[Congressional Record (Bound Edition), Volume 158 (2012), Part 5]
[House]
[Pages 6753-6755]
[From the U.S. 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.
       (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.

[[Page 6754]]

       (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.
  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.

[[Page 6755]]

  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.

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