It’s been a long time coming for mobile workers suffering under the tax nightmare of filing state and federal returns in every state their job requires them to visit throughout the year, but change is finally in the air.
Reintroduced in early 2019 by Senate Finance Committee members, Senators Sherrod Brown (Democrat, Ohio) and John Thune (Republican, South Dakota), the Mobile Workforce State Income Tax Simplification Act of 2019 is a bill that has many taxpayers hopeful of easier times ahead.
Proposed in the bill S.604 – which has bipartisan approval from 17 Democrats, 16 Republicans, and 1 Independent – is a standardized approach in how mobile workers file their income tax returns, as well as easier reporting and withholding requirements.
Rather than filing in every single state income was earned while traveling for work, mobile employees would only file a tax return for:
• Their home state of residence; and/or
• Any state they worked in for over 30 days and received compensation for.
A giant victory for traveling workers should the bill pass – though, as with all things, the Act comes with its own set of cons.
For starters, the bill excludes professional entertainers and athletes, certain production employees, and specific public figures from this tax easement; a clause that some argue adds yet more evidence of noted tax code discrimination against athletes and entertainers for the simple fact that they make more money.
For another, passage of the bill could affect the earnings of tax professionals nationwide as processing multi-state returns for their mobile clients certainly came with it’s own added fee for the extra work. But Michael Knight, partner of Knight Rolleri Sheppard CPAs LLP, puts it best when speaking of his client group of touring musicians who spend a day performing in every state they visit.
“We have to file 30 state returns, so the proposed act would be tremendously relieving,” Knight says. “We do it for the group, but the people in the group have to do it individually. The 30-day threshold would obviate a lot of work — I may have to reduce my fee, but that’s OK; I’m goring my own ox, but it’s for the greater good.”
Not only is multi-state filing expensive for both employer and employee, but incredibly time-consuming for the taxpayer and tax professional.
A nightmare, really, for all concerned. And one all hope ends quickly with the smooth passing of the Mobile Workforce State Income Tax Simplification Act of 2019.