AICPA focuses advocacy efforts on mobile workforce legislation

As was written in this forum eight years ago,¹ state tax nonresident withholding and liability concerns for nonresident individuals and their employers continue to be prevalent in an interconnected, mobile economy. The issues are more salient now and over the past year with increased remote-working arrangements stemming from stay-at-home orders in response to the COVID-19 pandemic.

This column summarizes recent developments that make more imperative the need for federal legislation to address this issue, and it considers how the pandemic has impacted the debate over how to provide relief to employers and employees alike. With the changing environment, the federal legislation considered in the 116th Congress and likely in the 117th Congress has evolved accordingly, and a fresh look at the proposed relief is appropriate. This column also highlights the AICPA's significant efforts in this area, and it focuses on potential hurdles to passage and an outlook on what may lie ahead.

The Mobile Workforce Bill effort began as a way to address cross-jurisdictional business and the prevalence of teleworking or remote-work arrangements, which had accelerated since the turn of the century, due to better technology and more connective software. The modern workforce includes employees, independent contractors, and business owners who travel across the country to generate and sustain their business — "road warriors."

Employees who travel outside of their resident state for business purposes are subject to many and varying administrative burdens. In addition to having to file federal and resident state income tax returns, they may also be required to file an income tax return in every other state, and some cities, into which they traveled and worked, even if they were there for only one day. These employees and their employers must comply with a patchwork of confusing, outdated, and complex nonresident state income tax laws. 

For personal income tax purposes, the employee's state of residence universally has the right to tax all of the employee's income, and the nonresident states in which the employee earns income also have the right to tax the income earned within their borders. Adding to the complexity is that the nonresident states are inconsistent about whether and, if so, the extent to which they actually exercise the right to tax the nonresident employee or require the employer to withhold income tax on the nonresident in such circumstances. As one can imagine, the mix of state income tax approaches makes compliance extremely difficult and time-consuming for employers and employees alike.²

Before the pandemic, states implemented several measures to help simplify nonresident worker compliance, but it has been difficult for states to act in concert as a way to develop a consistent nationwide policy. Approximately a third of the states (mostly bordering each other in the Midwest and East) have entered into bilateral reciprocity agreements, under which the states agree not to subject each other's nonresident employees to their personal income tax. This type of relief often benefits nonresident employees who typically commute a short distance over a state border, but it generally does not assist employees who travel cross-country.

At the same time, many states impose tax and withholding requirements on the first day a nonresident employee works in the state. Other states impose nonresident tax and withholding requirements after the employee earns a certain amount of income or after the employee has been working in the state for a certain number of days. The disparity of state policies in this area is evident in the distinct day and threshold tests that apply to determine whether and, if so, when the employer must withhold state income tax if an employee is working outside his or her resident state. For example, Arizona³ does not impose a withholding requirement until a nonresident employee has worked more than 60 days in the state. In contrast, a nonresident employee is subject to withholding on the first day of work in 24 states.

Some states impose withholding requirements when a wage-based threshold is exceeded, including California, which applies the requirement when the nonresident employee earns in-state wages above the state's low-income exemption table.⁴ Wisconsin is an example of a state that uses a pure numerical threshold, and it does not require withholding on nonresident individuals if the employer reasonably estimates that during that calendar year the employee will earn less than $1,500 in Wisconsin.5 Given the differences between the states, it is imperative that both the employer and employee are aware of when these nonresident withholding requirements apply and of the fact that the state withholding rules do not always address the nonresident taxpayer's potential filing requirement and tax liability in the state.⁶

States have also attempted to simplify the treatment of the mobile workforce and their employers through the efforts of the Multistate Tax Commission (MTC), which developed a potential option for a broad-based system covering the treatment of all nonresidents. The MTC drafted a model statute, the Model Mobile Workforce Statute, which was designed to promote consistent employer withholding thresholds, along with an exclusion for an employee's personal income tax obligation.⁷

Despite the MTC's encouragement to develop state legislation to solve the mobile workforce issue, only North Dakota⁸ and Illinois⁹ have passed state-specific legislation addressing the mobile workforce to date. North Dakota's legislation was substantially in line with the MTC model, is effective for tax years beginning after Dec. 31, 2012, and provides for a 20-day threshold as long as the individual's state of residence provides a substantially similar exemption for North Dakota residents or does not impose an income tax. The Illinois legislation, adopted before the pandemic, applies starting in 2020 and has a 30-day threshold.

