Mobile Workforce State Income Tax Simplification Act of 2019

II 116TH CONGRESS 1ST SESSION S. 604 To limit the authority of States to tax certain income of employees for employment duties performed in other States. IN THE SENATE OF THE UNITED STATES FEBRUARY 28, 2019 Mr. THUNE (for himself, Mr. BROWN, Ms. BALDWIN, Mr. BARRASSO, Mr. BLUMENTHAL, Mr. BOOKER, Ms. CANTWELL, Ms. COLLINS, Ms. CORTEZ MASTO, Mr. CRAPO, Mr. CRUZ, Ms. ERNST, Ms. HASSAN, Mr. HOEVEN, Mr. ISAKSON, Mr. KING, Ms. KLOBUCHAR, Mr. LEAHY, Mrs. MURRAY, Mr. PORTMAN, Mr. REED, Mr. SCHATZ, Mrs. SHAHEEN, Mr. TILLIS, Mr. TOOMEY, Mr. VAN HOLLEN, Mr. WHITEHOUSE, Mr. WICKER, Mrs. HYDE-SMITH, Mr. MURPHY, Mr. PETERS, Mr. RISCH, and Mr. LEE) in- troduced the following bill; which was read twice and referred to the Com- mittee on Finance A BILL To limit the authority of States to tax certain income of employees for employment duties performed in other States. 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 ‘‘Mobile Workforce 4 State Income Tax Simplification Act of 2019’’. 5 VerDate Sep 11 2014 00:16 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S604.IS S604 kjohnson on DSK79L0C42 with BILLS 2 •S 604 IS SEC. 2. LIMITATIONS ON STATE WITHHOLDING AND TAX- 1 ATION OF EMPLOYEE INCOME. 2 (a) IN GENERAL.—No part of the wages or other re- 3 muneration earned by an employee who performs employ- 4 ment duties in more than one State shall be subject to 5 income tax in any State other than— 6 (1) the State of the employee’s residence; and 7 (2) the State within which the employee is 8 present and performing employment duties for more 9 than 30 days during the calendar year in which the 10 wages or other remuneration is earned. 11 (b) WAGES OR OTHER REMUNERATION.—Wages or 12 other remuneration earned in any calendar year shall not 13 be subject to State income tax withholding and reporting 14 requirements unless the employee is subject to income tax 15 in such State under subsection (a). Income tax with- 16 holding and reporting requirements under subsection 17 (a)(2) shall apply to wages or other remuneration earned 18 as of the commencement date of employment duties in the 19 State during the calendar year. 20 (c) OPERATING RULES.—For purposes of deter- 21 mining penalties related to an employer’s State income tax 22 withholding and reporting requirements— 23 (1) an employer may rely on an employee’s an- 24 nual determination of the time expected to be spent 25 VerDate Sep 11 2014 00:16 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S604.IS S604 kjohnson on DSK79L0C42 with BILLS 3 •S 604 IS by such employee in the States in which the em- 1 ployee will perform duties absent— 2 (A) the employer’s actual knowledge of 3 fraud by the employee in making the determina- 4 tion; or 5 (B) collusion between the employer and the 6 employee to evade tax; 7 (2) except as provided in paragraph (3), if 8 records are maintained by an employer in the reg- 9 ular course of business that record the location of an 10 employee, such records shall not preclude an employ- 11 er’s ability to rely on an employee’s determination 12 under paragraph (1); and 13 (3) notwithstanding paragraph (2), if an em- 14 ployer, at its sole discretion, maintains a time and 15 attendance system that tracks where the employee 16 performs duties on a daily basis, data from the time 17 and attendance system shall be used instead of the 18 employee’s determination under paragraph (1). 19 (d) DEFINITIONS AND SPECIAL RULES.—For pur- 20 poses of this Act: 21 (1) DAY.— 22 (A) Except as provided in subparagraph 23 (B), an employee is considered present and per- 24 forming employment duties within a State for a 25 VerDate Sep 11 2014 00:16 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S604.IS S604 kjohnson on DSK79L0C42 with BILLS 4 •S 604 IS day if the employee performs more of the em- 1 ployee’s employment duties within such State 2 than in any other State during a day. 3 (B) If an employee performs employment 4 duties in a resident State and in only one non- 5 resident State during one day, such employee 6 shall be considered to have performed more of 7 the employee’s employment duties in the non- 8 resident State than in the resident State for 9 such day. 10 (C) For purposes of this paragraph, the 11 portion of the day during which the employee is 12 in transit shall not be considered in determining 13 the location of an employee’s performance of 14 employment duties. 