxing
    income earned within their borders, including income earned by
    nonresidents. Unfortunately, this sometimes leads to some
    confusion regarding when and where a nonresident is required to
    pay income tax and under what circumstances an employer is
    obliged to withhold such taxes and report relevant tax
    information to the relevant government agency.
        H.R. 1864, the Mobile Workforce State Income Tax
    Simplification Act of 2011, which should have a simplified
    title, is designed to address these concerns. The bill would,
    among other things, allow a State to impose income taxes on
    nonresidents when the nonresident is present and performing
    employment duties for more than 30 days during the calendar
    year in which the income was earned.
        The bill also clarifies employers' withholding and
    reporting obligations by specifying that an employer may either
    rely on an employee's determination of the time the employee
    expects to perform duties in a given State or use data from a
    time and attendance system which tracks where an employee
    performs duties on a daily basis in order to determine the
    liability obligations that that person might have to that
    particular governmental jurisdiction.
        My home State of Tennessee has no State income tax and has
    a very regressive tax code. But that is neither here nor there.
    So it does not stand to lose in any particular way if this
    legislation were enacted, as some other State's taxing
    authorities assert with respect to their States.
        I think this legislation, if enacted, would have at least
    some positive impact on the Tennessean residents who work
    outside Tennessee for 30 or fewer calendar days in a given tax
    year, as they could avoid paying State income taxes altogether,
    and one of the reasons why some people do come to Tennessee and
    live besides the wonderful artesian water that we have, the
    barbecue, the basketball, and the hills in east Tennessee, and
    the other splendid activities, especially the people and those
    that live in the 9th District.
        This bill could also provide some useful clarification for
    Tennessee businesses that depend on sending employees out of
    State. I applaud the proponents of this bill for amending its
    language from the language originally introduced back in the
    110th Congress, when I was a cosponsor, specifically in
    response to the concerns raised by the States.
        Most significantly, the original language required the
    nonresident employee work more than 60 calendar days before a
    State could tax that nonresident. The revised language, as
    noted, reduces that threshold by half to 30 days.
        My understanding is the States and the proponents of H.R.
    1864 are very close to an agreement on this matter, and the
    only remaining major sticking point appears to be the
    appropriate threshold number of days. I have been told the
    States are pushing for a 20-day threshold. That difference
    between 20 and 30 is not insurmountable. It is 10, just into
    double figures. So that could be worked out, I feel confident.
        This Subcommittee has considered this issue for more than 4
    years now. I strongly urge the States and other interested
    parties to reach a consensus on this matter soon. I would like
    to see the consensus worked out soon so this can be a very
    strong bipartisan bill where I work with my colleague who
    wishes me birthday greetings as a co-prime sponsor and see that
    this bill does become law and save burdensome work and make my
    accountant, Michael Uiberall, who e-mailed me today, happy.
    [Laughter.]
        With that, I would surrender the balance of my time.
        Mr. Coble. I thank the distinguished gentleman from
    Tennessee.
        Normally, we restrict opening statements to the Chairman
    and the Ranking Member. But in view of the distinguished
    gentleman from Georgia's activity in this bill, I am pleased to
    recognize Mr. Johnson for his opening statement.
        Mr. Johnson. Thank you, Representative Coble, my good
    friend.
        And happy birthday to you, happy belated birthday to you.
        I am pleased to work with you in the 112th Congress on the
    Mobile Workforce State Income Tax Simplification Act of 2011,
    H.R. 1864. This is an important bill that will help workers and
    businesses, large and small. I have been working on this bill
    since I was a freshman in the 110th Congress, and I am pleased
    to have introduced it this Congress with you.
        We live in an ever-increasing mobile economy. Every day,
    thousands of Americans travel outside of their home State on
    business trips for brief periods of time. Many States have
    their own set of requirements for filing nonresident individual
    income tax returns that most Americans are not aware of and
    don't understand.
        For example, if an Atlanta-based employee of a Chicago
    company travels to headquarters on a business trip once a year,
    that employee would be subject to Illinois tax, even if his
    annual visit only lasts a day. However, if that employee
    travels to Maine, her trip would only be subject to tax if her
    trip lasts for 10 days. If she travels to New Mexico on
    business, she would only be subject to tax if she was in the
    State for 15 days.
        The Mobile Workforce State Income Tax Simplification Act
    would fix this problem by establishing a fair and uniform law
    that would ensure the correct amount of tax is withheld and
    paid to the States without the undue burden of the current
    dysfunctional system.
        Consistent with current law, H.R. 1864 provides that an
    employee's earnings are subject to full tax in his or her State
    of residence. In addition, this bill would only subject
    employees who perform employment duties in a nonresident State
    if they work in that State for more than 30 calendar days.
        At a time when more and more Americans find themselves
    traveling for their jobs, this bill is a common-sense solution
    that helps workers who are employed in multiple jurisdictions
    by simplifying their tax reporting requirements.
        We are all aware there is a problem, and this bill is the
    solution. It not only simplifies the system, but makes it fair
    for people who work in multiple jurisdictions, and it assists
    businesses as they comply with complex tax laws.