In light of the states' failure to provide uniform standards on the states' taxation of nonresident employee income and employer withholding on that income and to address the state taxation and withholding issues of teleworkers during the pandemic, the 116th Congress considered the Remote and Mobile Worker Relief Act of 2020 (Mobile Workforce Bill) as a multistate solution to promote uniformity and provide relief from state income tax filing and withholding burdens.¹⁰ The first version of the Mobile Workforce Bill was introduced in the 109th Congress in 2006¹¹ and ultimately passed the House of Representatives in 2012,¹² 2016,¹³ and 2017.¹⁴

The centerpiece of the Mobile Workforce Bill and its predecessor proposals is a reasonable de minimisprovision under which states may generally tax a nonresident employee's income if the employee is present and performing employment duties in a nonresident state for more than 30 days during the calendar year. Likewise, an employer is generally required to withhold state taxes on all of the employee's income from working in the state once the 30-day threshold has been exceeded.

The 2020 version of the Mobile Workforce Bill was modified to take into account the ongoing pandemic, along with the development of additional relief and certainty for businesses and employees displaced by the pandemic.¹⁵ This version expands the 30-day threshold to 90 days for employees working in another jurisdiction as a result of the pandemic. In addition, the legislation would temporarily maintain withholding and liability for remote workers in the same manner as before the pandemic (i.e., the normal working location of the employee before the pandemic), unless the employer tracks and elects to withhold and the employee has state income tax liability at the remote location. Also, the legislation provides that the presence of remote workers during the pandemic would not impact a multistate employer's nexus and apportionment posture.

Specific provisions relating to prior versions/2020 nonresident employee de minimis rules

30-day de minimis rule in nonresident jurisdiction: As in prior versions of this legislation, the de minimis rule specifically limits the taxation of wages and remuneration earned by a nonresident employee to: (1) the tax jurisdiction of the employee's residence and (2) any tax jurisdiction in which the employee is physically present performing duties for more than 30 days during the calendar year.¹⁶ The bill also allows jurisdictions to require employers to retroactively withhold on all wages or other remuneration earned as of the first day the employee began performing work in the state once the 30-day threshold has passed.17

90-day de minimis rule in nonresident jurisdiction for 2020 due to pandemic: For the 2020 calendar year, the de minimis threshold on nonresident taxation and withholding is changed from more than 30 days to more than 90 days for any employee who performs employment duties in any taxing jurisdiction other than the taxing jurisdiction of the employee's residence during 2020 as a result of the pandemic.¹⁸

Employer's reliance on employee's determination of time in nonresident jurisdiction: The bill also addresses an employer's tracking of an employee's location when performing work duties. For the purpose of determining withholding- and reporting-related penalties, an employer may rely on its employees' annual determination of time they expect to spend in each nonresident jurisdiction, unless the employer has actual knowledge that an employee made the determination fraudulently or the employer and employee collude to evade tax.¹⁹ If, in the regular course of business, an employer maintains records of an employee's location, those records do not prevent the employer from relying on the employee's determination of the time he or she expects to spend in the nonresident state.²⁰ However, if an employer, at its discretion, maintains a time and attendance system tracking where an employee performs his or her services each day, the data from that system will be used instead of the employee's determination.²¹

Definition of a day: One provision in the bill that has received a great deal of attention over the years is the definition of a "day" because it is possible to work in more than one state in a day, making it easier to surpass a de minimis day threshold.²² The Mobile Workforce Bill's definition of a "day" is designed to take into account the fact that a road warrior may be in multiple jurisdictions in a day and that only one state should be able to claim the day. Accordingly, under the bill, an employee is considered present and performing employment duties within a jurisdiction for a day if the employee performs more of his or her duties within that jurisdiction than any other jurisdiction for the day.²³ Where an employee is present and performs material employment duties in both the resident jurisdiction and one nonresident jurisdiction on the same day, the employee will be considered to have performed the preponderance of his or her duties for that day in the nonresident jurisdiction.²⁴ Finally, the portion of a day that an employee spends in a state while in transit is not considered in determining where he or she performed employment duties.²⁵

