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California Law Simplifies Employer Tax Obligations

California’s A.B. 2660 would allow employers to file a group income tax return for their international business travelers simplifying existing tax obligations.

California’s Assembly is considering a recently introduced bill by Assemblywoman Autumn Burke (D), A.B. 2660, that would allow employers to file a group income tax return for their international business travelers who are ineligible under today’s laws to obtain a social security number (SSN) or federal income taxpayer identification number (ITIN). The bill must first pass the full Assembly by 19 June to move forward to the Senate for debate. Currently, the bill has bipartisan support and is expected to move forward to consideration by the Assembly unless it is not seen as a priority during this time of the COVID-19 pandemic.

Specifically, A.B. 2660 is significant to Worldwide ERC® and its members because it gives employers the voluntary option to file a composite return on behalf of their international business travelers to California, helping them to meet tax compliance obligations that are currently challenging to fulfill. Additionally, the bill reduces administrative burdens for employees who only incur this obligation to file a California income tax return because they are an international business traveler for their employer.

The bill may be the first of its kind nationwide and it is reported it would raise $34 million a year for California regarding the fiscal year that begins 1 July, 2022. Additionally, there is a savings for the employer should an employer choose to file a composite tax return for their international business travelers to California. Employers would do so by paying the already-established 1% rate in California, a non-taxable compensation resulting in no gross-up and savings for the employer.

Finally, the bill is also a potential benefit for the employee. According to the Franchise Tax Board, around 10,000 international employees travel to California for business purposes and are often ineligible for a SSN or ITIN due to lacking a qualifying visa as a traveler. While employers are obligated to report and withhold taxes for these employees, these international business traveler employees are obligated to file individual tax returns in California, if they don’t choose to be included in the employer’s composite filing.

Without the solutions provided for in the bill it is a lengthy, expensive, and arduous process for employers and international business travelers coming to California when tax obligations are considered.

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How This Impacts Mobility

A.B. 2660 is incredibly relevant to Worldwide ERC® and its members as it provides more flexibility for employers to opt to file a composite tax return for their international employees traveling on business to California, while easing the financial and administrative burdens on employees and providing ultimate costs savings along the way. Worldwide ERC® will continue to track this bill and provide you with updates as it moves forward. If you have any questions about this bill, please reach out to Rebecca Peters, Vice President of Government Affairs at rpeters@worldwideerc.org

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