        In an economy that is beginning to recover from the
    devastating recession, this bill makes sense. After 3 years of
    championing this issue, I appreciate this Subcommittee's
    interest in this legislation. I would be remiss not to
    recognize former Representative Chris Cannon of Utah, who was
    the original proponent of this legislation, and he entrusted it
    to me. And now I am working with Mr. Coble to get it done.
        So I look forward to working with all of you to move the
    bill through Congress and to the President's desk for his
    signature.
        Thank you, Mr. Chairman, and I yield back.
        Mr. Coble. Thank you, Mr. Johnson.
        And we had the distinguished gentleman from South Carolina,
    Mr. Gowdy, was with us, and I presume he will be back.
        Before we hear from our distinguished panel, the gentleman
    from Tennessee just said to me, he said, ``Howard, I hope you
    can give me these greetings 20 years from now.'' Twenty years
    from now, Mr. Cohen, I will probably be in sweet Beulah land,
    or at least I hope that is where I am.
        Mr. Cohen. Mr. Chairman, I hope not, and I doubt it. In the
    New York Times today, I read about a lady who I wish I would
    have married. It was one of the mistakes, I have made some
    mistakes with women before. I should have married this woman.
    She died at 104 with a half billion dollars. [Laughter.]
        Mr. Coble. Well, maybe I won't be in sweet Beulah land.
    [Laughter.]
        But it is always good to hear that.
        Good to have our distinguished panel with us. I will give
    you a little background about each of them.
        Mr. Jeffrey A. Porter is the founder and owner of Porter &
    Associates, CPAs, a local firm in Huntington, West Virginia,
    which concentrates in the providing of tax planning and
    business advisory services for small to medium-sized
    businesses.
        Today, he is testifying on behalf of the American Institute
    of Certified Public Accountants, a group in which he has been
    active for over 20 years. He is currently serving as a member
    of the Tax Executive Committee for a second term.
        Mr. Porter is a member of the West Virginia Society of
    CPAs. He holds a bachelor's degree in business administration
    from the Marshall University and a master of taxation from the
    University of Tulsa.
        Mr. Patrick Carter currently serves as the director of the
    Delaware Department of Revenue. His testimony today is on
    behalf of the Federation of Tax Administrators, a group he
    currently serves as president. As director, he oversees a staff
    of 200 who are responsible for the administration and
    enforcement and collection of the personal and business income
    taxes for the State of Delaware.
        Prior to becoming director, Patrick served as the deputy
    director of the Delaware Division of Revenue from 1994 to 2001.
    Prior to his public service, Mr. Carter was a CPA in the
    private sector. He received his MBA in finance from Indiana
    University and his bachelor's degree in accounting from the
    University of Delaware. He is a member of the Delaware Society
    of CPAs.
        Mr. Joseph Crosby is the chief operating officer and senior
    director of policy at the Council on State Taxation, or COST,
    here in Washington, D.C. The council is a nonprofit trade
    association consisting of nearly 600 multi-State corporations
    engaged in interstate and international business. Its objective
    is to preserve and promote equitable and nondiscriminatory
    State and local taxation of multijurisdictional business
    entities.
        Prior to joining COST, Mr. Crosby was the national director
    of State legislative service for Ernst & Young in Washington,
    D.C. He has been quoted as an expert in State and local tax
    policy in several major media outlets. Before attending
    American University for graduate coursework in economics, Mr.
    Crosby earned his bachelor's degree in history at the Loyola
    Marymount University in Los Angeles.
        Gentlemen, good to have each of you with us. Good to have
    those in the audience with us as well.
        Mr. Porter, we will start with you. And if you would,
    gentlemen, on your panel, you will see a panel that will
    illuminate with a green light. When that green light turns to
    amber, that tells you that the ice on which you are skating is
    getting thin, and you will have another minute to go. And if
    you could wrap up on or about 5 minutes, we would appreciate
    that.
        Mr. Porter, we will start with you.

      TESTIMONY OF JEFFREY A. PORTER, OWNER, PORTER & ASSOCIATES,
      CPAS, HUNTINGTON, WEST VIRGINIA, ON BEHALF OF THE AMERICAN
               INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

        Mr. Porter. Thank you, Mr. Chairman and Members of the
    Subcommittee.
        We appreciate the opportunity to testify today in support
    of H.R. 1864, the Mobile Workforce State Income Tax
    Simplification Act of 2011.
        My name is Jeff Porter. I am a sole practitioner in
    Huntington, West Virginia, with Porter & Associates and
    currently serve on the Tax Executive Committee of the American
    Institute of Certified Public Accountants.
        At Porter & Associates, we provide accounting and tax
    services to approximately 100 local businesses and prepare
    close to 900 individual income tax returns annually. We have
    clients in a wide range of industries, including contracting,
    wholesale and retail trade, medical, law, the food industries,
    and many others. Today, I am pleased to testify on behalf of
    the AICPA.
        The AICPA is a national professional organization of
    certified public accountants, comprised of approximately
    370,000 members. The AICPA members advise clients on Federal,
    State, and international tax matters and prepare income tax
    returns for millions of Americans.
