Payroll Daily News – 6/27/17

House passes mobile workforce tax simplification

The U.S. House of Representatives passed the Mobile Workforce State Income Tax Simplification Act of 2017, H.R. 1393, which would limit the authority of states to tax wages and other remuneration from employment in other states. If enacted, no part of the wages or other remuneration earned by an employee who performs employment duties in more than one state would be subject to income tax in any state other than (1) the state of the employee’s residence, and (2) the state where 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. Exemptions would apply for professional athletes, professional entertainers, qualified production (film, television, etc.) employees, and certain public figures. In addition, if the legislation is enacted, wages or other remuneration earned in any calendar year would not be subject to state income tax withholding and reporting requirements unless the employee is subject to income tax in the state. Withholding and reporting requirements by a state where the employee is present and performing employment duties for more than 30 days would apply to income earned as of the employment commencement date in the state during the calendar year. Federal rules for determining penalties related to an employer’s state tax withholding and reporting requirements would also apply. If enacted, the bill would take effect on January 1 of the second calendar year that begins after the date of enactment. It would not apply to any tax obligation that accrues before the effective date.

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