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Simplification: They Must Not Be Talking About Federal Tax Laws

Potential good news for the growing mobile workforce.  Currently, there is a Bill pending in the US Senate to simplify the exposure, withholding, and reporting of state income taxes for both employers and employees traveling across state lines to perform their job functions.  The US House of Representatives already passed the Act in late September 2016, and the Bill is now being reviewed and considered by the Senate Finance Committee.

Essentially, the law is attempting to limit employees subject to state income taxes if they work in a state for 30 days or less.  In addition, this would limit the burden on employers for withholding and reporting requirements for those same employees.  The law allows the employers to rely on its employees for reporting days worked in a state where the employee does not reside, as long as, the employer does not have actual knowledge that the employee is lying or the employer is colluding with the employee to lie about days worked in a state.

One of the interesting aspects of this Bill would be its applicability to professional athletes.   Professional athletes tend to earn their income from performing in states all over the country.  The Bill specifically defines a professional athlete and the wages earned that are applicable to the 30-day threshold.  This potential aspect could revamp the way professional sports operate, scheduling of games, or where a professional athlete chooses to play.

Hopefully, this law passes and brings some simplicity and uniformity to the state income tax world for multi-state employers.  It should also bring down payroll and administrative costs for employers and protect employees from unwarranted state revenue departments.  What will be interesting is how the states will react if the Bill is passed and the law is enacted.  If it’s going to take money out of any states purse, then it is likely that a constitutional challenge will follow.  Does the federal government have the power pursuant to the Commerce Clause?  Or the Due Process Clause?

About the Author:  Michael Anidjar is an associate attorney who joined The Law Offices of Moffa, Sutton, & Donnini, P.A. in 2016. Mr. Anidjar’s practice concentrates in the area of federal and state taxation of businesses and its owners. Mr. Anidjar has been a licensed Certified Public Accountant since 2008 and his experience and background in tax compliance serves as a communication bridge between accountant, lawyer, and taxpayer, when resolving tax issues.

Mr. Anidjar was born and raised in South Florida. He is heavily involved in the community through organizations like the Jewish Federation of Broward County. He is not only a firm believer in due process rights, but considers assisting individuals with food, shelter, and other basic needs during difficult times an obligation of fellow community members.