        The members of the AICPA also provide services to
    individuals, tax exempt organizations, small and medium-sized
    businesses, as well as America's largest businesses.
        The AICPA supports H.R. 1864. Businesses, including small
    businesses and family businesses, that operate interstate are
    subject to significant regulatory burden with regard to
    compliance with nonresident State income tax withholding laws.
    These administrative burdens take existing resources from
    operational aspects of the business and may require the hiring
    of additional administrative staff or outside experts in order
    to meet the demands of compliance.
        The business costs could be passed on to customers and
    clients. But either way, they incur cost to someone in the
    stream of commerce. Having a uniform national standard for
    State resident income tax withholding and having a de minimis
    exemption for the multi-State assessment of State nonresident
    income tax would significantly mitigate these burdens.
        Accounting firms, including small firms, do a great deal of
    business across State lines. Many clients have facilities in
    nearby States that require an onsite inspection during the
    conduct of an audit. Additionally, consulting, tax, and other
    nonaudit services that CPAs deliver may be provided to clients
    in other States or to facilities of local clients that are
    located in other States.
        Many small business clients of CPAs have multi-State
    activities also. In essence, all of these entities--small
    businesses, accounting firms, and their clients--are affected
    by nonresident income tax withholding laws.
        Forty-three States and the District of Columbia impose a
    personal income tax on wages, and there are many differing
    requirements for withholding tax for nonresidents among those
    States. Some of the States have a de minimis number of days
    before nonresidents working in that State must have taxes
    withheld and paid to the State. Others have a de minimis
    exemption based on the amount of wages earned, either in
    dollars or as a percent of total income while in the State.
        The rest of the States that impose personal income taxes on
    nonresident income earned in the State only require a work
    appearance in the State, even if in the presence of the State
    only for a moment. The issue of tracking and complying with all
    of these different requirements are further complicated by the
    reciprocity agreements in many States, usually among adjoining
    States and that specify they will not require State income tax
    withholding for residents of other States that have signed the
    reciprocity agreement.
        It is not difficult to understand the complexity that goes
    into this, and the recordkeeping could be voluminous. The
    recordkeeping and withholding a State requires can be for as
    little as a few moments of work in another State.
        The research to determine any State's given individual
    requirement is extensive and time consuming, especially for a
    small firm or a small business that does not have a great
    amount of resources. This research needs to be updated
    annually, at least to make sure that the State law has not
    changed.
        In addition to uniformity, we maintain there needs to be a
    de minimis exemption. The AICPA has supported the 60-day limit
    contained in previous versions of similar legislation but
    believe that the 30-day limit contained in H.R. 1864 is fair
    and workable.
        The changes that have occurred as our country has gone from
    local economies to a national economy are huge. Where
    businesses once tended to be local, they now have a national
    reach. This has caused the operations of even a small business
    to move to an interstate basis.
        As this Committee moves forward in considering the
    legislation, there is one amendment that the AICPA would
    recommend. Once the 30-day threshold is reached, the employee
    should pay withholding and State income tax in the host State
    for all wages going forward. Withholding should not be made
    retroactive for the first 30 days. To do so would be unfair to
    the employee.
        Mr. Chairman, again, thank you for the opportunity to
    testify in support of H.R. 1864, and I would be happy to answer
    any questions you or the Members of the Subcommittee may have.
        [The prepared statement of Mr. Porter follows:]

                                   __________

        Mr. Coble. Thank you, Mr. Porter.
        Mr. Carter, you are recognized for 5 minutes.

    TESTIMONY OF PATRICK T. CARTER, DIRECTOR, DELAWARE DIVISION OF
     REVENUE, WILMINGTON, DELAWARE, ON BEHALF OF THE FEDERATION OF
                           TAX ADMINISTRATORS

        Mr. Carter. Chairman Coble, Vice Chairman Gowdy, Ranking
    Member Cohen, Members of the Subcommittee, thank you for the
    opportunity to address the Subcommittee on H.R. 1864.
        I am Patrick Carter, president of the Federation of Tax
    Administrators. The FTA is an association of the principal tax
    and revenue collection agencies in each of the 50 States, the
    District of Columbia, and New York City. We have worked with
    the Committee staff, industry representatives on this
    legislation for several years.
        We had requested through an FTA resolution that since New
    York State is the most significantly affected State and since
    it is undertaking review of the issue that Federal legislation
    should not proceed until proponents of H.R. 1864 have worked
    with New York State officials to resolve the issue at the State
    level. Further, Congress should also take account of the
    constructive action by other States on this issue before
    proceeding with legislation.
        We regret that except for a reduction in the days threshold
    for determining employees' tax withholding responsibility from
    60 to 30 days, few of these changes we suggested have been made
    to the legislation before you. As a result, we believe this
    bill offers avoidance opportunities and makes normal tax
    administration of this area virtually impossible.
        We must oppose the legislation as it is currently written.
    If Congress intends to pursue legislation in this area, the
    Federation of Tax Administrators believes the legislation
    should be revised as follows.
        First, the recordkeeping requirements should be improved.
