Earlier this week, the House passed the Mobile Workforce State Income Tax Simplification Act of 2011 (H.R. 1864). This bill would bar states from imposing taxes on workers until they have actually worked at least 30 days within their borders. If it passes the Senate, this measure would go a long way in helping simplify the regulatory burden of withholding taxes for mobile workers and reporting them to states outside of where a business is based.
Currently, in the 41 states in which there is an income tax on wages, the rules for withholding are not uniform. This creates confusion and complexity for small businesses that have a mobile workforce.
For a good discussion of this complexity, read an article from the Journal of Accountancy (you don’t have to be a CPA to understand it).
The measure, which just passed the House in a bi-partisan effort, would create a national standard by limiting withholding to the state or locality of the employee’s residence as well as to the state or locality in which the employee is physically present performing duties for more than 30 days.
A coalition of more than 495 businesses and organizations support the bill. And so do I! Urge your senators to do so now.