The House Judiciary Committee yesterday favorably reported H.R. 1393, the ‘‘Mobile Workforce State Income Tax Simplification Act of 2017,’’ by a vote of 19-2.
If enacted, H.R. 1393 [PDF 246 KB] would limit a state’s ability to require withholding and payment of personal income taxes unless an employee (1) is a resident of the state, or (2) has been present and performing employment duties in the state for more than 30 days during the calendar year.
Currently there is no uniformity among states with respect to when an employer’s obligation to withhold on mobile workers commences, or when a nonresident employee’s presence in state to perform duties triggers a personal income tax filing requirement. If enacted, H.R. 1393 could ameliorate uncertainty for both employers and employees and preserve the states’ ability to impose taxes on nonresidents that work for more than 30 days within their borders.
H.R. 1393 clarifies that being “present in a state for a day” means that the employee performs a preponderance of his or her duties in that state during such day. If an employee were to perform material duties in a resident and nonresident state during the same day, the duties would be considered performed in the nonresident state. The term “employee” is defined under the laws of the state where the services were performed; however, professional athletes and entertainers, qualified production employees, and certain public figures are specifically excluded from the definition of employee.
If enacted, the legislation would become effective on January 1 of the second year that begins after enactment.
The House has not yet scheduled floor action on H.R. 1393. In addition, H.R. 1393 is identical to legislation introduced earlier this year in the Senate (S. 540). The Senate has not scheduled action on S. 540 [PDF 246 KB].
Identical legislation would need to be passed by both the House and the Senate, and to be signed (or not vetoed) by the President, to become law.
Similar legislation has been introduced in previous sessions of Congress.
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