15 (2) EMPLOYEE.—The term ‘‘employee’’ has the 16 same meaning given to it by the State in which the 17 employment duties are performed, except that the 18 term ‘‘employee’’ shall not include a professional 19 athlete, professional entertainer, qualified production 20 employee, or certain public figures. 21 (3) PROFESSIONAL ATHLETE.—The term ‘‘pro- 22 fessional athlete’’ means a person who performs 23 services in a professional athletic event, provided 24 that the wages or other remuneration are paid to 25 VerDate Sep 11 2014 00:16 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S604.IS S604 kjohnson on DSK79L0C42 with BILLS 5 •S 604 IS such person for performing services in his or her ca- 1 pacity as a professional athlete. 2 (4) PROFESSIONAL ENTERTAINER.—The term 3 ‘‘professional entertainer’’ means a person of promi- 4 nence who performs services in the professional per- 5 forming arts for wages or other remuneration on a 6 per-event basis, provided that the wages or other re- 7 muneration are paid to such person for performing 8 services in his or her capacity as a professional en- 9 tertainer. 10 (5) QUALIFIED PRODUCTION EMPLOYEE.—The 11 term ‘‘qualified production employee’’ means a per- 12 son who performs production services of any nature 13 directly in connection with a State qualified, cer- 14 tified or approved film, television or other commer- 15 cial video production for wages or other remunera- 16 tion, provided that the wages or other remuneration 17 paid to such person are qualified production costs or 18 expenditures under such State’s qualified, certified 19 or approved film incentive program, and that such 20 wages or other remuneration must be subject to 21 withholding under such film incentive program as a 22 condition to treating such wages or other remunera- 23 tion as a qualified production cost or expenditure. 24 VerDate Sep 11 2014 00:16 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S604.IS S604 kjohnson on DSK79L0C42 with BILLS 6 •S 604 IS (6) CERTAIN PUBLIC FIGURES.—The term 1 ‘‘certain public figures’’ means persons of promi- 2 nence who perform services for wages or other remu- 3 neration on a per-event basis, provided that the 4 wages or other remuneration are paid to such person 5 for services provided at a discrete event, in the na- 6 ture of a speech, public appearance, or similar event. 7 (7) EMPLOYER.—The term ‘‘employer’’ has the 8 meaning given such term in section 3401(d) of the 9 Internal Revenue Code of 1986 (26 U.S.C. 3401(d)), 10 unless such term is defined by the State in which 11 the employee’s employment duties are performed, in 12 which case the State’s definition shall prevail. 13 (8) STATE.—The term ‘‘State’’ means any of 14 the several States. 15 (9) TIME AND ATTENDANCE SYSTEM.—The 16 term ‘‘time and attendance system’’ means a system 17 in which— 18 (A) the employee is required on a contem- 19 poraneous basis to record his work location for 20 every day worked outside of the State in which 21 the employee’s employment duties are primarily 22 performed; and 23 (B) the system is designed to allow the em- 24 ployer to allocate the employee’s wages for in- 25 VerDate Sep 11 2014 00:16 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S604.IS S604 kjohnson on DSK79L0C42 with BILLS 7 •S 604 IS come tax purposes among all States in which 1 the employee performs employment duties for 2 such employer. 3 (10) WAGES OR OTHER REMUNERATION.—The 4 term ‘‘wages or other remuneration’’ may be limited 5 by the State in which the employment duties are 6 performed. 7 SEC. 3. EFFECTIVE DATE; APPLICABILITY. 8 (a) EFFECTIVE DATE.—This Act shall take effect on 9 January 1 of the second calendar year that begins after 10 the date of the enactment of this Act. 11 (b) APPLICABILITY.—This Act shall not apply to any 12 tax obligation that accrues before the effective date of this 13 Act. 14 Æ VerDate Sep 11 2014 00:16 Mar 07, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S604.IS S604 kjohnson on DSK79L0C42 with BILLS