Exclusions: As in the North Dakota statute, certain employees are excluded from the uniform rules provided in the bill, including professional athletes; professional entertainers; qualified production employees who work in connection with film, television, or other commercial video production paid under the jurisdiction's film incentive program as qualified production costs or expenditures subject to withholding; and certain public figures who give speeches or make similar types of appearances and are paid per event.²⁶ Generally, these types of employees earn significant amounts of money in each of the places where they work. Accordingly, they (and their employers) may be better able than those in other occupations to deal with the filing and withholding requirements for nonresident income. In addition, the revenue loss from not allowing nonresident jurisdictions to tax this type of income could be significant.

Specific provisions relating to state and local tax certainty during the 2020 'covered period'

Employer right to withhold at pre-pandemic prior work location or elect otherwise: The latest version of the Mobile Workforce Bill in the 116th Congress included several special provisions that would have applied in a designated period occurring in 2020 (the "covered period," as described below). A default rule provides that in general, during the covered period, any wages and other remuneration that are earned by an employee during this period are treated as earned at the primary work location of the employee.²⁷ Wages and other remuneration include amounts earned that are subject to the deemed jurisdiction's tax and withholding requirements.²⁸ The primary work location is defined as the address of the employer where the employee is regularly assigned to work when not working remotely during the covered period.²⁹

An employee is considered as "working remotely" when performing duties as an employee at a location other than the primary work location of the employee at the direction of his or her employer due to conditions resulting from the pandemic, including to comply with a government order relating to the pandemic, to prevent the spread of the disease, and due to the employee or a member of the employee's family contracting the disease.³⁰

As an important alternative to the default rule, if an employer maintains a work location recordkeeping system that tracks where the employee performs duties on a daily basis, the employer may elect to treat the wages earned by an employee as earned at the location where the work was remotely performed.³¹ This election provides flexibility and options to the employer regarding how to withhold to the extent a system is available or is developed to track where the remote work is performed during the pandemic. Ideally, it is possible for employers and their employees to coordinate in an effort to determine whether wages should be withheld at the remote location or the primary work location.

Employer protection from nexus/apportionment effects from presence of remote workers: The bill also provides some other important tax protections to employers during the covered period. The bill confirms that employees working remotely in other jurisdictions during the pandemic period will not create any nexus or establish minimum contacts or level of presence that would subject the employer's business to registration, taxation, or other related requirements for businesses that operate in that jurisdiction.³²

The bill also provides that for jurisdictions with a tax based on net or gross receipts or income, for purposes of apportioning or sourcing receipts or income, duties performed by an employee of an out-of-state business while working remotely during the covered period are disregarded for any filing requirements for that tax. Also, the income earned by the employer's business is apportioned and sourced to the tax jurisdiction that includes the primary work location of the employee before the covered period.³³

The covered period: The definition of "covered period" is especially important, as it is the trigger for determining when the above rules governing pandemic-related state and local tax certainty are effective. The bill said the covered period begins on the date that the employee started working remotely and ends on the earlier of: (1) Dec. 31, 2020, or (2) the date the employer allows, at the same time, the employee to return to the primary work location and at least 90% of its permanent workforce to return to that work location.³⁴

What the bill does not do: While the reach of the Mobile Workforce Bill is even more expansive with the advent of pandemic-specific protections, there are still some fact patterns the bill does not address. For example, the bill does not change the rule for income distributed to a partner from a partnership. Therefore, a partner in a law firm that is doing business in multiple states normally would still have to file personal income tax returns in the states in which the partnership generated the income, even if the partner was never physically present in those states, unless the partner elected to participate in the filing of a composite nonresident return.

The bill is currently silent as to the exact procedure when the employee working in a nonresident state exceeds the 30-day threshold during the year. While the employer has an obligation to withhold nonresident income tax for the entire work period once an employee exceeds the 30-day threshold, it is uncertain whether the employer must immediately withhold all 31 days of nonresident income tax on the employee or risk incurring penalties. Requiring an immediate withholding of this amount could significantly affect the employee financially. In certain cases, such a "cliff" could cause employers and their employees to evaluate whether to change work arrangements toward the end of a year to avoid crossing the 30-day threshold.

