[Congressional Record Volume 158, Number 69 (Tuesday, May 15, 2012)]
[House]
[Pages H2667-H2669]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MOBILE WORKFORCE STATE INCOME TAX SIMPLIFICATION ACT OF 2012
Mr. COBLE. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 1864) to limit the authority of States to tax certain income of
employees for employment duties performed in other States, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1864
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Mobile Workforce State
Income Tax Simplification Act of 2012''.
SEC. 2. LIMITATIONS ON STATE WITHHOLDING AND TAXATION OF
EMPLOYEE INCOME.
(a) In General.--No part of the wages or other remuneration
earned by an employee who performs employment duties in more
than one State shall be subject to income tax in any State
other than--
(1) the State of the employee's residence; and
(2) the State within which the employee is present and
performing employment duties for more than 30 days during the
calendar year in which the wages or other remuneration is
earned.
(b) Wages or Other Remuneration.--Wages or other
remuneration earned in any calendar year shall not be subject
to State income tax withholding and reporting requirements
unless the employee is subject to income tax in such State
under subsection (a). Income tax withholding and reporting
requirements under subsection (a)(2) shall apply to wages or
other remuneration earned as of the commencement date of
employment duties in the State during the calendar year.
(c) Operating Rules.--For purposes of determining penalties
related to an employer's State income tax withholding and
reporting requirements--
(1) an employer may rely on an employee's annual
determination of the time expected to be spent by such
employee in the States in which the employee will perform
duties absent--
(A) the employer's actual knowledge of fraud by the
employee in making the determination; or
(B) collusion between the employer and the employee to
evade tax;
(2) except as provided in paragraph (3), if records are
maintained by an employer in the regular course of business
that record the location of an employee, such records shall
not preclude an employer's ability to rely on an employee's
determination under paragraph (1); and
(3) notwithstanding paragraph (2), if an employer, at its
sole discretion, maintains a time and attendance system that
tracks where the employee performs duties on a daily basis,
data from the time and attendance system shall be used
instead of the employee's determination under paragraph (1).
(d) Definitions and Special Rules.--For purposes of this
Act:
(1) Day.--
(A) Except as provided in subparagraph (B), an employee is
considered present and performing employment duties within a
State for a day if the employee performs more of the
employee's employment duties within such State than in any
other State during a day.
(B) If an employee performs employment duties in a resident
State and in only one nonresident State during one day, such
employee shall be considered to have performed more of the
employee's employment duties in the nonresident State than in
the resident State for such day.
(C) For purposes of this paragraph, the portion of the day
during which the employee is in transit shall not be
considered in determining the location of an employee's
performance of employment duties.
[[Page H2668]]
(2) Employee.--The term ``employee'' has the same meaning
given to it by the State in which the employment duties are
performed, except that the term ``employee'' shall not
include a professional athlete, professional entertainer, or
certain public figures.
(3) Professional athlete.--The term ``professional
athlete'' means a person who performs services in a
professional athletic event, provided that the wages or other
remuneration are paid to such person for performing services
in his or her capacity as a professional athlete.
(4) Professional entertainer.--The term ``professional
entertainer'' means a person who performs services in the
professional performing arts for wages or other remuneration
on a per-event basis, provided that the wages or other
remuneration are paid to such person for performing services
in his or her capacity as a professional entertainer.
(5) Certain public figures.--The term ``certain public
figures'' means persons of prominence who perform services
for wages or other remuneration on a per-event basis,
provided that the wages or other remuneration are paid to
such person for services provided at a discrete event, in the
nature of a speech, public appearance, or similar event.
(6) Employer.--The term ``employer'' has the meaning given
such term in section 3401(d) of the Internal Revenue Code of
1986 (26 U.S.C. 3401(d)), unless such term is defined by the
State in which the employee's employment duties are
performed, in which case the State's definition shall
prevail.
(7) State.--The term ``State'' means any of the several
States.
