Multi-State Worker Tax Fairness Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 7968 To amend title 4 of the United States Code to limit the extent to which States may tax the compensation earned by nonresident telecommuters and other multi-State workers. IN THE HOUSE OF REPRESENTATIVES AUGUST 7, 2020 Mr. HIMES (for himself, Mrs. HAYES, and Mr. PAPPAS) introduced the following bill; which was referred to the Committee on the Judiciary A BILL To amend title 4 of the United States Code to limit the extent to which States may tax the compensation earned by nonresident telecommuters and other multi-State workers. 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 ‘‘Multi-State Worker 4 Tax Fairness Act of 2020’’. 5 VerDate Sep 11 2014 19:50 Aug 28, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7968.IH H7968 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 7968 IH SEC. 2. LIMITATION ON STATE TAXATION OF COMPENSA- 1 TION EARNED BY NONRESIDENT TELECOM- 2 MUTERS AND OTHER MULTI-STATE WORK- 3 ERS. 4 (a) IN GENERAL.—Chapter 4 of title 4, United 5 States Code, is amended by adding at the end the fol- 6 lowing: 7 ‘‘§ 127. Limitation on State taxation of compensation 8 earned by nonresident telecommuters 9 and other multi-State workers 10 ‘‘(a) IN GENERAL.—In applying its income tax laws 11 to the compensation of a nonresident individual, a State 12 may deem such nonresident individual to be present in or 13 working in such State for any period of time only if such 14 nonresident individual is physically present in such State 15 for such period and such State may not impose non- 16 resident income taxes on such compensation with respect 17 to any period of time when such nonresident individual 18 is physically present in another State. 19 ‘‘(b) DETERMINATION OF PHYSICAL PRESENCE.— 20 For purposes of determining physical presence, no State 21 may deem a nonresident individual to be present in or 22 working in such State on the grounds that— 23 ‘‘(1) such nonresident individual is present at 24 or working at home for convenience, or 25 VerDate Sep 11 2014 19:50 Aug 28, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7968.IH H7968 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 7968 IH ‘‘(2) such nonresident individual’s work at 1 home or office at home fails any convenience of the 2 employer test or any similar test. 3 ‘‘(c) DETERMINATION OF PERIODS OF TIME WITH 4 RESPECT TO WHICH COMPENSATION IS PAID.—For pur- 5 poses of determining the periods of time with respect to 6 which compensation is paid, no State may deem a period 7 of time during which a nonresident individual is physically 8 present in another State and performing certain tasks in 9 such other State to be— 10 ‘‘(1) time that is not normal work time unless 11 such individual’s employer deems such period to be 12 time that is not normal work time, 13 ‘‘(2) nonworking time unless such individual’s 14 employer deems such period to be nonworking time, 15 or 16 ‘‘(3) time with respect to which no compensa- 17 tion is paid unless such individual’s employer deems 18 such period to be time with respect to which no com- 19 pensation is paid. 20 ‘‘(d) DEFINITIONS.—As used in this section— 21 ‘‘(1) STATE.—The term ‘State’ means each of 22 the several States (or any subdivision thereof), the 23 District of Columbia, and any territory or possession 24 of the United States. 25 VerDate Sep 11 2014 19:50 Aug 28, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7968.IH H7968 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 7968 IH ‘‘(2) INCOME TAX.—The term ‘income tax’ has 1 the meaning given such term by section 110(c). 2 ‘‘(3) INCOME TAX LAWS.—The term ‘income 3 tax laws’ includes any statutes, regulations, adminis- 4 trative practices, administrative interpretations, and 5 judicial decisions. 6 ‘‘(4) NONRESIDENT INDIVIDUAL.—The term 7 ‘nonresident individual’ means an individual who is 8 not a resident of the State applying its income tax 9 laws to such individual. 10 ‘‘(5) EMPLOYEE.—The term ‘employee’ means 11 an employee as defined by the State in which the 12 nonresident individual is physically present and per- 13 forming personal services for compensation. 14 ‘‘(6) EMPLOYER.—The term ‘employer’ means 15 the person having control of the payment of an indi- 16 vidual’s compensation. 17 ‘‘(7) COMPENSATION.—The term ‘compensa- 18 tion’ means the salary, wages, or other remuneration 19 earned by an individual for personal services per- 20 formed as an employee or as an independent con- 21 tractor. 22 ‘‘(e) NO INFERENCE.—Nothing in this section shall 23 be construed as bearing on— 24 ‘‘(1) any tax laws other than income tax laws, 25 VerDate Sep 11 2014 19:50 Aug 28, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7968.IH H7968 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 7968 IH ‘‘(2) the taxation of corporations, partnerships, 1 trusts, estates, limited liability companies, or other 2 entities, organizations, or persons other than non- 3 resident individuals in their capacities as employees 4 or independent contractors, 5 ‘‘(3) the taxation of individuals in their capac- 6 ities as shareholders, partners, trust and estate 7 beneficiaries, members or managers of limited liabil- 8 ity companies, or in any similar capacities, and 9 ‘‘(4) the income taxation of dividends, interest, 10 annuities, rents, royalties, or other forms of un- 11 earned income.’’. 12 (b) CLERICAL AMENDMENT.—The table of sections 13 of such chapter 4 is amended by adding at the end the 14 following new item: 15 ‘‘127. Limitation on State taxation of compensation earned by nonresident tele- commuters and other multi-State workers.’’. (c) EFFECTIVE DATE.—The amendments made by 16 this section shall take effect on the date of the enactment 17 of this Act. 18 Æ VerDate Sep 11 2014 19:50 Aug 28, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H7968.IH H7968 pamtmann on DSKBC07HB2PROD with BILLS