    The proposed recordkeeping requirements absolve employers of
    virtually any obligation to use information that they have
    unless there is fraud in using the employees' records. State
    audits will have to be done on each employee to determine if
    withholdings should have taken place. This scheme cannot
    effectively be audited or enforced.
        The fraud standard should be eliminated, and the employer
    should be allowed to rely on employee's estimate of time in a
    State, unless the employer has actual knowledge that the
    employee's estimate is in error. If an employer maintains
    records on the location of an employee, those records should be
    used to determine whether an employee has a State income tax
    withholding and information return obligation.
        On the 30-day rule for establishing tax withholding
    requirement, it is certainly more than is required to deal with
    the compliance and burden issues that the bill is intended to
    address. For example, it is certainly well beyond any level
    that is necessary to deal with individuals who travel regularly
    as part of their jobs. For example, attorneys with litigation,
    training personnel, meeting organizers, as well as government
    affairs and sales personnel.
        We believe the excessive nature of the 30-day rule
    contributes to the substantial revenue impact that the bill has
    on certain States, particularly in New York State because of
    the nature of its economy and its role as an international
    center in finance and business. New York State has estimated
    that this bill could potentially cost them between $80 million
    and $100 million.
        We suggest that it be reduced after a consultation with
    States concerned with the revenue effect of the rule. The FTA
    believes that if the legislation is enacted in this area, the
    de minimis withholding threshold should have an income
    component in addition to the time component.
        State tax obligations would be triggered if the total wages
    and remuneration paid to an employee for services in a State
    exceeded a specified amount of income or if the employee
    exceeded a certain number of days, as is currently proposed.
    This is similar to the approach used in the Federal income tax
    system to determine the taxability of income paid on a
    nonresident alien.
        H.R. 1864 defines ``day'' as a preponderance of the
    employee's employment duties in such State or locality for such
    day. We believe this is too vague for administrative purposes.
    We recommend that this be changed to substitute ``all or any
    part of a day in which the employee is present and performs
    services in that State.''
        Furthermore, H.R. 1864 provides no guidance and will likely
    disrupt established State policies on an increasingly frequent
    form of compensation, stock options, or other compensation paid
    in 1 year for services performed in an earlier year. We
    recommend that the legislation include a provision that allows
    States to allocate option income earned by a nonresident to a
    State based on the proportion of time worked in the State from
    the time the option is granted to the time it is exercised.
        The bill only excludes certain public figures and persons
    of prominence from the coverage of the bill. There are other
    types of individuals that are paid on a per-event basis. We
    recommend instead that the bill be amended simply to provide
    that persons paid on a per-event basis are not to be subject to
    the terms of the bill. This would avoid litigation and reduce
    the revenue impact of the legislation.
        Mr. Chairman, New York State is the State that is most
    negatively impacted by this bill. However, today, I had a
    conversation with the commissioner of the New York State Tax
    Department, and he is amenable with New York State to work with
    the Federation of Tax Administrators and with private industry
    to work toward a compromise on this bill.
        That concludes my remarks on this legislation. We continue
    to be interested in working with the Subcommittee and concerned
    States to develop a mutually accepted proposal.
        Thank you.
        [The prepared statement of Mr. Carter follows:]

                                   __________

        Mr. Coble. Thank you, Mr. Carter.
        Mr. Crosby?

      TESTIMONY OF JOSEPH R. CROSBY, CHIEF OPERATING OFFICER AND
         SENIOR DIRECTOR OF POLICY, COUNCIL ON STATE TAXATION,
                             WASHINGTON, DC

        Mr. Crosby. Chairman Coble, Ranking Member Cohen, and
    Members of the Subcommittee, my name is Joe Crosby. I am chief
    operating officer and senior director of policy with the
    Council on State Taxation, which is more commonly known as
    COST.
        COST is a trade association based here in D.C. that
    represents nearly 600 of the Nation's largest employers on
    business tax issues.
        Mr. Chairman, I would like to begin by thanking you and
    Congressman Johnson for introducing H.R. 1864. This is an
    important piece of legislation, and we appreciate your support.
        I would also like to thank the other Subcommittee Members
    who have already agreed to cosponsor and those who I hope will
    soon cosponsor the legislation.
        I appreciate the opportunity to share with you COST views
    on this issue. Mr. Chairman, you and the Ranking Member Cohen
    and Mr. Johnson did an excellent job in your introductory
    remarks describing the problem and what the legislation does.
    So being from Maine and understanding what thin ice means, I
    will dispense with a lengthy description of what the bill does
    in the interest of time.
        What I would like to say, simply to add to a couple of
    things that were said earlier, is that this is an issue that
    impacts all employers, not just businesses. It impacts
    businesses large and small. It also impacts charities and
    nonprofits and even Government agencies.
        The legislation is not a business legislation, per se, but
    legislation that helps all employees that travel for work and
    all of their employers, and I think that is an important thing
    to keep in mind.
        The other thing that I think is helpful to understand, and
    Mr. Carter's testimony alluded to this, this is an issue that
    is understood nearly universally to be a problem. The
    Federation of Tax Administrators in prior testimony before this
    Subcommittee said, ``Complying with the current system is,
    indeed, difficult and probably impractical.''