(8) Time and attendance system.--The term ``time and
attendance system'' means a system in which--
(A) the employee is required on a contemporaneous basis to
record his work location for every day worked outside of the
State in which the employee's employment duties are primarily
performed; and
(B) the system is designed to allow the employer to
allocate the employee's wages for income tax purposes among
all States in which the employee performs employment duties
for such employer.
(9) Wages or other remuneration.--The term ``wages or other
remuneration'' may be limited by the State in which the
employment duties are performed.
SEC. 3. EFFECTIVE DATE; APPLICABILITY.
(a) Effective Date.--This Act shall take effect on January
1 of the 2d year that begins after the date of the enactment
of this Act.
(b) Applicability.--This Act shall not apply to any tax
obligation that accrues before the effective date of this
Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
North Carolina (Mr. Coble) and the gentleman from Georgia (Mr. Johnson)
each will control 20 minutes.
The Chair recognizes the gentleman from North Carolina.
General Leave
Mr. COBLE. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
and include extraneous materials on H.R. 1864, as amended, currently
under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from North Carolina?
There was no objection.
Mr. COBLE. I yield myself such time as I may consume.
Mr. Speaker, I rise in support of H.R. 1864.
On the way back to Washington, D.C., this past weekend, I looked
around in my local airport and saw dozens of business travelers
preparing to board airplanes to leave North Carolina and conduct
business in other States. This happens, Mr. Speaker, every day in every
State in America. The American workforce is more mobile in the 21st
century than it has ever been.
Nonetheless, the diversity of State income tax laws places a
significant burden on people who travel for work and their employers,
many of which are small businesses. Currently, 41 States tax the wages
earned by a nonresident for work 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
damaging small businesses and stifling economic growth.
{time} 1610
For example, some States require a nonresident to pay income tax if
he or she works in that State for just one day. Other states do not
collect tax until the nonresident works for a certain number of days in
the particular jurisdiction. Small businesses must expend considerable
resources 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.
To alleviate this problem, on May 12 I introduced H.R. 1864, the
Mobile Workforce State Income Tax Simplification Act, with the
distinguished gentleman from Georgia (Mr. Johnson). The bill we
introduced establishes a clear 30-day threshold for tax liability and
employer withholding. Under the bill, States remain free to set any
income tax rate they choose.
Tax simplification--on both the Federal and State level--will allow
workers and employers to predict their tax liabilities with accuracy
and expend fewer resources researching the nuances of each State's
respective tax law. The money they would have spent hiring accountants
and tax lawyers can then be spent on creating meaningful jobs and
growing the economy.
I urge all Members to cast a ``yes'' vote on this bill, and I reserve
the balance of my time.
Mr. JOHNSON of Georgia. Mr. Speaker, I yield myself such time as I
may consume.
I rise today in strong support of H.R. 1864, the Mobile Workforce
State Income Tax Simplification Act. This is an important bipartisan
bill that will help all workers across the country. It will also help
businesses, large and small.
I have been working on this bill since I was a freshman in the 110th
Congress, at which time Chris Cannon from Utah, a former Member, was
the lead sponsor. In the 111th Congress, I was the lead sponsor on H.R.
1864 as it is known now. This term, the 112th Congress, Mr. Coble, whom
I have been quite pleased to work with, has been the lead sponsor.
Again, he is a good friend of mine, and I appreciate the opportunity to
work with him.
H.R. 1864 provides for a uniform and easily administered law that
would ensure the correct amount of taxes withheld and paid to the
States without the undue burden the current system places on employees
and employers. From a national perspective, the Mobile Workforce bill
will vastly simplify the patchwork of inconsistent and confusing State
rules. It would also reduce administrative costs to States and lessen
compliance burdens on American workers.
Take my home State of Georgia, for instance. If an Atlanta-based
employee of a St. Louis company travels to headquarters on a business
trip once per year, that employee is required to file a Missouri tax
return, even if her annual visit only lasts for 1 day. However, if that
employee travels to Maine, she would not be required to file a Maine
tax return unless her trips lasts for 10 days. If she travels to
Arizona on business, she would only have to file an Arizona income tax
return if she was in the State for more than 60 days.