The bill also would not disturb existing reciprocity agreements between states, which would still be free to fully exempt nonresidents from taxation. Likewise, current jurisdiction-specific exemptions that fully comply with the rules in the bill would not be disturbed.

Applicability and effective date: The bill applies to taxing jurisdictions, which includes states, the District of Columbia, or any territory or possession of the United States, any municipality, city, county, township, parish, transportation district, or assessment jurisdiction, or any other political subdivision within the territorial limits of the United States with the authority to impose a tax, charge, or fee.³⁵ The bill applies to calendar years beginning after 2019, and it does not apply to any tax obligation that accrues before Jan. 1, 2020.³⁶

The AICPA has long championed the mobile workforce effort and supports the Mobile Workforce Bill in its current incarnation, in conjunction with additional efforts as a means to make it easier for employers and their employees to be able to comply with their current state income tax obligations, particularly during the pandemic. The AICPA recently noted its support in several letters to Congress, including on:

• June 18, 2020: AICPA Comments of Support on the Federal Remote and Mobile Worker Relief Act (available at www.aicpa.org);
• July 20, 2020: AICPA Recommendations for Phase Four Federal Legislation Addressing COVID-19 (Coronavirus) Pandemic (available at www.aicpa.org), including support for the remote and mobile worker legislation; and
• Aug. 27, 2020: A coalition letter (available at aicpa.org) from the AICPA, the Council on State Taxation, and 121 employers and organizations, including 45 state CPA societies, urging enactment of the Remote and Mobile Worker Relief Act (as a means to provide consistency, uniformity, and simplification across the country to nonresident state income tax withholding taxation and liability).

In addition, the AICPA continues to track state tax guidance (see the chart available at www.aicpa.org) and to advocate on various issues related to the pandemic (see the Coronavirus (COVID-19) Tax Policy & Advocacy Resources webpage at aicpa.org/advocacy/tax/covid-19.html) and has supported and provided recommendations (available at www.aicpa.org) to state CPA societies as they work with their state tax agencies on pandemic relief guidance in this area.

With respect to recommendations on withholding, the AICPA suggested states allow businesses to continue to withhold income tax (and the employee income tax liability) based on the location of the employer for newly remote workers sheltering in place instead of the employee's shelter-in-place location. Fifteen states (Alabama, Georgia, Illinois, Indiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nebraska, New Jersey, Pennsylvania, Rhode Island, South Carolina, and Wisconsin) have followed the AICPA's suggestion in providing guidance.³⁷

As the newest version of the Mobile Workforce Bill in the 116th Congress recognized, a remote workforce can dramatically affect a company's state tax nexus footprint, given that a business is generally considered to be doing business and subject to a state's tax laws if the business has employees working in the state. Businesses with employees working remotely, as they would have an office location, could find they are subject to a state's tax laws based merely on the presence of the employee performing employment duties at home instead of at the employer's office.³⁸ This could include new income and franchise tax and sales and use tax obligations, and it could happen in instances where a business would have been subject to P.L. 86-272, the Interstate Income Act of 1959, protection from income taxes but for the presence of one employee working in the state.³⁹ Finally, establishing new nexus for any state tax due to a remote workforce could create and complicate registration and compliance obligations, including complex apportionment factor calculations for income tax purposes.

As the AICPA suggested, 19 states and jurisdictions (Alabama, California, the District of Columbia (D.C.), Georgia, Indiana, Iowa, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, North Dakota, Oregon, Pennsylvania, Rhode Island, and South Carolina (through 2020), Wisconsin, and City of Philadelphia) followed the AICPA's recommendation (available at www.aicpa.org, for state CPA societies to advocate) that an employee working in a state due to shelter-in-place restrictions would not create nexus and change apportionment calculations for tax purposes. Additionally, seven jurisdictions (California, D.C., Georgia, Indiana, Iowa, Massachusetts, and Rhode Island) have provided that newly remote workers (because of the pandemic) will not count against companies taking P.L. 86-272 positions.

