Remote and Mobile Worker Relief Act of 2021

II 117TH CONGRESS 1ST SESSION S. 1274 To limit the authority of States or other taxing jurisdictions to tax certain income of employees for employment duties performed in other States or taxing jurisdictions, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 21, 2021 Mr. THUNE (for himself and Mr. BROWN) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To limit the authority of States or other taxing jurisdictions to tax certain income of employees for employment duties performed in other States or taxing jurisdictions, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Remote and Mobile 4 Worker Relief Act of 2021’’. 5 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1274 IS SEC. 2. LIMITATIONS ON WITHHOLDING AND TAXATION OF 1 EMPLOYEE INCOME. 2 (a) IN GENERAL.—No part of the wages or other re- 3 muneration earned by an employee who is a resident of 4 a taxing jurisdiction and performs employment duties in 5 more than one taxing jurisdiction shall be subject to in- 6 come tax in any taxing jurisdiction other than— 7 (1) the taxing jurisdiction of the employee’s res- 8 idence; and 9 (2) any taxing jurisdiction within which the em- 10 ployee is present and performing employment duties 11 for more than 30 days during the calendar year in 12 which the wages or other remuneration is earned. 13 (b) INCOME TAX WITHHOLDING AND REPORTING.— 14 Wages or other remuneration earned in any calendar year 15 shall not be subject to income tax withholding and report- 16 ing requirements with respect to any taxing jurisdiction 17 unless the employee is subject to income tax in such taxing 18 jurisdiction under subsection (a). Income tax withholding 19 and reporting requirements under subsection (a)(2) shall 20 apply to wages or other remuneration earned as of the 21 commencement date of employment duties in the taxing 22 jurisdiction during the calendar year. 23 (c) OPERATING RULES.—For purposes of deter- 24 mining penalties related to an employer’s income tax with- 25 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1274 IS holding and reporting requirements with respect to any 1 taxing jurisdiction— 2 (1) an employer may rely on an employee’s an- 3 nual determination of the time expected to be spent 4 by such employee in the performance of employment 5 duties in the taxing jurisdictions in which the em- 6 ployee will perform such duties absent— 7 (A) the employer’s actual knowledge of 8 fraud by the employee in making the determina- 9 tion; or 10 (B) collusion between the employer and the 11 employee to evade tax; 12 (2) except as provided in paragraph (3), if 13 records are maintained by an employer in the reg- 14 ular course of business that record the location at 15 which an employee performs employment duties, 16 such records shall not preclude an employer’s ability 17 to rely on an employee’s determination under para- 18 graph (1); and 19 (3) notwithstanding paragraph (2), if an em- 20 ployer, at its sole discretion, maintains a time and 21 attendance system that tracks where the employee 22 performs duties on a daily basis, data from the time 23 and attendance system shall be used instead of the 24 employee’s determination under paragraph (1). 25 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1274 IS (d) DEFINITIONS AND SPECIAL RULES.—For pur- 1 poses of this Act: 2 (1) DAY.— 3 (A) Except as provided in subparagraph 4 (B), an employee is considered present and per- 5 forming employment duties within a taxing ju- 6 risdiction for a day if the employee performs 7 more of the employee’s employment duties with- 8 in such taxing jurisdiction than in any other 9 taxing jurisdiction during a day. 10 (B) If an employee performs employment 11 duties in a resident taxing jurisdiction and in 12 only one nonresident taxing jurisdiction during 13 one day, such employee shall be considered to 14 have performed more of the employee’s employ- 15 ment duties in the nonresident taxing jurisdic- 16 tion than in the resident taxing jurisdiction for 17 such day. 18 (C) For purposes of this paragraph, the 19 portion of the day during which the employee is 20 in transit shall not be considered in determining 21 the location of an employee’s performance of 22 employment duties. 23 (2) EMPLOYEE.— 24 (A) IN GENERAL.— 25 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1274 IS (i) GENERAL DEFINITION.