The U.S. House of Representatives’ version of the Mobile Workforce State Income Tax Simplification Act of 2019 (H.R. 4796) was introduced in late October by Rep. Greg Steube (R-Fla.). The bill would establish a standard 30-day annual safe harbor in all states during which most employers and employees would not be responsible for withholding or owing nonresident income taxes.
Currently, nonresident employees are subject to withholding based on either the number of days spent in a state or the amount of money earned there. In 24 states, employees are subject to withholding on the first day of travel within the state.
Compliance with nonresident income tax withholding rules tends to be low due to the complexity involved, the lack of available tools to manage the issue, and the selective enforcement among state regulators. The safe harbor would protect employers from unnecessary withholding and remitting and protect employees from the need to file nonresident income tax returns to recover the withheld amounts.
The House has passed a version of this bill three times, though it stalled in the Senate each time. A Senate version of the bill (S. 604) was introduced in February.
To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!
William Dunn, CPP, is Director of Government Relations for the APA.