It should be noted that much of the relief offered by states in this area is tied to the pandemic and is temporary. Businesses with fully remote workforces, and businesses considering whether some of their employees should permanently work remotely beyond the pandemic, must carefully review any state guidance that temporarily provides a nexus exemption. It is imperative businesses closely read the state guidance and understand when and for how long it applies. The AICPA State and Local Tax Technical Resource Panel will continue to keep members updated of developments.

Although the House of Representatives has passed mobile workforce legislation three times with bipartisan support, there are four hurdles that the updated legislation must overcome to advance in both chambers in the new Congress. The first hurdle is that the new Congress will have many urgent priorities to address, especially with the coronavirus pandemic. The best opportunity for mobile workforce legislation to pass would be for it to be attached to a prioritized bill, as it is unlikely that the new Congress would consider stand-alone legislation (even though the Mobile Workforce Bill was specifically changed to address the pandemic). The acrimonious environment in Washington, D.C., continues to pose a challenge for any legislation to pass, much less state-specific tax legislation.

Second, congressional leaders representing the state of New York remain in a strong position to block the Mobile Workforce Bill from moving through the House and Senate. Because New York City is a financial and business center and adjoins several New Jersey and Connecticut suburbs, many nonresident employees work there occasionally or regularly. As a result, the bill is perceived to be detrimental to New York state's revenues, in contrast to a relatively revenue-neutral effect it should have in most other states. In the House, Rep. Jerrold Nadler, D-N.Y., has been chair of the House Judiciary Committee, which has jurisdiction over the Mobile Workforce Bill. As chair, Nadler has previously stated his opposition to the Mobile Workforce Bill on Commerce Clause grounds. Sen. Chuck Schumer, D-N.Y., the Senate minority leader in the 116th Congress, will continue to have much influence and could prevent the Mobile Workforce Bill from reaching the full Senate.

The third challenge to federal passage is the fact that it would not provide additional revenue to the federal government. While the bill should be perceived as helping employees and their employers address pandemic-related issues, the lack of a federal revenue score makes it somewhat more difficult to obtain the momentum needed to move the bill through Congress.

The fourth and final challenge to the Mobile Workforce Bill comes from opposition by state governments and tax authorities, which often oppose tax bills that try to impose a federal solution to a state problem. This aversion to federal action on state taxation stems from the view that in enacting such a measure, Congress is treading into territory reserved for the states. This opposition is even more prevalent when the federal solution reduces some states' revenues, in an environment in which states are suffering from decreased tax revenue, high unemployment rates, and a costly health emergency that likely is not going away anytime soon.

Despite these obstacles, the fact that the Mobile Workforce Bill has previously passed the House three times and has been adapted to address the pandemic gives some hope. Congressional action would provide relief to the historic road warriors, along with teleworkers and their employers that now find themselves dealing with similar uncertainty and potentially large state and local tax filing burdens as a result of the pandemic.

During the pandemic and hopefully soon beyond it, businesses with remote workforces could become subject to tax or withholding obligations in new jurisdictions due to the nature of one or more employees working from a residence or temporary location. Also, virtual work arrangements, whether designed to facilitate internships or ensure continuity of governance through board of director meetings, could have similar and surprising impacts on a business's state and local tax footprint. Many employers may be considering extending remote work arrangements well past the early stages of the recovery from the pandemic, making it that much more important for businesses to understand how these arrangements can impact their state and local tax footprint.

A bill that provides businesses a framework to address the numerous state and local tax issues that have unavoidably arisen as a result of the changing location of employees during the pandemic would be welcomed. The Mobile Workforce Bill would reduce administrative burdens currently faced by employees and their employers alike, allowing for enhanced focus on core business issues that will be needed during the particularly uncertain economic road ahead.  

