[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.







                                 
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