In each case, her employer is also liable for withholding those
States' taxes out of her paycheck, and the only way she can avoid
double taxation is if she files for a credit for each State's tax in
her resident State.
H.R. 1864 would fix this problem by establishing a uniform threshold
before State income tax laws would apply to traveling employees. This
bill would protect employees who perform employment duties in a
nonresident State if they work in the State for less than 30 days.
Until that threshold is reached, they will continue to pay in their
State of residency.
When I initially started working on this bill, the withholding
threshold was 60 days. In response to the concerns by the Federation of
Tax Administrators, I sought a compromise and lowered the threshold to
30 days. I understand that the FTA may still have some concerns about
the bill, but I believe that it is a good bill that addresses the bulk
of their concerns. The FTA's concerns have certainly not been ignored.
In addition to lowering the day threshold, we also worked to clarify
that the bill's operating rules were not drafted to avoid paying
withholding tax, and clarified if an employer has a time and attendance
system designed to allocate wages among States, it must be used.
At a time when more and more Americans find themselves traveling for
their job, this bill is a commonsense solution that helps workers who
are employed in multiple States by simplifying the tax reporting
requirements for them and for their employers.
[[Page H2669]]
Madam Speaker, for the vast majority of States, this bill carries a
minimal or no revenue impact. In fact, this bill will greatly increase
compliance rates. This bill will end up saving States the
administrative costs of processing and remitting thousands of small
returns from nonresidents.
While nothing is perfect, and the Federation of Tax Administrators
may still have some concerns, this bill is truly the product of years
of working with the States on an approach that balances their concerns
with administrative ease and efficiency for employers and employees.
This is truly a bipartisan effort that seeks to simplify State tax
compliance, not reduce State taxes.
I yield back the balance of my time.
Mr. COBLE. Madam Speaker, I urge my colleagues to cast a ``yes'' vote
on this matter, and I yield back the balance of my time.
Mr. SMITH of Texas. Madam Speaker, the American workforce is
increasingly mobile. Fifty years ago, most people worked in the
communities in which they lived. Today, many more Americans travel to
other states for work.
The complexity and variation among state income tax laws is a burden
on interstate commerce. In some states, for example, a non-resident
employee must pay income tax if they work there for only one day. But
in other states, income tax liability is not triggered until the 60th
day.
Under this current patchwork system, employees who travel out of
state for work must file tax returns in other jurisdictions even if
their ultimate tax liability to a state is a few dollars.
In addition to burdening our interstate employees, different state
income tax laws require employers to comply with a wide variety of tax
withholding laws. Many of those employers are small businesses who can
least afford these administrative costs.
This bipartisan bill, the Mobile Workforce State Income Tax
Simplification Act, is sponsored by the Chairman of the Judiciary
Committee's Subcommittee on Courts, Commercial and Administrative Law,
Howard Coble. I also appreciate Congressman Hank Johnson's
cosponsorship of this legislation.
This bill simplifies state income tax policies without infringing on
the rights of states to set their own tax rates. The bill provides that
a state may not impose its income tax on non-resident employees unless
they earn wages in the state for more than 30 days. The employee would
still owe an income tax to their state of residence for wages earned
during the first 30 days they work in a non-resident state.
This bill eases the burden that the current patchwork of state income
tax laws places on traveling employees and small businesses. So rather
than increasing the expense of navigating the maze of tax rules,
businesses can use their resources to invest in creating jobs for
American workers.
Finally, the bill we consider today reflects a few changes that were
made at the request of state taxing authorities. I am pleased that the
sponsors of the legislation were able to work cooperatively with all
interested parties to bring a compromise version to the floor.
I encourage my colleagues to vote ``yes'' on the bill.
