|House Passes Bill to Limit State Taxation of
5/15. The House passed HR 1864
"Mobile Workforce State Income Tax Simplification Act of 2011", by voice
This bill provides that a state may not impose its income tax on non-resident
employees unless they earn wages in the taxing state for more than 30 days.
bill does not address state business activity taxes.
The impact of this bill on
state taxation of non-resident workers on the basis that they work via phone or
internet communications with persons in the taxing state is less than clear.
See, related story in this issue titled "Commentary: State Taxation of Teleworkers".
The Senate has not yet passed this bill, or any related bill.
Rep. Howard Coble (R-NC) introduced
this bill on May 12, 2011. The House
Judiciary Committee's (HJC) Subcommittee on Courts, Commercial and
Administrative Law held a hearing on the bill on May 25, 2011. See, HJC
with hyperlinks to prepared testimony.
The HJC amended and approved the bill on November 17, 2011, by voice vote. The HJC reported
the bill on February 3, 2012. See,
Report No. 112-386. Rep. Jerrold Nadler (D-NY) and Rep. John Conyers (D-MI)
wrote a short dissent.
This bill provides that "No part of the wages or other
remuneration earned by an employee who performs employment duties in more than
one State shall be subject to income tax in any State other than -- (1) the
State of the employee's residence; and (2) the State within which the employee
is present and performing employment duties for more than 30 days during the
calendar year in which the wages or other remuneration is earned."
This bill contains a definitions section. However, it does not define the
terms "present" or "performing employment duties". The bill does not expressly
state that a taxing state shall not deem a non-resident to be "present" on days
in which he or she works remotely via telecommunications or the internet with
persons or servers in the taxing state.
The Congressional Budget Office (CBO) released
report on this bill on January 25, 2012. It states that "Generally, states
that have large employment centers close to a state border would lose the most
revenue; states from which employees tend to commute would gain revenue. For
example, New York would likely lose the largest amount of revenue -- from $50
million to $100 million according to state and industry estimates -- and
Illinois, Massachusetts, and California would face smaller losses. New Jersey
and Connecticut would likely gain revenue."
House Floor Debate. Rep. Coble stated in the House that "the diversity of State
income tax laws places a significant burden on people who travel for work and
their employers, many of which are small businesses. Currently, 41 States tax
the wages earned by a nonresident for work performed there. I do not take issue
with the right of those States to impose an income tax, but I am concerned that
the disparity of tax rules among those States is damaging small businesses and
stifling economic growth."
He continued that "some States require a nonresident to pay
income tax if he or she works in that State for just one day. Other states do
not collect tax until the nonresident works for a certain number of days in the
particular jurisdiction. Small businesses must expend considerable resources to
figure out how much they must withhold for their traveling employees in 41
different jurisdictions. Employees are also confused about when their tax
liability is triggered and in which States they must file a tax return."
He said that this bill "establishes a clear 30-day threshold
for tax liability and employer withholding. Under the bill, States remain free
to set any income tax rate they choose."
Rep. Hank Johnson (D-GA) (at left), the
lead cosponsor of the bill, also spoke in support. He said that "this bill will greatly
increase compliance rates. This bill will end up saving States the administrative costs of
processing and remitting thousands of small returns from nonresidents."
Rep. Lamar Smith
(R-TX), the Chairman of the HJC, stated in the House that "Under this current patchwork
system, employees who travel out of state for work must file tax returns in other jurisdictions
even if their ultimate tax liability to a state is a few dollars."
He added that "In addition to burdening our interstate employees, different state
income tax laws require employers to comply with a wide variety of tax withholding laws. Many
of those employers are small businesses who can least afford these administrative costs."
Rep. Sheila Lee (D-TX) also spoke in favor
of the bill. Texas is one of the few states with no state income tax.
Prior Versions of this Bill. Rep. Johnson and others have been working on this
legislation for three Congresses.
For the 110th Congress, see HR 3359
WW], the "Mobile
Workforce State Income Tax Fairness and Simplification Act of 2007", sponsored by Rep.
