AICPA Urges Congress Committee to Approve State Tax Simplification Act

The American Institute of CPAs is urging the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law to approve H.R. 2315, the Mobile Workforce State Income Tax Simplification Act of 2015.

In a written statement for the June 2 record of the subcommittee’s hearing on several bills, including H.R. 2315, related to nexus issues, the AICPA stated, “The AICPA strongly supports H.R. 2315. We believe the bill provides relief, which is long-overdue, from the current web of inconsistent state income tax and withholding rules that impact employers and employees.”

The AICPA explained that H.R. 2315 would limit the authority of states to tax certain income of employees for employment duties performed in other states. More specifically, the bill prohibits states from taxing most non-resident employees (there are exceptions for certain professions) unless the employee is present and performing employment duties for more than 30 days during the calendar year. Furthermore, employees would not be subject to state income tax withholding and reporting requirements unless their income is subject to taxation.

H.R. 2315 was introduced by Rep. Mike Bishop (R-Mich.); Rep. Hank Johnson (D-Ga.) is the lead co-sponsor of the bill. Both Reps. Bishop and Johnson are members of the Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law.

“We believe Congressmen Bishop and Johnson have reached a good balance between the states’ right to tax income from work performed within their borders, and the needs of individuals and businesses, and especially small businesses, to operate efficiently in this economic climate,” the testimony stated. “Having a uniform national standard for non-resident income taxation, withholding and filing requirements will enhance compliance and reduce unnecessary administrative burdens on businesses and their employees. In addition to uniformity, H.R. 2315 provides a reasonable 30-day de minimis exemption before an employee is obligated to pay taxes to a state in which they do not reside.”