Legislative / Regulatory | Tax

Plan to create national withholding standard for non-resident employees clears House

Front view of the House of Representatives

The U.S. House of Representatives has passed an MACPA-backed plan to create a national standard to govern the withholding of state income taxes for non-resident employees.

H.R. 2315, also known as the Mobile Workforce State Income Tax Simplification Act of 2015, passed the House by voice vote on Sept. 21.

According to the American Institute of CPAs, the bill includes several key components designed to alleviate the burden the current state income tax withholding system places on traveling employees and their employers. For most states, the legislation contains little or no revenue impact.

“This bipartisan legislation would enhance compliance with state personal income tax laws,” said MACPA President and CEO Tom Hood. “It would greatly simplify the onerous burdens placed on employees who travel outside of their resident states for temporary periods and on employers who have corresponding withholding and reporting requirements.”

The bill includes a number of impactful provisions:

  • It would provide for a uniform and easily administered law for traveling employees and their employers, establishing a national threshold of 30 days.
  • It would ensure that the correct amount of tax is withheld and paid to the states without the undue burden the current system places on employees and employers.
  • It would simplify the patchwork of existing inconsistent and confusing state rules, reduce administrative costs to states, and lessen compliance burdens on consumers.
  • It would establish provisions for the use of time and attendance systems that would provide protection for honest mistakes by the employer and a reduction in audit risk.
  • It would align the many different tax requirements of 41 states regarding the withholding for income tax of non-residents by setting a national threshold of 30 days or more before liability to withhold and pay taxes.
  • It would provide an opportunity for greater compliance because of the certainty and consistency of minimum withholding rules across all states, thus encouraging the free movement of personnel within the marketplace.

U.S. Reps. Mike Bishop (R-MI) and Hank Johnson (D-GA) sponsored the bill and spearheaded the measure’s passage. Co-sponsors from Maryland are Reps. John Delaney and C.A. “Dutch” Ruppersberger.

The MACPA has supported the measure on a number of fronts:

  • The association sent letters to its representatives asking for their support and sponsorship.
  • The MACPA joined the Mobile Workforce Coalition, a group of 308 organizations that support the national withholding standard. A bipartisan group of lawmakers in both the House and the Senate supports the coalition’s work.
  • AICPA Governing Council members from Maryland discussed the proposal with lawmakers during recent visits to Capitol Hill.

The bill now moves to the Senate, where its companion bill — sponsored by Sens. John Thune (R-SD) and Sherrod Brown (D-OH) — has 51 co-sponsors.


Bill Sheridan