Johnson. It had a 60 day threshold. See also, story titled "Summary of Teleworker and
Mobile Worker Protection Bills" in TLJ Daily E-Mail Alert No. 1,665, October 30, 2007.
For the 111th Congress, see HR 2110
WW], the "Mobile
Workforce State Income Tax Simplification Act", introduced by Rep. Johnson. It had a 30
|Commentary: State Taxation of
5/15. The issue of telework did not arise during the floor
debate in the House on HR 1864 [LOC |
the "Mobile Workforce State Income Tax Simplification Act of 2011". In contrast, members frequently referenced traveling
workers. Nor is telework addressed in the HJC report.
Also, TLJ spoke with several House staffers who declined to offer a definitive statement
regarding the impact of this bill on taxation based upon teleworking.
TLJ spoke with Maureen Riehl of the Council on
State Taxation (COST), a group that supports this bill. She said that this
bill is directed at state taxation of business travelers. However, she added
that it does impact state taxation of teleworkers.
Riehl said that the word
"present" in the bill means that the employee must be "actually physical
present" in the taxing state for 30 days to be subject to income taxation by the
taxing state; telecommuting does not constitute presence.
No Representatives from the state of New York spoke during the floor debate.
Yet, the aggressive tax policies of New York are the main target of this and
other Congressional bills that would limit state taxing authority.
New York taxes non-resident non-present teleworkers. See for example,
pages in PDF] of the New York State Department of Taxation and Finance titled
"New York Tax Treatment of Nonresidents and Part-Year Residents Application of
the Convenience of the Employer Test to Telecommuters and Others".
Members of the Connecticut delegation in the House and Senate have long been introducing bills that
would limit New York's taxation of teleworkers. For the current Congress, see S 1811
HR 5615 [LOC |
the "Telecommuter Tax Fairness Act".
See also, story titled "Connecticut Representatives Again Introduce Telecommuter Tax
Fairness Act" in TLJ Daily E-Mail Alert No. 2,383, May 15, 2012.
And see, stories titled "Supreme Court Denies Cert in Challenge to State
Income Tax on Out of State Teleworkers" and "Connecticut Legislators Seek End to
New York's Taxation of Out of State Workers" in
TLJ Daily E-Mail
Alert No. 1,244, November 1, 2005.
|Senators Casey and Schumer Condemn
5/17. Sen. Robert Casey (D-PA) and
Sen. Charles Schumer (D-NY) held a news
conference at which they announced that they will introduce a bill titled the
"Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore
Tenancy Act", which comes close to producing the acronym of EXPATRIOT Act.
See, excerpts of CNN video
[YouTube]. See also, Sen. Casey's
release with bill summary.
The two Senators discussed the renunciation of US citizenship last September
by Eduardo Saverin, one of the founders and owners of Facebook. Under US tax law
he would have realized a taxable capital gain at the time of Facebook's initial
public offering. Saverin resides in Singapore, which has no capital gains tax.
The two Senators asserted that Saverin renounced citizenship to avoid US
taxes. Sen. Schumer asserted that "we aren't going to let him get away with it".
Sen. Casey's release states that this bill will provide that "any expatriate with
either a net worth of $2 million or an average income tax liability of at least
$148,000 over the last five years will be presumed to have renounced their
citizenship for tax avoidance purposes. The individual will then have an
opportunity to demonstrate otherwise to the IRS by meeting specific IRS
requirements. If the individual has a legitimate reason for renouncing his or
her citizenship, no penalties will apply. But if the IRS finds that an
individual gave up their passport for substantial tax purposes, then it will
prospectively impose a tax on the individual’s future investment gains, no
matter where he or she resides. This would eliminate any tax benefit and
financial incentive from renouncing one’s citizenship. The rate of this capital
gains tax will be 30 percent, in keeping with the rate that is already applied
on non-resident aliens for dividends and interest earnings."
Also, "So long as the individual avoids these taxes, they would be
inadmissible to the United States forever."
Sen. Casey stated that Saverin "has benefited greatly from being a citizen of
the United States but he has chosen to cast it aside and leave U.S. taxpayers
with the bill. Renouncing citizenship to simply avoid paying your fair share is
an insult to middle class Americans and we will not accept it."
