TEI endorses Mobile Workforce State Income Tax Simplification Act.

July 22, 2011

On July 22, 2011, Tax Executives Institute submitted the following comments to the House Committee on the Judiciary and its Subcommittee on Courts, Commercial and Administrative Law, recommending the enactment of H.R. 1864, the Mobile Workforce State Income Tax Simplification Act of 2011. The Institute's comments were prepared under the aegis of its State and Local Tax Committee, whose chair is Linda H. Dickens of Texas Instruments, Inc. Committee member Tov B. Haueisen of General Electric Company contributed materially to the preparation of the submission. Daniel B. De Jong, TEI Tax Counsel, serves as legal staff liaison to the committee and coordinated the preparation of the submission.

Tax Executives Institute, the preeminent association of in-house tax professionals worldwide, urges prompt consideration and enactment of H.R. 1864, the Mobile Workforce State Income Tax Simplification Act of 2011. 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 unjust 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 among the states. For example, Congress previously enacted legislation to preclude non-resident state taxation of certain distributions from non-qualified deferred compensation plans. That authority should 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. 1864 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 strongly supports the enactment of H.R. 1864.

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 approximately 7,000 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 virtually without exception engaged in interstate commerce with employees who are regularly required to travel to states outside their state of residence to perform duties. Thus, the Institute has a direct interest in H.R. 1864.

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...