Ms. JACKSON LEE of Texas. Madam Speaker, I rise in strong support of
H.R. 1864, The Mobile Workforce State Income Tax Simplification Act of
2011. This is a commonsense, bipartisan piece of legislation.
Every day millions of American workers travel outside their home
state for business purposes. Each state into which they travel has its
own set of unique requirements for filing a non-resident personal
income tax return. As a result, in addition to filing a federal and any
applicable home state income tax returns, these workers may be legally
required to file an income tax return and pay non-resident state taxes
in virtually every other state into which they have travelled.
H.R. 1864, the ``Mobile Workforce State Income Tax Simplification Act
of 2011,'' would simplify the onerous burdens placed on employees who
travel outside their resident states for temporary periods and on
employers who have corresponding withholding requirements. The bill
would establish fair, administrable and uniform rules to ensure that
the appropriate amount of tax is paid to state and local jurisdictions
without placing excessive burdens on employees and their employers.
This bill was reported out of the Judiciary Committee, by a
bipartisan voice vote, which speaks volumes. I hope you will join me in
supporting this important legislation impacting millions of American
employees who travel for work to support their families.
Forty-one states currently impose a personal income tax on income
earned within their borders regardless of whether an individual is a
resident of the state--thereby requiring non-resident employees who
must travel to other states for work purposes to pay tax after
performing work there for even a limited amount of time. Employers are
required to withhold that state's income tax on behalf of the employee
and remit it to the state at the end of the year.
The committee notes that while some states require an employer to
withhold income tax on the first day of the employee's travel, others
use a hybrid system of time spent and dollars earned to trigger
withholding, requiring individuals who travel for work to track and
comply with the income tax laws of up to 41 different states. For
instance, a nonresident's income tax liability is triggered in New York
the moment he or she earns wages in the state, but the employer's
withholding requirement is not triggered until the 14th day of wage-
earning. In Idaho, meanwhile, a non-resident's income tax liability is
not triggered until after he or she makes $1,000 in wages in the state.
I note that some committee Democrats oppose the bill because they
fear it will lead to severe state revenue losses but believe that this
is a solid bi-partisan piece of legislation.
This bill limits the authority of states to tax the income of
nonresident employees who work for a limited amount of time in the
state, allowing such individuals to be taxed only if they work in the
state for 31 days or more.
Those limits would become effective on January 1 of the second year
that begins after the bill's date of enactment, and it would not apply
to any tax obligation that accrues before that time.
The bill prohibits states from taxing the wages or other earnings of
non-residents unless they work in the state for 31 days or more during
the calendar year. Similarly, states could not subject such income to
state income tax withholding and reporting requirements, unless more
than 30 days of work was performed.
Under the measure, an individual is considered to be present and
performing employment duties within a state for a day if that
individual performs more of his or her work within that state than in
any other state during the day. If an individual works during one day
both in his or her resident state and in just one non-resident state,
the individual would be considered to have performed more of his or her
employment duties in the non-resident state. Portions of the day during
which an individual is in transit would not be considered in
determining the location of where work was performed.
The bill provides that for purposes of determining state income tax
withholding and reporting requirements, an employer could rely on an
employee's determination of the time expected to be spent working for
the employer in other non-resident states (absent the employer's actual
knowledge of fraud by the employee in making the determination, or
collusion between the employer and the employee to evade tax).
Employers could rely on an employee's determination even if the
employer regularly maintains records of the location of employees, but
if the employer maintains a time and attendance system that tracks
where an employee works on a daily basis the data from the time and
attendance system must be used instead of the employee's determination.
The bill stipulates that the term ``employee'' has the same meaning
given to it by the state in which employment duties are performed--
except the term would not include professional athletes, professional
entertainers or certain public figures. States could, therefore,
continue to tax those non-residents as they do now.
I urge my colleagues to join me in supporting this bill.
The SPEAKER pro tempore (Ms. Foxx). The question is on the motion
offered by the gentleman from North Carolina (Mr. Coble) that the House
suspend the rules and pass the bill, H.R. 1864, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________