        And the executive director of the Multi-State Tax
    Commission said, ``There is widespread noncompliance'' as a
    result of the complex laws that are currently in place.
        So I don't really think there is a whole lot of question
    with regard to whether this is an issue that needs to be
    addressed. Nor is there really any question about the substance
    of what the solution should be. The framework that is set forth
    in H.R. 1864, a national threshold that protects employees that
    travel on temporary work assignments is, indeed, the framework
    that has been adopted by the Multi-State Tax Commission in
    their own efforts on this issue.
        The Multi-State Tax Commission's agreement, modeled after
    H.R. 1864, unfortunately, will not solve the problem, and
    Federal action is needed. Model State legislation in the area
    of taxation has never been universally adopted in the States.
    We have never had one experience in this country of the States
    uniformly adopting any tax simplification proposal.
        And so, while I would like to think that something like
    that could happen, it faces a fundamental political challenge.
    And that is for especially on this issue, for a State
    legislator to make this issue a high priority would require him
    or her to put the interests of nonresidents above his or her
    own constituents.
        The legislation, as it might be adopted in any particular
    State, benefits exclusively nonresidents. And so, it is
    difficult for State legislators, as you know better than I, to
    put forward an issue that is going to help primarily folks who
    are not their constituents.
        And so, adoption of a model State statute by one State or
    even a handful of States won't solve the problem. For employees
    who travel and their employers, there will be no meaningful
    simplification unless and until Congress enacts legislation.
        And Mr. Chairman, that is really the question that we
    confront here is whether this is something best addressed
    separately by the States or addressed by this body. And I think
    the weight of the evidence is clear that it is something that
    must be adopted here because of the practical political
    obstacles, as well as the historic inability for States to
    solve these sorts of problems.
        As you mentioned in your introductory remarks, Mr.
    Chairman, the mobility of our workforce is one of our greatest
    strengths as a Nation, and that flexibility is being impinged
    by the current laws and regulations. Unless H.R. 1864 is
    passed, that flexibility will be hindered and will continue to
    form a problem.
        Thus, I respectfully request the Subcommittee's speedy
    adoption of H.R. 1864. I appreciate the time and would be happy
    to answer any questions you have.
        Thank you.
        [The prepared statement of Mr. Crosby follows:]

                                   __________

        Mr. Coble. Thank you, Mr. Crosby.
        Thanks to each of you.
        Now, as we pose questions, we will try to comply with the
    5-minute rule. So if you could keep your responses terse, we
    can move along. I would appreciate that.
        Mr. Porter, can you explain how taxes paid to a nonresident
    State are generally treated by the resident State for tax
    purposes, and how will this bill affect this treatment?
        Mr. Porter. Generally, if you are a nonresident and you
    come and work in a State, they are going to withhold taxes. So
    you are going to have to file a tax return in the nonresident
    State.
        And typically, the resident State will give you a credit
    for the tax that you have paid up to the amount that the
    resident State would generally tax you on that amount. So, in
    other words, if you are in a higher tax rate at, say, 6
    percent, a State that only has a 4 percent rate is going to
    give you a 4 percent credit equal to that. That is typically in
    the area that I am in--in West Virginia, Ohio, Kentucky--a
    practice that I see.
        This bill would change that just primarily on the first 30
    days that when you are working in a State, you would not have
    to pay State taxes in the nonresident State. So you would pay
    it in the resident State.
        Mr. Coble. Thank you, sir.
        Mr. Carter, do you acknowledge that there is a patchwork
    among States' income tax laws that make or that create
    administrative burdens for small businesses in particular?
        Mr. Carter. Mr. Chairman, I do. Delaware, our tax nexus for
    employees is very similar or modeled after New York State. One
    day in the State of Delaware, an individual is subject to
    taxation.
        As you read into your testimony, other States have
    different models. Arizona is 60 days. So someone could be in
    the State of Arizona for 60 days before they are subject to
    taxation in Arizona.
        So I do acknowledge that for businesses--in my prior
    career, I worked for JPMorgan Bank in their accounts payable
    area, and I was responsible for making sure that travel
    expenses were paid. But we did not communicate with the payroll
    department to tell people in the payroll department where the
    people were traveling. So it is a challenge for not only small
    businesses, but large businesses as well.
        Mr. Coble. I thank you, sir.
        Mr. Carter. You are welcome.
        Mr. Coble. Mr. Crosby, if Congress does not approve this
    bill, is there an individual State that has an incentive to
    reduce the administrative burden placed upon small businesses
    by the cumulative effect of diverse State income tax laws?
        Mr. Crosby. Mr. Chairman, it is not in the interest of any
    one State to change this statute because the benefits accrue to
    folks who live outside of the State. So, by definition, it is
    very difficult for a State legislator to put high on their
    priority list an issue which is going to benefit folks living
    somewhere else.
        We have some wonderful State legislators in this country. A
    friend of mine, State senator Dwight Cook in North Dakota did
    marshal a change through his legislature this year. But I fear
    that we are not going to see a uniform or nationwide movement
    toward this and that North Dakota will prove to be the
    exception rather than the rule.
        Mr. Coble. I thank you.
