House passes mobile workforce legislation
TAX ALERT |
On June 20, 2017, the U.S. House of Representatives passed H.R. 1393, the Mobile Workforce State Income Tax Simplification Act of 2017 (Mobile Workforce Act), intending to provide a federal solution to the states’ income tax treatment of non-resident and temporary workers. The Mobile Workforce Act will next be considered by the U.S. Senate.
The Mobile Workforce Act
As drafted, the Mobile Workforce Act prohibits the wages or other remuneration earned by an employee who performs employment duties in more than one state from being subject to state income tax in a state other than the state of the employee's residence, unless the employee is in the state for more than 30 days during the calendar year the wages are earned. The bill also exempts employers from state income tax withholding and information reporting for employees performing employment duties in a state for fewer than 30 days.
The Mobile Workforce Act provides several exclusions from the definition of ‘employee,’ including professional athletes, professional entertainers, production employees who perform services in connection with certain film, television or other commercial video productions, and public figures who are persons of prominence who perform services for wages or other remuneration on a per-event basis.
The bill is currently scheduled to take effect on Jan. 1 of the second calendar year that begins after the enactment of the bill. At the earliest, the current effective date of the legislation would be Jan. 1, 2019.
The recent success of the Mobile Workforce Act follows a virtually identical bill introduced in the last congressional session. In September 2016, the House passed H.R. 2315, but due to the end of the session, the presidential election and other legislative business, was never addressed in the Senate. The Mobile Workforce Act still has far to go before becoming law, but proponents of the bill are surely encouraged by success in the House twice in the last nine months. A bill identical to the Mobile Workforce Act, S.540, was introduced in the Senate in March.
Taxpayers and tax professionals alike have lobbied for mobile workforce legislation for over a decade hoping to bring some certainty and consistency to a fragmented landscape of state income tax laws addressing withholding and temporary employees. For more information on mobile workforce legislation, please read our blog, Will congress pass mobile workforce legislation in 2017?