A new bill from a bipartisan pair of senators would ease the tax burden faced by traveling workers and create a temporary nexus exception during the coronavirus pandemic.
The Remote and Mobile Worker Relief Act of 2020 (S. 3995), introduced June 18 by Senate Finance Committee members John Thune, R-S.D., and Sherrod Brown, D-Ohio, builds on previous legislation introduced by the pair to help taxpayers who travel for work.
“Doctors and nurses who voluntarily crossed state lines to help during the pandemic — in some cases sacrificing vacation time to do so — should not be at risk of facing a much higher or unexpected tax bill as a reward for their service and sacrifice,” Thune said in a release.
Thune and Brown introduced a similar measure last year, the Mobile Workforce State Income Tax Simplification Act of 2019 (S. 604), which would exempt workers from filing tax returns in a state in which they worked for 30 or fewer days. The new legislation includes the same provisions but extends the exemption to 90 days for workers who worked out of state during the coronavirus pandemic.
Brown argued that workers who traveled to work in other jurisdictions during the pandemic shouldn’t be hit with surprise tax bills from a different state. “We should make it easier for these mobile workers to support themselves and their families,” he said.
The bill serves as a partial rebuke to New York Gov. Andrew Cuomo (D), who recently announced that doctors and nurses who traveled to New York to volunteer would have to pay state taxes. “We're not in a position to provide any more subsidies right now because we have a $13 billion deficit,” Cuomo said in May.
No Nexus
The new Thune-Brown bill doesn’t just address the qualms faced by traveling workers; it also answers questions raised about the tax obligations of those working remotely.
The bill dictates that the taxing jurisdiction of an employee is that of their employer regardless of where the employee is located if they are working remotely during the coronavirus pandemic. It also clarifies that no nexus or minimum contact is created by an employee working in a state for an out-of-state business during the pandemic.
The American Institute of CPAs lauded the bill’s introduction, saying it provides relief from “inconsistent state and local income tax and withholding rules that impact employers and employees.”
“The coronavirus pandemic has crippled businesses, and it’s important that Congress work to remove unnecessary obstacles to restoring the financial health of individuals and businesses,” AICPA Tax Committee Chair Christopher W. Hesse said in a statement.
The organization said the measure would also helps CPA firms that routinely have employees working in states other than their home states.
Hurdle Remains
Simplifying and streamlining taxes for mobile workers, however, hasn’t been simple because of objections raised by influential New York lawmakers concerned that the Empire State would lose millions in tax revenue.
House Judiciary Committee Chair Jerrold Nadler, D-N.Y., criticized previous efforts to streamline the tax collection process for mobile workers and has not yet allowed a hearing on the House version (H.R. 5674) of the Mobile Workforce State Income Tax Simplification Act introduced by Rep. Henry C. “Hank” Johnson Jr., D-Ga.
Senate Minority Leader Charles E. Schumer, D-N.Y., has previously stood in the way of House-passed mobile workforce bills and continues to disagree with efforts to pass the legislation.