        Thank you, gentlemen.
        I am now pleased to recognize the distinguished gentleman
    from Tennessee, Mr. Cohen.
        Mr. Cohen. Thank you, Mr. Chairman.
        The Multi-State Tax Commission has proposed a model
    statute, and I think it has got the 20-day rule in it. I
    haven't really put it to memory. And it would have a uniform
    standard similar, I think, to the legislation we have got here.
        Mr. Carter, does this address the concerns, the legislation
    that you have, to some extent?
        Mr. Carter. It does, to some effect. Some of our concerns,
    as I laid out, are some of the definitions in the House rule
    you have right now. I do believe that the States, if we had an
    opportunity to work with the industry and with the Subcommittee
    staff, we could come to an agreement on the definition of days.
        But there are other issues in the bill that I think need to
    be addressed.
        Mr. Cohen. Other than days?
        Mr. Carter. Other than days, yes.
        Mr. Cohen. Like what?
        Mr. Carter. Well, we talked about some of the definitions
    of what a day is. A definition of----
        Mr. Cohen. It sounds like the title of a song.
        Mr. Carter. It does. But as to whether bonuses or stock
    options--not bonuses, but stock options, how they are treated
    in this type of legislation. I think there is some items that
    worked on, we could come up with a bill that is agreeable to
    both sides on this, and I don't believe that the day threshold
    is the--although it is important for someone like New York
    State because of the economic impact to them--is not the
    biggest hurdle.
        Mr. Cohen. Mr. Crosby, are the definitions something you
    could work with Mr. Carter on and Mr. Webster and get this all
    worked out?
        Mr. Crosby. Yes, Mr. Cohen. After there was a hearing at
    the end of 2007, then-Chairwoman Sanchez of this Subcommittee
    directed the parties to work together. And under Mr. Johnson's
    aegis, we spent a considerable amount of time working with
    representatives for State and local government, and there are
    numerous changes in this version of the legislation to address
    some of the things that the Federation of Tax Administrators
    raised, including the definition of ``day.''
        That was changed substantially to ensure that if a
    nonresident is only in one nonresident State, then it is a
    nonresident day, regardless of how long they are there. We
    certainly would be willing to continue discussions, were it
    acceptable to the sponsors. I think my concern is that I have
    the redline of the old bill and the letters that were exchanged
    between Mr. Johnson and Chairwoman Sanchez at the time
    discussing and detailing all the changes we have made, and
    there seems to be not a recognition on the part of the tax
    administrators.
        And so, my fear is that we would make further changes and
    yet be back here in another Congress where there are further
    changes yet to be made. So, Mr. Cohen, we certainly would be
    willing to consider them and work with them, as long as there
    was a good faith effort on their part that at the end of the
    process, they would support the legislation.
        Mr. Cohen. So if they would support it at the end. And Mr.
    Carter, it was definitions, and what is your other issue? The
    days you said weren't important.
        Mr. Carter. Days were not a critical--although it is
    expensive to some of the States. It would cost Delaware. We are
    a 1-day State. New York, much more than us just because of the
    size of their economy. But there were a series of things.
        Reciprocity, there are certain States that agree,
    irrespective of how many days a nonresident is in the State,
    New Jersey and Pennsylvania have reciprocity. So a Pennsylvania
    resident working in New Jersey is not subject to tax in New
    Jersey and vice versa. This bill does not recognize that.
        Mr. Cohen. Mr. Crosby, why don't you incorporate that? That
    seems like it would be good for small business and for
    accountants?
        Mr. Crosby. That is an excellent question. In fact, what
    this bill does is set a threshold below which States cannot tax
    nonresidents. It does not prohibit a State from setting a
    higher threshold.
        So those reciprocity agreements that exist right now, you
    can think of them as 365-day thresholds. They are perfectly
    acceptable under this legislation. We could specifically
    recognize them, and that is certainly not a concern.
        The way the bill is drafted, though, it doesn't impinge
    upon those in any way, shape, or form.
        Mr. Cohen. All right, Mr. Carter. Checkmate. [Laughter.]
        What is your next problem?
        Mr. Carter. I think the recordkeeping provisions where it
    refers to fraud as being the criteria for whether the records
    are proper or not. That is a very high standard, almost
    impossible to prosecute against.
        We have, in Delaware, we have a statute on tax fraud, and
    it is very, very, very difficult to prove if someone is
    committing fraud in the tax area. We normally prosecute, if we
    do, for not filing because it is such a high threshold.
        One of the other issues that we have is with the concern
    with high-income individuals. We believe that someone earning
    $500,000 a year as being tracked where they go, come and go,
    maybe the 20-, 30-day threshold is not--for that person is not
    a low enough level, just because they are traveling all over
    the place and their income is so substantial. And their goings
    are easily tracked.
        They are not the type of individual of the small business
    where the person is just popping in for 1 day because they get
    called up and they have to fix the pipes for the plumbing
    company, and they are crossing the State line.
        So there are a number of things I think that we can work on
    and resolve to come up with a much more amenable piece of
    legislation to both the States and private industry.
        Mr. Cohen. My time has expired. So I won't ask you about
    the right of return in the Golan Heights.
