Uniform Standard Governing Payment of State Taxes for Employees Working in More Than One State Pushed
Congress should adopt a uniform national standard governing withholding and payment of state income taxes for employees who work in more than one state, Barry Melancon, president and CEO of the American Institute of Certified Public Accountants, said in a letter to members of the House Judiciary Committee strongly supporting H.R. 1864, the Mobile Workforce State Income Tax Simplification Act of 2011.
“A uniform national standard will significantly simplify compliance with all of the different state laws,” Melancon said noting that numerous state income tax withholding laws, and varying de minimis exemption periods make compliance extremely difficult and time consuming.
“Simplified compliance will significantly ease the regulatory burden on the employer and should enhance compliance when withholding is required.”
H.R. 1864 would require an employee’s earnings to be subject to state income tax and withholding when the employee performs work in a state for more than 30 days during the calendar year.
“We believe that this is an appropriate balance,” Melancon said.
“The bill will mean most employers will be better able to judge which employees will need to withhold income taxes in states other than their home state.”
He said the bill is “critically important” to thousands of CPA firms and many of their business clients, as well as the thousands of CPAs employed by companies with multi-state operations.
“Small businesses are particularly impacted,” Melancon said.
The House Judiciary Committee is scheduled to mark up H.R. 1864 on Nov. 17.