—Except as 1 provided in clause (ii), the term ‘‘em- 2 ployee’’ has the meaning given such term 3 in section 3121(d) of the Internal Revenue 4 Code of 1986, unless such term is defined 5 by the taxing jurisdiction in which the per- 6 son’s employment duties are performed, in 7 which case the taxing jurisdiction’s defini- 8 tion shall prevail. 9 (ii) EXCEPTION.—The term ‘‘em- 10 ployee’’ shall not include a professional 11 athlete, professional entertainer, qualified 12 production employee, or certain public fig- 13 ures. 14 (B) PROFESSIONAL ATHLETE.—The term 15 ‘‘professional athlete’’ means a person who per- 16 forms services in a professional athletic event, 17 provided that the wages or other remuneration 18 are paid to such person for performing services 19 in his or her capacity as a professional athlete. 20 (C) PROFESSIONAL ENTERTAINER.—The 21 term ‘‘professional entertainer’’ means a person 22 of prominence who performs services in the pro- 23 fessional performing arts for wages or other re- 24 muneration on a per-event basis, provided that 25 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1274 IS the wages or other remuneration are paid to 1 such person for performing services in his or 2 her capacity as a professional entertainer. 3 (D) QUALIFIED PRODUCTION EM- 4 PLOYEE.—The term ‘‘qualified production em- 5 ployee’’ means a person who performs produc- 6 tion services of any nature directly in connec- 7 tion with a taxing jurisdiction qualified, cer- 8 tified or approved film, television or other com- 9 mercial video production for wages or other re- 10 muneration, provided that the wages or other 11 remuneration paid to such person are qualified 12 production costs or expenditures under such 13 taxing jurisdiction’s qualified, certified or ap- 14 proved film, television or other commercial 15 video production incentive program, and that 16 such wages or other remuneration must be sub- 17 ject to withholding under such qualified, cer- 18 tified or approved film, television or other com- 19 mercial video production incentive program as a 20 condition to treating such wages or other remu- 21 neration as a qualified production cost or ex- 22 penditure. 23 (E) CERTAIN PUBLIC FIGURES.—The term 24 ‘‘certain public figures’’ means persons of 25 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1274 IS prominence who perform services for wages or 1 other remuneration on a per-event basis, pro- 2 vided that the wages or other remuneration are 3 paid to such person for services provided at a 4 discrete event, in the nature of a speech, public 5 appearance, or similar event. 6 (3) EMPLOYER.—The term ‘‘employer’’ has the 7 meaning given such term in section 3401(d) of the 8 Internal Revenue Code of 1986, unless such term is 9 defined by the taxing jurisdiction in which the em- 10 ployee’s employment duties are performed, in which 11 case the taxing jurisdiction’s definition shall prevail. 12 (4) TAXING JURISDICTION.—The term ‘‘taxing 13 jurisdiction’’ means any of the several States, the 14 District of Columbia, any municipality, city, county, 15 township, parish, transportation district, or assess- 16 ment jurisdiction, or any other political subdivision 17 within the territorial limits of the United States with 18 the authority to impose a tax, charge, or fee. 19 (5) TIME AND ATTENDANCE SYSTEM.—The 20 term ‘‘time and attendance system’’ means a system 21 in which— 22 (A) the employee is required on a contem- 23 poraneous basis to record his work location for 24 every day worked outside of the taxing jurisdic- 25 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1274 IS tion in which the employee’s employment duties 1 are primarily performed; and 2 (B) the system is designed to allow the em- 3 ployer to allocate the employee’s wages for in- 4 come tax purposes among all taxing jurisdic- 5 tions in which the employee performs employ- 6 ment duties for such employer. 7 (6) WAGES OR OTHER REMUNERATION.—The 8 term ‘‘wages or other remuneration’’ may be defined 9 by the taxing jurisdiction in which the employment 10 duties are performed. 11 (e) PLACE OF RESIDENCE.—For purposes of this sec- 12 tion, the residence of an employee shall be determined 13 under the laws of the taxing jurisdiction in which such 14 employee maintains a dwelling which serves as the employ- 15 ee’s permanent place of abode during the calendar year. 16 (f) ADJUSTMENT DURING CORONAVIRUS PAN- 17 DEMIC.—With respect to calendar years 2020 and 2021, 18 in the case of any employee who performs employment du- 19 ties in any taxing jurisdiction other than the taxing juris- 20 diction of the employee’s residence during such year as 21 a result of the COVID–19 public health emergency, sub- 22 section (a)(2) shall be applied by substituting ‘‘90 days’’ 23 for ‘‘30 days’’. 