Saverin has denied the Senators' tax allegations. He stated in a release that
"My decision to expatriate was based solely on my interest in working and living
in Singapore, where I have been since 2009."
Commentary. There also exists the argument that US capital gains taxes
are very high, both absolutely and relative to other countries, and that this is one source of
competitive disadvantage for the US in the global economy.
Investors make investment decisions in large part on the basis of expected
return on investment. This includes an assessment of tax consequences. Investors
do not make investment decisions on the basis of how they will facilitate the
spending ambitions of politicians around the world.
Senators Casey and Schumer could have advocated reforms to US tax policies
that would draw capital to the US economy, rather than advocate new punitive
policies that would further drive capital away.
There also exist the related arguments that US corporate taxes are both high relative to
other countries, and in need of reform to address the global scope of many companies, and
that these current tax policies further place the US at a competitive disadvantage.
|Sen. Schumer Introduces Bill to Criminalize
Removal of ID Numbers from Mobile Devices
5/15. Sen. Charles Schumer (D-NY) introduced
S 3186 [LOC |
WW], the "Mobile
Device Theft Deterrence Act of 2012", a bill to make it a crime to alter or remove the
identification number of a mobile device.
This bill was referred to the Senate Judiciary
Committee (SJC). Sen. Schumer is a member.
On April 10, 2012, the CTIA announced that certain wireless service providers will take
coordinated action "to help deter smartphone thefts and protect consumer data". The
gist of that program is the creation of integrated databases of unique identifiers of mobile
communications devices reported as stolen, by participating wireless service providers, combined
with a commitment by such providers to not provide service to the unique identifiers associated
with devices reported as stolen.
At that time, Sen. Schumer announced in a
release that he would introduce
a bill that would "make it a federal crime to tamper or alter a cell phone IMEI numbers
in order to activate a stolen phone. Schumer's legislation will be modeled on similar federal
statutes with respect to VIN numbers on automobiles. Anyone convicted of tampering with or
altering the IMEI number on a cell phone could face a maximum of five years in prison."
See, story titled "Wireless Service Providers Announce Plans for Disabling
Stolen Smart Phones" in TLJ Daily E-Mail Alert No. 2,369, April 12, 2012. See
also, story titled "House Commerce Committee Democrats Question Companies
Regarding Smart Phone Theft" in TLJ Daily E-Mail Alert No. 2,356, March 25, 2012.
Sen. Schumer issued a release
on May 16. It states that "Currently, when cell phones are reported stolen, many
American cell phone companies only deactivate the phone's ``SIM´´ card, which is the account
data storage component of the device. While deactivation of a SIM card does not allow for the
device to be used with existing data and account information, SIM cards are easily removed and
replaced, allowing stolen phones to be easily resold on the black market."
Theft and sale of stolen property are already criminalized. Yet, mobile devices are stolen
and resold. Sen. Schumer did not explain why criminalizing the associated act of changing
identification numbers should be expected to have a deterrent effect.
Steve Largent, head of the CTIA, stated in a
release that "CTIA's
members are committed to protecting their customers and their wireless devices from theft.
We are pleased to support Senator Schumer’s legislation and believe it will be an important
tool in the effort to combat the theft of wireless devices. We hope Congress moves quickly
to pass this important bill."
|This issue contains the following items:
• House Passes Bill to Limit State Taxation of Mobile Workers
• Commentary: State Taxation of Teleworkers
• Senators Casey and Schumer Condemn Facebook's Saverin
• Sen. Schumer Introduces Bill to Criminalize Removal of ID Numbers from Mobile Devices
New items are highlighted in
|Friday, May 18
The House will meet at 10:00 AM for morning
hour, and at 12:00 NOON for legislative business. It will resume consideration
of HR 4310 [LOC |
"National Defense Authorization Act for Fiscal Year 2013". See, Rep. Cantor's
The Senate will not meet.
