CPA news to know: Why mobile workforce tax legislation matters

Earlier in February, numerous amendments to the 2021 fiscal year budget resolution were voted on by the Senate. One of those nonbinding amendments, which passed unanimously by a voice vote, could lead to a lessening of an administrative burden for many employers and employees.

The amendment related to mobile workforce legislation, introduced by Sen. John Thune, R-S.D., and supported by Sen. Sherrod Brown, D-Ohio, which would extend the de minimis threshold to work in a state as a nonresident before owing state income taxes or being subject to withholding.

The version of the bill introduced in the 116th Congress would increase the proposed 30-day de minimis threshold to 90 days during the pandemic.

It also would provide that during the pandemic, employers could withhold as they did prior to the pandemic or provide flexibility for employers to track where remote work is performed. It also would provide that employers would not have a nexus or apportionment impact by having a remote worker in a nonresident state during the pandemic.

The AICPA has long supported and continues to support mobile workforce legislative proposals. The AICPA submitted comments in support of the bill on numerous occasions and issued a Feb. 8 press release on the passage of the Senate budget resolution amendment on mobile workforce legislation. 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.

What you’ll learn from this episode:

• Background on the AICPA’s interest in mobile workforce tax legislation from Eileen Sherr, CPA, CGMA, director of the AICPA Tax Policy & Advocacy team.
• Why the legislation could be significant.
• FASB’s recent response to a pandemic-related accounting concern.
• Several highlights from the JofA’s February print issue, including more on tax penalty relief and Excel’s Ideas feature.

Play the episode below or read the edited transcript:

To comment on this episode or to suggest an idea for another episode, contact Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com.

Transcript:

Neil Amato: Welcome back to the Journal of Accountancy podcast. I’m Neil Amato. One important topic the Journal of Accountancy has covered recently is mobile workforce legislation. Joining me to dig into that topic a bit more is Eileen Sherr, the director of the AICPA’s Tax Policy and Advocacy team. Hi, Eileen.

Eileen Sherr: Hello.

Amato: Eileen, Congress recently made room in its fiscal year 2021 budget resolution for mobile workforce tax legislation. Why is this significant?

Sherr: It’s a great step. It’s the first time the Senate has considered mobile workforce legislation. It’s a really positive development. Senators Thune and Brown supported the amendment. It was only one of 40 amendments that made it as part of budget resolution consideration, and it passed by a unanimous voice vote. So, it signals that Congress is interested in it, that the Senate would definitely consider this legislation and hopefully as part of [an] upcoming relief package.

Amato: What exactly is the issue that mobile workforce legislation is supposed to fix?

Sherr: It fixes the problem of — right now, there’s a lot of uncertainty and a lot disparity among the states as to how many days you can be in a state working as a nonresident before you owe tax liability or the employer has to have withholding on your paycheck. There’s a lot of variation. It could be the first day that someone’s in a state, it could be up to 60 days that someone’s in a state and working as a nonresident before you start having to deal with it. It could affect traveling employees, anybody that’s going to a conference or training, or meeting with clients, obviously. So, it affects a lot of people all the time, and this would add certainty and a uniform, 30-day safe harbor for anybody traveling in a state. You wouldn’t owe tax until after you exceeded the 30 days.

Amato: Is it possible the states could fix this on their own, or not?

Sherr: Yes, but it would take a long time for each of the states to do that. Obviously, having a national, consistent safe harbor would be really good for everybody, a de minimis rule of 30 days so everybody knows the rules throughout the country, rather than state by state. Right now, Illinois did pass it last year, and Kansas has a bill now that they’re considering, and we think Louisiana and Arkansas might consider it. So, it’s possible state by state we could get there, but it’s going to take a while, and there’s a chance that each state could make their own little variation to it, and then it won’t be as uniform as having a national bill.

Amato: In what ways has the AICPA been involved in the effort to enact mobile workforce legislation?

Sherr: We have been a supporter for many, many years, right from the very beginning. We’ve been working with COST, the Council On State Taxation — they’re also interested in this legislation. TEI, Tax Executives Institute, also supports it. So, it has wide support, and it would add a lot of consistency. We’ve testified before Congress on this bill for many years as well. So, we’ve been active for many years.

Amato: Definitely sounds like a lot of activity. Eileen, thank you so much. We’ll keep monitoring the progress of this legislation.

Sherr: Great, yes, we hope it will get reintroduced in the near future. Thank you.

Amato: In recent news, the Financial Accounting Standards Board, or FASB, responded to a pandemic-related accounting concern by voting to provide private companies and not-for-profits an alternative to the requirement to monitor and evaluate goodwill impairment triggering events throughout the year.

In case you missed it, the February issue of the Journal of Accountancy offers up strategies and best practices for tax practitioners to keep in mind when requesting penalty abatement from the IRS on behalf of clients. You can find the tips in February’s Tax Practice Corner column, titled “Tax Penalty Relief Amid the Pandemic.”

Also in the issue, professional liability experts discuss work paper dos and don’ts, engagement letters, and common liability claim issues.

And the Tech Q&A column takes a look at Excel Ideas, which can analyze a dataset and provide recommendations for charts and PivotTables. For more on these and other topics, visit journalofaccountancy.com. I’m Neil Amato. Thanks for listening to the JofA podcast.