AICPA support for the Mobile Workforce Bill

• 110th Congress: AICPA testified in support of the legislation (H.R. 3359) at the Nov. 1, 2007, hearing of the House Judiciary Committee Subcommittee on Commercial and Administrative Law (testimony available here).
• 112th Congress: On May 25, 2011, AICPA testified before the House Judiciary Committee Subcommittee on Commercial and Administrative law in support of H.R. 1864 and S. 3485. On Nov. 15, 2011, the AICPA submitted a letter (available here) to all members of the House Judiciary Committee. The AICPA developed a 112th Congress Issue Paper: Background, AICPA Position, and AICPA Legislative Recommendation Regarding Workforce Mobility, available here.
• 113th Congress: The AICPA testified on this legislation (H.R. 1129 and S. 1645) at the April 29, 2014, hearing of the Senate Small Business Committee (testimony available here).
• 114th Congress: On June 15, 2015, the AICPA submitted written testimony (available here) for House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law hearing record in support of H.R. 2315 and S. 386 for the June 2, 2015, hearing held by the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law. The AICPA testified in support of the legislation at the July 22, 2015, hearing of the House Small Business Committee (testimony available here). The AICPA sent a letter of support and submitted written testimony (available here) for the April 13, 2016, hearing of the House Committee on Small Business Subcommittee on Economic Growth, Tax, and Capital Access.
• 115th Congress: On March 10, 2017, the AICPA submitted a letter (available here) in support of the mobile workforce legislation committee markup. The AICPA submitted a written statement (available here) for the June 14, 2017, hearing of the Senate Committee on Small Business and Entrepreneurship. On June 20, 2017, the AICPA submitted a letter (available here) supporting the Mobile Workforce State Income Tax Simplification Act of 2017 (H.R. 1393 and S. 540). The AICPA submitted comments (available here) in support of the legislation at the House Committee on Ways and Means Subcommittee on Tax Policy's July 13, 2017, hearing. The AICPA submitted comments (available here) in support of the legislation for the July 18, 2017, hearing of the Senate Finance Committee. The AICPA testified in support of the legislation for the Sept. 19, 2017, Senate Finance Committee hearing on Business Tax Reform (testimony available here). On Oct. 25, 2017, the AICPA submitted comments (available here) in support of the legislation.
• 116th Congress: On June 18, 2020, the AICPA submitted comments of support on the Federal Remote and Mobile Workforce Relief Act (available here). On July 20, 2020, the AICPA submitted recommendations for phase four federal legislation addressing the COVID-19 pandemic (available here), including support for the remote and mobile worker legislation. On Aug. 27, 2020, a coalition letter (available here) was submitted to Congress, including from the AICPA, the Council on State Taxation, and 121 employers and organizations, including 45 state CPA societies, urging enactment of the remote and mobile workforce relief act.

Footnotes

¹See Yesnowitz, "The Mobile Workforce Bill: Addressing 'Road Warrior' Compliance," 43 The Tax Adviser 838 (December 2012).

²For example, a road warrior working a few days in many states could have a significant number of nonresident state income tax returns to file, with very small amounts of tax to report to these states. This becomes a time-consuming matter in which the recovery of that tax through a resident state credit for income taxes paid in other jurisdictions may end up being more costly than the nonresident tax itself. Likewise, employers may have difficulty with withholding requirements to the extent their employees' locations cannot be accurately tracked, or they may default to "day-one" withholding in all nonresident states as a protective measure, even though a threshold level of activity may be required to subject a nonresident to the tax.

³Ariz. Rev. Stat. §43-403.A.5(b). Days spent in transit, engaging in personal activities, participating in training or professional development activities, or attending meetings not directly connected to the Arizona operations of the employer or related entity are not counted toward the 60-day threshold (Ariz. Rev. Stat. §43-403.A.5(b)(i)-(iii)).

⁴Cal. Unemp. Ins. Code §13020; Cal. Employment Dev. Dep't, 2020 California Employer's Guide (DE 44), pp.16-17 (January 2020).

⁵Wis. Stat. §71.64(6)(b).

⁶The Mobile Workforce Coalition provides detailed guidance on the problems caused by the "patchwork of complicated nonresident income tax laws" and the thresholds imposed by the states. See mobileworkforcecoalition.org/problem.

⁷Multistate Tax Commission, "Model Mobile Workforce Statute" (July 27, 2011), available at www.mtc.gov.

⁸S.B. 2170, reenacting and amending N.D. Cent. Code §57-38-59.3.

⁹S.B. 1515, enacted on Aug. 26, 2019, provides a 30-day individual income tax safe harbor for certain nonresidents for tax years ending on or after Dec. 31, 2020. Employees working in the state pursuant to a disaster declared by the governor or the president are not included in the 30-day threshold.

