“A bill to limit the authority of States to tax certain income of employees for employment duties performed in other States.”
No CRS summary available for this bill.
This section limits state income taxation of wages earned by an employee performing duties in more than one state to (1) the employee's state of residence and (2) any state in which the employee is present and performs duties for more than 30 days during the calendar year. It prohibits state income tax withholding and reporting on such wages unless taxable under these rules, with withholding in a nonresident state required only for wages earned from the date duties commence there during the calendar year. This section provides employers a safe harbor from penalties on withholding and reporting by allowing reliance on an employee's annual estimate of days expected in each state—absent employer knowledge of employee fraud or collusion to evade tax—unless the employer maintains (at its discretion) a time and attendance system tracking daily work locations, in which case that data controls. Business records of employee locations (made in the regular course) do not override the safe harbor. This section defines key terms, including "day" (generally, the state where the employee performs more duties than elsewhere that day; special rule if duties split between resident and one nonresident state, deeming duties performed more in the nonresident state; transit time excluded); "employee" (using the host state's definition, excluding professional athletes, entertainers, qualified production employees, and certain public figures); "employer" (using IRC §3401(d) or host state definition); "State" (any of the several states); "time and attendance system" (requiring contemporaneous daily recording of out-of-primary-state work and enabling wage allocation); and "wages or other remuneration" (as limited by host state).
This section provides that the Act takes effect on January 1 of the second calendar year following the date of enactment and does not apply to any tax obligation that accrues before that date.