Worldwide ERC® Advocates for the Mobile Workforce State Income Tax Simplification Act

Worldwide ERC® sent a letter of support to Senator John Thune of South Dakota to reiterate our longstanding need of this legislation and the benefits it provides to workforce mobility.

The Mobile Workforce State Income Tax Simplification Act remains an important issue for workforce mobility as it aims to simplify the standards and processes for taxing nonresident employees who travel temporarily to other states for work. Recently, Worldwide ERC® sent a letter to Senator John Thune of South Dakota to reiterate our longstanding support of this legislation and the benefits it provides to workforce mobility.

What is the Mobile Workforce State Income Tax Simplification Act?

The Mobile Workforce State Income Tax Simplification Act is legislation that would provide a clear and uniform framework for when state governments may begin to tax nonresident employees who travel to states to temporarily perform work. The House Judiciary Committee’s report (H. Report 115-180) shows that forty-three states and the District of Columbia levy a personal income tax on wages, but each has its own rules for when taxation and withholding begin.

For example, some have the number of days worked in the state as the standard, which varies from as little as one day (New York) to 59 days (Arizona). Other states have a dollar threshold earned within the state, for example, $1,500 (Wisconsin), $1,000 (Idaho) $800 (South Carolina) and $300 (Oklahoma). States having different taxation parameters for out-of-state workers which has caused a patchwork of tax rules for employers and their mobile workforces.

There are also standards for employee taxation that may differ from employer withholding. Worldwide ERC®’s member organizations struggle to apply these disparate rules and spend a great deal of time and effort to do so. A clear and uniform framework for taxation would simplify the process for those who temporarily travel outside their states for work.

What is the status of the legislation in Congress?

The legislation was introduced in the House of Representatives in 2011, 2015, 2017, and most recently this past January. Senator John Thune’s version of the bill in the Senate was introduced in 2019 and currently holds 38 co-sponsors. There is a companion bill in the House. Worldwide ERC®’s letter reiterates our support of the legislation on behalf of our members who facilitate employee moves while grappling with complex state tax and withholding standards.