Author’s Note: It’s Tax Day, which seemed an incredibly fitting day to announce MSJDN’s formal endorsement of a bill to simplify and reduce the burden of state income taxes paid by people doing their jobs from remote locations. Below is MSJDN’s official press release, a PDF version of which can be downloaded HERE.
MSJDN Formally Endorses The Multi-State Worker Tax Fairness Act (H.R. 4085).
Proposal Before Congress Seeks to Make Telework Easier for Employees and Employers
Telework may soon become a more viable career option for military spouse attorneys and the firms that would like to hire them. Representatives Jim Himes, Rosa DeLauro, and Elizabeth Esty recently introduced the Multi-State Worker Tax Fairness Act.
The major difficulty associated with telework under current law is tax-related. There are some states that balk at telework, says Nicole Belson Goluboff, Legislative Advisor to the Telework Coalition and Public Policy Liaison for the Association for Commuter Transportation’s Telework Council. “These states cling to outdated tax policies that discourage the practice,” despite clear evidence from the Federal Communications Commission’s National Broadband Plan that telework would increase employment by enabling more people to work. At MSJDN, we certainly understand the critical role that telework plays in the careers of our members, many of whom work remotely due to PCS moves.
The Multi-State Worker Tax Fairness Act seeks to address what is probably the most insidious “telework-hostile” tax policy: the “convenience of the employer” rule. In a state applying this rule, if a nonresident employee works from home some or most of the time for any reason other than the necessity of the employer, the employee must pay personal income taxes to the state where the employer is located on the wages earned out-of-state. This is in addition to the taxes the employee must pay to the state in which he or she actually resides. As a result of the rule, many employees are double taxed. This double-tax threat punishes workers for telecommuting across state lines. It also creates confusing withholding obligations for businesses.
The “convenience of the employer” regime has a dampening effect on telework that is particularly harmful to military spouse attorneys. The risk of double taxation can make telework needlessly expensive for employees. In addition, because of the high compliance costs the convenience rule imposes on employers, it reduces the likelihood that attorneys will be offered jobs in states other than the one in which they reside. It also reduces the likelihood that an employer will allow remote work following a PCS.
The Multi-State Worker Tax Fairness Act is intended to eliminate the convenience of the employer rule and replace it with a straightforward taxation policy based on actual location. The Act would eliminate the risk of double taxation that results from ambiguities in the current regime, and would also relieve steep payroll burdens for organizations trying to hire employees located in other states, or retain employees after they move.
MSJDN believes that passage of the Multi-State Worker Tax Fairness Act would improve career portability for military spouse attorneys, which has a direct impact on the military family. Accordingly, MSJDN joins The American Legion, VetJobs, The Telework Coalition, the Association for Commuter Transportation, the National Taxpayers Union, JALA International, 1 Million for Work Flexibility, Take Back Your Time, and the Small Business & Entrepreneurship Council in formally endorsing The Multi-State Worker Tax Fairness Act.
For additional information on the Multi-State Worker Tax Fairness Act, please contact Eleanor Vuono, Chair of MSJDN’s Government Relations Committee, at firstname.lastname@example.org.
The Military Spouse JD Network is an international network of legal professionals improving the lives of military families. We advocate for licensing accommodations for military spouses, including bar membership without additional examination. MSJDN has over 700 members all across the globe, and includes military spouses and partners from all branches of the United States military, as well as spouses of retired service members and legal and military organizations who support our mission.