Senate shows bipartisan support for mobile workforce tax legislation

By Alistair M. Nevius, J.D.

On Thursday, the Senate voted on amendments to S. Con. Res. 5, the fiscal year 2021 budget resolution. After more than 500 amendments to the budget resolution were filed, 41 amendments received votes on the Senate floor in a process that lasted well into Friday morning. One amendment, introduced by Sen. John Thune, R-S.D., and supported by Sen. Sherrod Brown, D-Ohio, reflects bipartisan legislation that would provide state tax filing relief to American employees and businesses during the pandemic. The amendment passed the Senate unanimously on a voice vote.

Although a congressional budget resolution and its adopted amendments are nonbinding, this is the first time the issue has been considered on the Senate floor, and the amendment’s passage marks a step forward in ultimately passing mobile workforce legislation. The House, which has passed mobile workforce bills in previous Congresses, now must vote on the Senate-passed budget resolution.

Mobile workforce legislation is designed to address the problem of employees who travel outside of their resident state for business purposes being required to file an income tax return and have state income tax withheld in many states, and some cities, into which they traveled and worked, even if they were there for only one day. This has created an enormous administrative burden for employees and their employers.

Previous mobile workforce bills have provided a de minimis provision under which states may generally not tax a nonresident employee’s income unless the employee is present and performing employment duties in the nonresident state for more than 30 days during the calendar year. Likewise, an employer is generally required to withhold state taxes on all of the employee’s income from working in the state once the 30-day threshold has been exceeded. In the 116th Congress, Thune and Brown introduced S. 3995, which expanded on previous legislation addressing simplified state tax collection for remote workers by including pandemic-specific relief provisions. Similar legislation is expected to be introduced soon.

The AICPA has long supported and continues to support mobile workforce legislative proposals. Reacting to the Senate’s vote, Edward Karl, CPA, CGMA, AICPA vice president—Taxation, said, “The AICPA recognizes the importance of mobile workforce legislation and we applaud the work by Senators Thune and Brown to advance this bipartisan amendment to the FY2021 Budget Resolution.” For more on the development of mobile workforce legislation, see Yesnowitz, Sherr, and Bell-Jacobs, “AICPA Focuses Advocacy Efforts on Mobile Workforce Legislation,” in The Tax Adviser.

Alistair M. Nevius, J.D., (Alistair.Nevius@aicpa-cima.com) is the JofA’s editor-in-chief, tax.

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