        I yield back the remainder of my time.
        Mr. Coble. Thank you, Mr. Cohen.
        The distinguished gentleman from South Carolina, Mr. Gowdy,
    is recognized.
        Mr. Gowdy. Thank you, Mr. Chairman.
        And I am delighted to go last. If the distinguished
    gentleman from Georgia, who is an original cosponsor, would
    wish to take my turn, I am pleased to go last.
        Mr. Johnson. I would. Thank you, Mr. Gowdy.
        Mr. Coble. The distinguished gentleman from Georgia is
    recognized.
        Mr. Johnson. Thank you, Chairman.
        Does anybody here know what Charlie Brown used to utter
    when Lucy would take the ball off the tee again, and he would
    kick and end up falling on his back? Does anybody know that?
        Mr. Cohen. I don't think you can say that in public.
    [Laughter.]
        Mr. Johnson. You knew this was coming for you, didn't you?
    Yes, I feel like Charlie Brown, and Mr. Cohen is my Lucy. And I
    think he has covered just about everything I would like to
    cover, and I will say thank you for doing that. And that kind
    of cuts down a little time on the hearing.
        I will say, Mr. Crosby, yes, there was a new definition of
    what is a day, definition of a day. And no definition of what
    does ``is'' mean. What is ``is?''
        Mr. Crosby. No, sir. That was not redefined.
        Mr. Johnson. That was not in there, but there are some
    other things in there as well.
        And Mr. Carter, we certainly want to work with you to clear
    up any problems that you may have with the bill. But I think it
    is moving pretty quickly toward adoption by this body, and I
    would encourage you to get with Committee staff and also my own
    staff and staff for Mr. Coble, see what you can work out on
    this thing so that we can go ahead and move it forward.
        And that will be the extent of my questions and comments.
    Thank you.
        And thank you, Mr. Gowdy.
        Mr. Coble. Thank you, Mr. Johnson.
        Now the distinguished gentleman from South Carolina, Mr.
    Gowdy, is recognized.
        Mr. Gowdy. Thank you, Mr. Chairman.
        I have just got a couple of questions, and they are broad,
    general questions.
        Mr. Crosby, other than the complexities of compliance, what
    is your best argument for uniformity? And I get how complex it
    is. But other than the complexities of compliance, what is your
    best argument for uniformity?
        Mr. Crosby. I think the best arguments are the ones that
    Mr. Coble made in his introductory remarks in terms of the
    mobility and flexibility of the U.S. workforce.
        As large and small employers alike are subject to
    additional recordkeeping burdens, large employers are burdened
    by or having to comply with Sarbanes-Oxley and Section 404,
    ensuring that they are in compliance with all applicable laws
    and regulations. This is an increasingly difficult area for
    them and requires a significant expenditure of resources, as
    well as a significant negative impact on the employees who are
    required to travel for work.
        And so, my fear is that if we move forward without solving
    this problem, ultimately, you will have folks deterred from
    doing things they would otherwise do. I have spoken to numerous
    business managers and employees who have relocated meetings
    from one jurisdiction to another because of the potential
    impact of having tax liability in a jurisdiction.
        As I said, myself, I live in Maine. We have a 10-day
    threshold there. Massachusetts is 1 day. New Hampshire does not
    have a personal income tax. I know many regional businesses
    that now hold their meetings in New Hampshire, much to New
    Hampshire's benefit, because of the fear of holding those in
    Maine or Massachusetts and being subject to tax liability.
        So, currently, the existing laws are negatively impacting
    commerce around the country, and I think that is probably,
    other than the complexity, the biggest concern with the
    existing patchwork of State laws.
        Mr. Gowdy. And you are satisfied that there are no issues
    with the dormant commerce clause?
        Mr. Crosby. Yes, sir. I am.
        Professor Wally Hellerstein, who wrote literally the
    casebook that is studied by State and local tax lawyers,
    testified before this Committee that this legislation is not
    only authorized by the Constitution but is exactly the type of
    legislation that the framers envisioned if they could have
    envisioned this type of legislation--what I will call a
    surgical insertion into State tax law to alleviate a burden
    without fundamentally altering the way State taxes work.
        Mr. Gowdy. And if I will listen to the testimony correctly,
    there is nothing talismanic about 30 days, and that is open to
    negotiation?
        Mr. Crosby. Representative Gowdy, Mr. Johnson, when he
    first introduced this bill, started with 60 days. And that was
    based on survey data from employers regarding the number of
    employees that would fall outside of certain thresholds and
    then, in the spirit of compromise, was reduced later to 30
    days.
        Every reduction you make significantly increases the number
    of employees who would no longer be protected by the bill. So
    there is nothing talismanic about it. But certainly, any
    reduction means that fewer people would benefit from the
    legislation, so I think must be considered carefully.
        Mr. Gowdy. Thank you. I would yield back the remainder of
    my time, Mr. Chairman.
        Mr. Coble. I thank you, Mr. Gowdy.
        And I want to thank the Members of the Subcommittee for
    your attendance. I want to reiterate our thanks to the panel
    for your patience, as well as those in the audience.
