No One Wants a Surprise Tax Bill Under the Tree
By Sen. John Thune
The complicated tax situation facing mobile workers has been an issue in need of a solution for a while now, but the urgency to address it has grown exponentially during the pandemic. As everyone knows, medical professionals from around the country have traveled to hard-hit areas this year to help hospitals deal with the influx of COVID cases. But what many people don’t realize is that these medical professionals – like other mobile workers – are likely to face a complicated tax situation as a result.
Like most Americans, mobile workers’ income is subject to taxation in the state in which their permanent home is located, but any income they earned in a state other than their state of residence is also subject to taxation in the state in which they earned it. For example, a worker who lives and works in Minnesota gets taxed in Minnesota. In certain situations, she can also be taxed on the income she earns in Wisconsin and Iowa if she travels there for work.
Some states give up to a 60-day window before income earned by mobile workers in their state is subject to taxation. Other states start taxing mobile workers immediately. Navigating different states’ requirements can make for a miserable tax season. It can also be a real burden for their employers. It’s particularly challenging for smaller businesses, who frequently lack the in-house tax staff and tracking capabilities of larger organizations. The situation has long cried out for a solution.
For the past four Congresses, I’ve introduced legislation – the Mobile Workforce State Income Tax Simplification Act – to create a uniform standard for mobile workers. Under my bill, if you spent 30 days or fewer working in a different state, you would be taxed as normal by your home state. If you spent more than 30 days working in a different state, you would be subject to that other state’s income tax in addition to income tax from your home state.
In June of this year, I introduced an updated version of my Mobile Workforce bill – the Remote and Mobile Worker Relief Act. My new bill goes further to address some of the particular challenges faced by mobile and remote workers as a result of the coronavirus by establishing a special 90-day standard for health care workers who travel to another state to help during the pandemic. This would ensure that these workers don’t face an unexpected tax bill for the contributions they make fighting the coronavirus.
Relief for mobile workers is a bipartisan idea. A version of my original Mobile Workforce bill has passed the House of Representatives multiple times, and the only reason it hasn’t advanced so far in the Senate is because of the opposition of a handful of states – like New York– that aggressively tax temporary workers.
New York, of course, was the epicenter of the pandemic in the United States early on, and medical professionals from across the country came to New York to work and help out. One would think that their presence would be an occasion for profound gratitude, but New York Gov. Andrew Cuomo apparently also regards them as an opportunity for a tax windfall. That’s right. These workers provided indispensable help to New York in its worst period during the pandemic, but in May Gov. Cuomo announced that these workers would nevertheless be subjected to New York’s substantial income tax for the time they spent working in the state.
Americans have been through enough over the past year. Dedicated health care workers have traveled the country to save lives, and many workers in our country have been forced to work remotely. We can save them from unexpected tax misery next April with my bipartisan Remote and Mobile Worker Relief Act.
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