24 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1274 IS SEC. 3. STATE AND LOCAL TAX CERTAINTY. 1 (a) STATUS OF EMPLOYEES DURING COVERED PE- 2 RIOD.—Notwithstanding section 2(a)(2) or any provision 3 of law of a taxing jurisdiction, with respect to any em- 4 ployee who is working remotely within such taxing juris- 5 diction during the covered period— 6 (1) except as provided under paragraph (2), 7 any wages earned by such employee during such pe- 8 riod shall be deemed to have been earned at the pri- 9 mary work location of such employee; and 10 (2) if an employer, at its sole discretion, main- 11 tains a system that tracks where such employee per- 12 forms duties on a daily basis, wages earned by such 13 employee may, at the election of such employer, be 14 treated as earned at the location in which such du- 15 ties were remotely performed. 16 (b) STATUS OF BUSINESSES DURING COVERED PE- 17 RIOD.—Notwithstanding any provision of law of a taxing 18 jurisdiction— 19 (1) in the case of an out-of-jurisdiction business 20 which has any employees working remotely within 21 such jurisdiction during the covered period, the du- 22 ties performed by such employees within such juris- 23 diction during such period shall not be sufficient to 24 create any nexus or establish any minimum contacts 25 or level of presence that would otherwise— 26 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1274 IS (A) subject such business to any registra- 1 tion, taxation, or other related requirements for 2 businesses operating within such jurisdiction; or 3 (B) cause such business to be deemed a 4 resident of such jurisdiction for tax purposes; 5 and 6 (2) except as provided under subsection (a)(2), 7 with respect to any tax imposed by such taxing ju- 8 risdiction which is determined, in whole or in part, 9 based on net or gross receipts or income, for pur- 10 poses of apportioning or sourcing such receipts or 11 income, any duties performed by an employee of an 12 out-of-jurisdiction business while working remotely 13 during the covered period— 14 (A) shall be disregarded with respect to 15 any filing requirements for such tax; and 16 (B) shall be apportioned and sourced to 17 the tax jurisdiction which includes the primary 18 work location of such employee. 19 (c) DEFINITIONS.—For purposes of this section— 20 (1) COVERED PERIOD.—The term ‘‘covered pe- 21 riod’’ means, with respect to any employee working 22 remotely, the period— 23 (A) beginning on the date on which such 24 employee began working remotely; and 25 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 11 •S 1274 IS (B) ending on the earlier of— 1 (i) the date on which the employer al- 2 lows, at the same time— 3 (I) such employee to return to 4 their primary work location; and 5 (II) not less than 90 percent of 6 their permanent workforce to return 7 to such work location; or 8 (ii) December 31, 2021. 9 (2) EMPLOYEE.—The term ‘‘employee’’ has the 10 meaning given such term in section 3121(d) of the 11 Internal Revenue Code of 1986, unless such term is 12 defined by the taxing jurisdiction in which the per- 13 son’s employment duties are deemed to have been 14 performed under subsection (a), in which case the 15 taxing jurisdiction’s definition shall prevail. 16 (3) EMPLOYER.—The term ‘‘employer’’ has the 17 meaning given such term in section 3401(d) of the 18 Internal Revenue Code of 1986, unless such term is 19 defined by the taxing jurisdiction in which the per- 20 son’s employment duties are deemed to have been 21 performed under subsection (a), in which case the 22 taxing jurisdiction’s definition shall prevail. 23 (4) OUT-OF-JURISDICTION BUSINESS.—The 24 term ‘‘out-of-jurisdiction business’’ means, with re- 25 VerDate Sep 11 2014 04:30 May 14, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1274.IS S1274 kjohnson on DSK79L0C42PROD with BILLS 12 •S 1274 IS spect to any taxing jurisdiction, any business entity 1 which, excepting any employees of such business who 2 are working remotely within such jurisdiction during 3 the covered period, would, under the existing law of 4 such taxing jurisdiction, not otherwise— 5 (A) be subject to any registration, tax- 6 ation, or other related requirement for busi- 7 nesses operating within such jurisdiction; or 8 (B) be deemed a resident of such jurisdic- 9 tion f [Text truncated for display. 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