12:15 - 1:45 PM. The Federal Communications
Commission (FCC) will hold an event titled "Nuts and Bolts of Filing Transfer of Control
Applications: Satellite Licenses and Radio/Television Licenses". The speakers will be
David Brown (Associate Division Chief of the FCC's Media Bureau), Wayne McKee (Deputy Chief
of the FCC's MB's Engineering Division), Karl Kensinger (Associate Division Chief of the FCC's
International Bureau), and Kenneth Satten (Wilkinson Barker Knauer). The
FCBA states that this is a brown bag lunch hosted by its
Transactional Committee. Location: Hogan Lovells, 555 13th St., NW.
Deadline to submit comments to the U.S. Customs and Border
Protection regarding its interim rules that implement the preferential tariff treatment and
other customs related provisions of the US-Korea Free Trade Agreement. See,
notice in the
Federal Register, Vol. 77, No. 53, Monday, March 19, 2012, at Pages 15943-15960.
|Monday, May 21
The House will not meet on the week of Monday, May 21, through Friday,
May 25. It will return on Wednesday, May 30.
The Senate will meet at 2:00 PM. It will
resume consideration of the motion to proceed to S 3187
WW], a bill to
amend the Federal Food, Drug, and Cosmetic Act regarding generic drugs.
12:00 NOON - 1:15 PM.
American Bar Association's (ABA)
Section of Antitrust Law will host a webcast and teleconferenced panel
discussion titled "Government Enforcement of
the Antitrust Laws: Do Public Attorneys General Trump Private Attorneys
General?". The speakers will be James Donahue
(Office of the Attorney General of Pennsylvania), Brady Johnson (Office of the
Attorney General of Washington), Jamie Manning (Office of the Attorney General
of Illinois), Eric Cramer (Berger & Montague), and Tracy Kirkham (Cooper &
Kirkham). The price ranges from $15 to $20. See,
notice. No CLE credits.
1:00 - 2:30 PM.
American Bar Association (ABA) will host a webcast
panel discussion titled "Cloud Computing: The Impact on Practicing Law".
The speakers will be Gina
Bongiovi, David Cox, and Christopher Anderson (LexisNexis). CLE credits. See,
1:00 - 3:00 PM.
American Bar Association's (ABA)
Section of International Law will host a webcast and teleconferenced panel
discussion titled "A Cast of Thousands:
Corruption Risks and Enforcement in the Media & Entertainment Industry".
The topics will include the Foreign Corrupt Practices Act (FCPA). The speakers
will be Mikhail Reider-Gordon (Navigant Consulting), Bruce Searby (Paul
Weiss), Dan Shallman (O'Melveny & Myers), and Chris Fenton (DMG Entertainment,
North America). The price ranges from $15 to $25. No CLE credits. See,
2:00 - 3:15 PM. The American
Enterprise Institute (AEI) will host a panel discussion titled "US,
China and Taiwan: Why the Triangle Might Get More Complex".
The speakers will be Bonnie Glasser (Center for
Strategic and International Studies), Gary Schmitt (AEI), Randy Schriver
(Project 2049 Institute), and Michael Mazza (AEI). See,
notice. Location: AEI, 12th floor, 1150 17th St., NW.
2:00 - 5:30 PM. The New
America Foundation (NAF) will host an event regarding federal government funding of
universities and research. It is titled "How to Save America's Knowledge
registration page. Location: NAF, Suite 400, 1899 L St., NW.
|Tuesday, May 22
10:00 AM - 12:00 NOON. The Federal Communications Commission (FCC)
will host an event titled "Channel Sharing Worskshop". The speakers will be
John Cunney (Santander), Eric
De Silva (Wiley Rein),
(Pillsbury Winthrop), and Lonna Thompson (Association
of Public Television Stations), Bill Lake (Chief of the FCC's Media
Bureau) and Rebecca Hansen (FCC). Location: FCC, Commission Meeting Room.
12:45 - 2:15 PM. The
New America Foundation (NAF) will host a panel
discussion titled "Infiltration and Surveillance: Countering Homegrown
registration page. Location: NAF, Suite 400, 1899 L St., NW.
1:00 - 2:00 PM.
American Bar Association (ABA) will
host a webcast and teleconferenced panel discussion titled "Locked
Down: How Security for Mobile Devices Helps to Avoid Ethical Dilemmas".
