II 

109TH CONGRESS 

1ST SESSION S. 1097 

To amend title 4 of the United States Code to prohibit the double taxation 

of telecommuters and others who work at home. 

IN THE SENATE OF THE UNITED STATES 

MAY 23, 2005 

Mr. DODD (for himself and Mr. LIEBERMAN) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend title 4 of the United States Code to prohibit 

the double taxation of telecommuters and others who 

work at home. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Telecommuter Tax 

5 Fairness Act of 2005’’. 

6 SEC. 2. PROHIBITION ON DOUBLE TAXATION OF TELECOM7 MUTERS. 

8 (a) IN GENERAL.—Chapter 4 of title 4, United 

9 States Code, is amended by adding at the end the fol10 lowing new section: 
2 

•S 1097 IS

1 ‘‘§ 127. Prohibition on double taxation of telecom2 muters and others who work at home 

3 ‘‘(a) PHYSICAL PRESENCE REQUIRED.— 

4 ‘‘(1) IN GENERAL.—In applying its income tax 

5 laws to the salary of a nonresident individual, a 

6 State may only deem such nonresident individual to 

7 be present in or working in such State for any pe8 riod of time if such nonresident individual is phys9 ically present in such State for such period and such 

10 State may not impose nonresident income taxes on 

11 such salary with respect to any period of time when 

12 such nonresident individual is physically present in 

13 another State. 

14 ‘‘(2) DETERMINATION OF PHYSICAL PRES15 ENCE.—For purposes of determining physical pres16 ence, no State may deem a nonresident individual to 

17 be present in or working in such State on the 

18 grounds that such nonresident individual is present 

19 at or working at home for the nonresident individ20 ual’s convenience. 

21 ‘‘(b) DEFINITIONS.—As used in this section— 

22 ‘‘(1) STATE.—The term ‘State’ includes any po23 litical subdivision of a State, the District of Colum24 bia, and the possessions of the United States. 

25 ‘‘(2) INCOME TAX.—The term ‘income tax’ has 

26 the meaning given such term by section 110(c). 
3 

•S 1097 IS

1 ‘‘(3) INCOME TAX LAWS.—The term ‘income 

2 tax laws’ includes any statutes, regulations, adminis3 trative practices, administrative interpretations, and 

4 judicial decisions. 

5 ‘‘(4) NONRESIDENT INDIVIDUAL.—The term 

6 ‘nonresident individual’ means an individual who is 

7 not a resident of the State applying its income tax 

8 laws to such individual. 

9 ‘‘(5) SALARY.—The term ‘salary’ means the 

10 compensation, wages, or other remuneration earned 

11 by an individual for personal services performed as 

12 an employee or as an independent contractor. 

13 ‘‘(c) NO INFERENCE.—Nothing in this section shall 

14 be construed as bearing on— 

15 ‘‘(1) any tax laws other than income tax laws, 

16 ‘‘(2) the taxation of corporations, partnerships, 

17 trusts, estates, limited liability companies, or other 

18 entities, organizations, or persons other than non19 resident individuals in their capacities as employees 

20 or independent contractors, 

21 ‘‘(3) the taxation of individuals in their capac22 ities as shareholders, partners, trust and estate 

23 beneficiaries, members or managers of limited liabil24 ity companies, or in any similar capacities, and 
4 

•S 1097 IS

1 ‘‘(4) the income taxation of dividends, interest, 

2 annuities, rents, royalties, or other forms of un3 earned income.’’. 

4 (b) CLERICAL AMENDMENT.—The table of sections 

5 of such chapter 4 is amended by adding at the end the 

6 following new item: 

‘‘127. Prohibition on double taxation of telecommuters and others who work at 

home.’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall take effect on the date of enactment of 

9 this Act. 

Æ