The ‘‘Mobile Workforce State Income Tax Simplification Act of 2019’’ was reintroduce in the Senate by Senator John Thune (R-SD) earlier this year. The bill proposes to simplify tax reporting requirements for employers and workers where multiple state jurisdictions are concerned. Nevada Senator Catherine Cortez Masto (D) is a co-sponsor as is Sherrod Brown (D-Ohio) and approximately 30 other Senators.

The legislation would establish a 30-day “safe harbor” from withholding obligations for employers and personal income tax requirements for their traveling employees. The 30-day threshold is not continuous, so an employee could accumulate the 30 days over the course of a year. Thus, if an employee travels to a nonresident state for fewer than 30 days, they incur no personal income tax liability, nor would their employer have to withhold.

The rationale for the legislation is that the American workforce is increasingly mobile, switching jobs frequently, working in one state while living in another such as remote workers do, or workers may have multiple temporary assignments strung across the country.  The various state laws can have an adverse effect on employees’ income taxes. For example, some state thresholds are tied to personal exemption, standard deduction or filing thresholds that can change each year. Others have a specific monetary threshold based on wages earned.

Advocates say employees should be exempt from “needless complications” on their taxes. “Imagine how complicated and unfair it is for an individual who lives in a state like South Dakota, with no state income tax, to have to file income taxes in multiple states for simply temporarily working in those states — in some cases, for as little as 24 hours — and not be able to recover any income tax payments he or she has to make,” Sen. Thune said in a press release. 

“The current framework is overly burdensome, and this legislation would provide much-needed relief,” Sen. Thune continued. “The name of our bill says it all. If enacted, it would simplify state income tax filings by creating a common-sense, across-the-board standard for mobile employees who spend a short period of time during the year working across state lines.”

However, Democrats who are critics of the legislation say the bill’s “30-day threshold would allow a non-resident employee to work six entire business weeks (or more than 10 percent of the year) in another state and avoid an obligation to pay any income taxes to that state.”

A total of 41 states currently collect state income taxes. Currently, Nevada does not collect an individual income tax.