Proposed Legislation: Mobile Workforce State Income Tax Simplification Act

This federal bill was never put to a vote in the last session but hopefully it will reappear. If passed, then as of the January after enactment, an employee's wages would not be subject to personal income tax or withholding and reporting requirements in any state other than the employee's state of residence and a state in which the employee is present and performing employment duties for more than 30 days during a calendar year. Currently each state makes its own rules about how many days are allowed with some at 1 day.


The general rule is that employees owe taxes to the state where services are performed vs. the state where the employer is located or where they reside. The world is shrinking and many business owners/employers, especially those headquartered in small states, can no longer afford to turn down work across state borders. Registering as an employer and allocate a few day’s or a few week’s wages to another state is burdensome. This brings about quarterly and annual payroll tax from filing requirements (which stay in place until you submit more forms to close the accounts) and the need for the employees to file personal income tax returns for each state. In some cases, a DE contractor may do one 2-3 week job in each PA, MD, NJ, and VA in a year. The costs for employment form prep (registration, wage reporting, and closing the account after the job is complete) could be $600 per state and employees may pay $60 per additional state attached to their personal tax returns.
Write your Congressperson and ask him/her to support this bill!