¹⁰Remote and Mobile Worker Relief Act of 2020, S. 3995, introduced June 18, 2020, by Sen. John Thune, R-S.D., substantially all of which was included in Section 403, State Tax Certainty of Employers and Employees, of the American Workers, Families, and Employers Assistance Act, S. 4318, which is part of the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act, introduced by Senate Republicans on July 27, 2020.

¹¹H.R. 6167.

¹²H.R. 1864 and S. 3485, introduced May 12, 2011, and Aug. 2, 2012, respectively. H.R. 1864 passed the House on May 15, 2012 (158 Cong. Rec. H2667-2668 (daily ed. May 15, 2012)).

¹³H.R. 2315 and S. 386, introduced May 14, 2015, and Feb. 5, 2015, respectively. H.R. 2315 passed the House on Sept. 21, 2016 (162 Cong. Rec. H5768 (daily ed. Sept. 21, 2016); H.R. Rep't 114-780, 114th Cong., 2d Sess. (Sept. 21, 2016)).

¹⁴H.R. 1393 and S. 540, introduced March 7, 2017. H.R. 1393 passed the House on June 20, 2017. S. 540 garnered 61 Senate co-sponsors but did not receive a vote.

¹⁵It should be noted that there are other current congressional proposals designed to address certain aspects of the mobile workforce issue. The Remote Worker Relief Act of 2020, H.R. 8056, introduced on Aug. 14, 2020, would provide somewhat similar pandemic relief provisions as the current version of the Mobile Workforce Bill, but it does not include the 90-day pandemic and 30-dayde minimis nonpandemic uniformity and simplification provisions described below. Also introduced was the Multi-State Worker Tax Fairness Act of 2020, H.R. 7968. This bill would provide that states cannot tax workers who are not present and working in a nonresident state and addresses the convenience-of-the-employer test.

¹⁶S. 3995, §2(a).

¹⁷S. 3995, §2(b). It should be noted that while S. 3995 and Section 403 of S. 4318 are substantially similar, S. 3995 has no sunset on the historic 30-day de minimis rule, while Section 403 of S. 4318 would sunset the 30-day de minimis rule after 2024 (S. 4318, §403(c)(3)).

¹⁸S. 3995, §2(e).

¹⁹S. 3995, §2(c)(1).

²⁰S. 3995, §2(c)(2).

²¹S. 3995, §2(c)(3).

²²For example, any portion of a day spent working in New York state counts as a full day, except for days spent in New York for the sole purpose of job-related training (N.Y. Dep't of Tax. and Fin., TSB-M-12(5)I (7/5/12)). Likewise, any portion of a day spent performing services in Connecticut counts as a full day (Conn. Dep't of Rev. Servs., AN 2010(3) (1/11/10)).

²³S. 3995, §2(d)(1)(A).

²⁴S. 3995, §2(d)(1)(B).

²⁵S. 3995, §2(d)(1)(C).

²⁶S. 3995, §§2(d)(2)-(6).

²⁷S. 3995, §3(a)(1).

²⁸S. 3995, §3(c)(7).

²⁹S. 3995, §3(c)(5).

³⁰S. 3995, §3(c)(8).

³¹S. 3995, §3(a)(2).

³²S. 3995, §3(b)(1).

³³S. 3995, §3(b)(2).

³⁴S. 3995, §3(c)(1).

³⁵S. 3995, §2(d)(8). Historically, the Mobile Workforce Bill was not specifically applicable to local taxing jurisdictions.

³⁶S. 3995, §4.

³⁷In addition, using the location of the employer could help prevent a double tax when one state uses the convenience-of-the-employer test (Arkansas, Connecticut, Delaware, Nebraska, New York, and Pennsylvania) to source wage payments and another state uses the physical presence standard. The possibility exists that a resident's state credit for taxes paid to another state may not cover all the nonresident state taxes paid.

³⁸A business can establish nexus through many other mechanisms beyond the presence of employees, including through property in the state or based on sales into a state.

³⁹P.L. 86-272 is the federal safe harbor prohibiting a state from imposing a net income tax on a seller's business activity if it is limited to the solicitation of orders for sales of tangible personal property.