Prior to the coronavirus (COVID-19) pandemic, many state taxing authorities asserted that businesses are subject to their states’ tax obligations by having a single employee working from within the states, even if there were no other connections between the business and those states. As a result, some states tried to force these businesses to comply with employer withholding obligations, to pay income, franchise, gross receipts, or other state business taxes. At the beginning of the pandemic, many businesses were forced to move quickly to a work-from-home model. As a result, many employees began working from states other than where their offices were located. In response to concerns raised by employers, some states announced relief from tax obligations ordinarily imposed on a business whose employees work in those states. However, as many employers consider adopting longer-term, or even permanent, work-from-home or work-from-anywhere policies, businesses need to know how to comply with state and local tax obligations. Advocates say Congress needs to take action to simplify compliance with state and local tax obligations for businesses.

Pending Legislation: H.R.429 - Mobile Workforce State Income Tax Simplification Act of 2021
Sponsor: Rep. Gregory Steube (FL)
Status: House Subcommittee on Antitrust, Commercial, and Administrative Law (Judiciary)
Chair: Rep. David Cicilline (RI)