        And without objection, all Members will have 5 legislative
    days to submit to the Chair additional written questions for
    the witnesses, which we will forward and ask the witnesses to,
    in fact, respond as promptly as you can, that their answers may
    be made a part of the record.
        Without objection, all Members will have 5 legislative days
    to submit additional materials for inclusion in the record.
        And with that, again, I thank the witnesses, and this
    hearing is now adjourned.
        [Whereupon, at 3:54 p.m., the Subcommittee was adjourned.]

                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable John Conyers, Jr., a Representative
     in Congress from the State of Michigan, and Ranking Member, Committee
                                on the Judiciary
        Today we discuss H.R. 1864, the ``Mobile Workforce State Income Tax
    Simplification Act,'' a bill to address concerns employers have raised
    about different state withholding standards.
        I am encouraged that the business community has reached out to the
    states to improve upon this legislation since the 110th Congress. And I
    sympathize with employers for the difficulties they have expressed on
    behalf of their record-keeping and employees. And the states have
    acknowledged that there is problem.
        However, the legislation as written does not address all of the
    concerns the states have addressed and will likely inhibit the ability
    of states to tax, which will lead to lost state revenues.
        If States cannot tax the income earned within their borders, it
    could impede their ability to provide needed services which many of us
    depend upon. States may be forced to furlough their dedicated and hard
    working government employees.
        I understand that some states--especially New York--would stand to
    lose tens of millions of dollars in revenue if the bill is enacted in
    its current form. My own state of Michigan would lose much needed
    revenue, nearly enough to cover the funding cut to libraries and the
    elimination of dairy inspectors that Michigan Governor Snyder has
    proposed. These programs support the education and protection of our
    children.
        With state revenues projected to suffer for the foreseeable future
    in this economic climate, Congress should be wary to pass legislation
    which may diminish state revenues.
        I am concerned that the bill's 30-day threshold, which exceeds the
    thresholds in several states, would allow an employee to work in
    several states about six weeks at a time and not have to pay taxes in
    those states. Those states would lose revenue while some employees
    would avoid paying taxes.
        The Multistate Tax Commission has proposed a model statute similar
    to this legislation but establishing a 20-day threshold. Others have
    proposed a hybrid threshold of 20-days or $20,000 earned in a state in
    a calendar year. Those thresholds seem more reasonable.
        I am also concerned about the timekeeping component in this
    legislation. In some instances timekeeping is left to the employees
    while in others the employer keeps track of the days its employees work
    in other states. These different timekeeping standards may lead to tax
    avoidance and confusion.
        A further discussion on the timekeeping standard would benefit all
    interested parties and allay some of the concerns with this bill.
        Otherwise, we may need to introduce separate legislation to improve
    upon this bill.
        Thank you and I look forward to hearing from the witnesses.

     Prepared Statement of the Honorable Henry C. ``Hank'' Johnson, Jr., a
       Representative in Congress from the State of Georgia, and Member,
           Subcommittee on Courts, Commercial and Administrative Law
        Chairman Coble, Ranking Member Cohen, I thank you for holding this
    hearing on H.R. 1864, the ``Mobile Workforce State Income Tax
    Simplification Act of 2011.''
        This is an important bill that will help workers and businesses
    large and small. I have been working on this bill since I was a
    freshman in the 110th Congress, and I am pleased to have introduced it
    in this Congress with Chairman Coble.
        We live in an ever-increasing mobile economy. Every day, thousands
    of Americans travel outside of their home state on business trips for
    brief periods of time.
        Many states have their own set of requirements for filing non-
    resident individual income tax returns that most Americans are not
    aware of and don't understand.
        For example, if an Atlanta-based employee of a Chicago company
    travels to headquarters on a business trip once a year, that employee
    would be subject to Illinois tax, even if his annual visit only lasts a
    day.
        However, if that employee travels to Maine, her trip would only be
    subject to tax if her trip lasts for 10 days. If she travels to New
    Mexico on business, she would only be subject to tax if she was in the
    state for 15 days.
        The Mobile Workforce State Income Tax Simplification Act would fix
    this problem by establishing a fair and uniform law that would ensure
    the correct amount of tax is withheld and paid to the states without
    the undue burden of the current dysfunctional system.
        Consistent with current law, H.R. 1864 provides that an employee's
    earnings are subject to full tax in his or her state of residence. In
    addition, this bill would only subject employees who perform employment
    duties in a nonresident state if they work in that state for more than
    30 calendar days.
        At a time when more and more Americans find themselves traveling
    for their job, this bill is a common-sense solution that helps workers
    who are employed in multiple jurisdictions by simplifying their tax
    reporting requirements.
        We are all aware there's a problem, and this bill is the solution.
        It not only simplifies the system, but makes it fair for people who
    work in multiple jurisdictions and assists businesses as they comply
    with complex tax laws.
        In an economy that is beginning to recover from the devastating
    recession, this bill makes sense.
        After three years of championing this issue, I appreciate this
    Subcommittee's interest in this legislation.
        I look forward to working with all of you to move the bill through
    Congress and to the President's desk for signature.
        Thank you, Mr. Chairman, and I yield back the balance of my time.