States currently have inconsistent, varying standards and requirements for employees to file personal income tax returns when traveling to a nonresident state for temporary work periods, and for employers to withhold income tax on employees who travel outside of their state of residence for temporary work periods. Employees who travel outside of their states of residence for business purposes are subject to onerous administrative burdens because they may be legally required to file an income tax return in every other state into which they traveled, even if they were only there for one day. Employers are required to incur extraordinary expenses in their efforts to comply with the states' widely divergent withholding requirements for employees’ travel to nonresident states for temporary work periods. And in some cases, requirements for employees and employers aren't the same.
Employer Withholding Requirements
Keeping track of the requirements imposed by states on employers when it comes to withholding income taxes in nonresident states is incredibly complex due to the different requirements between states. More than half of the states that have a personal income tax require employers to withhold tax from a nonresident employee's wages beginning with the first day the nonresident employee travels to the state for business purposes (dark maroon states on the map below).
Mobile Workforce Coalition applauds Illinois’ decision to their update onerous Laws. Now we need other states and Congress to Act.
In 2019, a business coalition in Illinois led the effort to enact a version of the 30-day mobile workforce standard (SB 1515). The new law establishes a 30-day threshold for personal income tax withholding and return filing requirements for out-of-state residents for tax years beginning after December 31, 2020 (the working days do not include any day in which an employee is performing services during a declared disaster period). Kansas considered similar legislation in 2020. Other states should follow their lead.
