Mobile Workforce State Income Tax Fairness and Simplification Act: on May 13, 2008, Tax Executives Institute filed the following comments with the House Judiciary Subcommittee on Commercial and Administrative Law, concerning H.R. 3359, the Mobile Workforce State Income Tax Fairness and Simplification Act of 2007.

On behalf of Tax Executives Institute (TEI), I urge prompt consideration and enactment of H.R. 3359, the Mobile Workforce State Income Tax Fairness and Simplification Act of 2007. Employers nationwide have a direct stake in the development of fair and uniform rules governing nonresident taxation and withholding, regardless of whether they are large multinational corporations or small businesses that pursue opportunities outside their home State. Employees nationwide also have an interest in the enactment of the legislation, not only to minimize their exposure to unfair taxation but to bring a measure of certainty to an area of the tax law that can impede economic growth and efficiency. The Commerce Clause of the Constitution gives Congress plenary authority to remove barriers and open markets between the States. In the past, Congress has enacted legislation, for example, to preclude non-resident State taxation of certain distributions from non-qualified deferred compensation plans. That authority should again be exercised here to limit the authority of States to tax certain income of employees for employment performed in other States and localities. H.R. 3359 represents a balanced approach toward ameliorating employer and employee uncertainty in respect of individual State income taxation and withholding for individuals temporarily present in another State while discharging their employment responsibilities and preserving the States' ability to impose taxes commensurate with the benefits accorded nonresidents. Tax Executives Institute therefore supports enactment of the legislation.

Background--About Tax Executives Institute

TEI is a voluntary, nonprofit association of corporate and other business executives, managers, and administrators who are responsible for the tax affairs of their employers. Founded in 1944, TEI is dedicated to the uniform and equitable enforcement of the tax law while reducing the costs and burdens of administration and compliance to the benefit of both the government and taxpayers. TEI has more than 7,300 individual members who represent more than 3,000 of the leading corporations in the United States, Canada, Europe, and Asia. The Institute's membership represents a cross-section of the business community whose employers are multinational enterprises and, virtually without exception, are engaged in interstate commerce. Because employees of the companies that TEI members work for are regularly required to travel to States outside their State of residence to perform duties, the Institute has a direct interest in the status of this legislation.

Statement of the Compliance Challenge

In today's mobile economy, it is rare that a company's activities or customers are confined to a single State. Regardless of whether a company is large or small privately held or publicly traded, the pursuit of new business knows no borders. Employees are regularly required to travel from their usual place of employment (i.e., their "home" or residence State) to other States to fulfill their employment obligations. When they do, they and their employers (whether they be profit-oriented, tax exempt, or governmental) become subject to a wide array of tax and withholding regimes. In some States, the...