The Mobile Workforce State Income Tax Simplification Act passed in the House Judiciary Committee on Wednesday by a vote of 23-4.
Introduced by Republican Congressman Mike Bishop of Michigan, the bill is designed to address taxation issues with employees working temporarily in multiple states.
“I applaud the House Judiciary Committee on advancing this bipartisan bill to streamline state income tax filing and reporting standards,” Bishop said in a written statement.
As many as 41 separate reporting requirements can affect employees and employers doing multi-state work, and many of those requirements are dependent on time spent in a given state or income accrued. The Mobile Workforce act aims to simplify this greatly: taxes would only be paid in a worker’s state of citizenship and any state they work in longer than 30 days.
“By simplifying these requirements, we can reduce compliance costs and confusing paperwork for employees and their employers,” said Bishop.
This bipartisan, bicameral bill moving forward in the house benefits businesses as well as employees, as dealing with reporting income and pursuing these taxes is often costly and time-intensive work.
Also, Bishop has argued some states will save more money not pursuing these cases than they would have made from taxing the employees.
“To demonstrate the legal morass these rules create, one manufacturer testified before the Judiciary Committee this year that it had to issue 50 W-2’s for a single employee in a single year,” said a statement from Congressman Bob Goodlatte (R-VA).
As demand for interstate work increases, situations like that have become more commonplace, and without changes to the way these taxes are pursued, will continue to do so.
“On a larger scale, these regulatory costs stifle interstate commerce,” added Goodlatte.
Goodlatte, who chairs the Judiciary Committee, joined Bishop in calling Wednesday’s vote a victory for both employers and employees nationwide.
The bill now awaits discussion on the House floor.