The speakers will be John Simek (Sensei Enterprises, Inc.) and David Ries
(Thorp Reed & Armstrong). CLE credits. See,
2:30 PM. The Senate
Intelligence Committee (SIC) will hold a closed markup meeting. See,
notice. Location: Room 219, Hart Building.
|Wednesday, May 23
9:30 AM - 12:00 NOON. The New
America Foundation (NAF) and Public
Knowledge (PK) will host an event titled "From Broadcast To Broadband New
Theories of the Public Interest in Wireless". Larry Irving will give a keynote
speech. At 9:45 AM there will be a panel titled "The End of Scarcity? What, If
Any Public Interest Obligations Are Necessary in Broadband?" The speakers will be
Joaquin Alvarado (American Public Media), Mark Lloyd (FCC Associate General Counsel), Andy
Werbach (University of Pennsylvania business school), and
Ellen Goodman (Rutgers University School of
Law). At 11:00 AM there will be a panel titled "What is the Public Interest in
Wireless?". The speakers will be Wally Bowen (Mountain Area Information Network), Michael
Calabrese (NAF), Amalia Deloney (Center for Media Justice), Amina Fazlullah (Benton Foundation
Margaret McCarthy (staff of Rep. Henry Waxman (D-CA)), and Harold Feld (PK). See,
Location: NAF, Suite 400, 1899 L St., NW.
12:15 - 1:30 PM. The Federal
Communications Commission (FCC) will hold an event titled titled "Domestic Deployment
and Operation of Emergency Communications in Times of Disaster: Procedures, Pitfalls, Best
Practices". The speakers will be Richard Lee (Associate Bureau Chief of the FCC's
Public Safety and Homeland Security Bureau), Brian Luu (Electrical Engineer and Roll Call
Program Manager in the FCC's PSHSB), Clifford Gonsalves (Radio Frequency Engineer and TEMS
Program Manager in the FCC's PSHSB), and Gordon Fullerton (consultant). Register with Zenji
Nakazawa at Zenji dot Nakazawa at fcc dot gov or 202-369-4406. The
FCBA states that this is a brown bag lunch of its Homeland
Security and Emergency Communications Committee. Location: FCC, Room TW-C468, 445 12th
2:00 - 4:00 PM. The
Senate Banking Committee's (SBC) Subcommittee on
Security and International Trade and Finance will hold a hearing titled "Reviewing
the U.S. – China Strategic and Economic Dialogue". The witnesses will be Stephen
Roach (Yale University), Fred Bergsten (Peterson Institute for International Economics),
John Dearie (Financial Services Forum), and Dean Garfield (Information Technology Industry
notice. Location: Room 538, Dirksen Building.
2:30 PM. The Senate
Judiciary Committee (SJC) will hold a hearing titled "Nominations". The SJC
will webcast this event. See,
notice. Location: Room 226, Dirksen Building.
|Thursday, May 24
10:00 AM. The
Senate Judiciary Committee (SJC) will hold an executive business meeting. See,
notice. The SJC will webcast this event. Location: Room 226, Dirksen Building.
12:15 - 1:30 PM. The
Federal Communications Bar Association's (FCBA)
International Telecommunications and Young Lawyers Committees will host a brown bag lunch
titled "A Look at Cross-Border Issues between the U.S. and Mexico". The
speakers will be Lindsey Tonsager (Covington &
Burling), Hal Grigsby (Department of State), Larry Olson (FCC's International Bureau), Tim
McGuire (FCC's Wireless Telecommunications Bureau), and Brian Marenco (FCC's Public Safety and
Homeland Security Bureau). Location: Hogan Lovells, 555 13th St., NW.
2:30 PM. The Senate
Intelligence Committee (SIC) will hold a closed hearing titled "Intelligence
notice. Location: Room 219, Hart Building.
6:00 - 8:00 PM. The
Federal Communications Bar Association (FCBA) will host an
event titled "Spring Reception". Location: Microsoft, 901 K St., NW.
|Saturday, May 26
20th anniversary of the Supreme Court's
opinion in Quill v.
North Dakota, 504 U.S. 298 (1992).
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