II 

112TH CONGRESS 

1ST SESSION S. 1811 

To amend title 4 of the United States Code to limit the extent to which 

States may tax the compensation earned by nonresident telecommuters. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 7, 2011 

Mr. LIEBERMAN (for himself and Mr. BLUMENTHAL) 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 limit the 

extent to which States may tax the compensation earned 

by nonresident telecommuters. 

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 2011’’. 


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•S 1811 IS

1 SEC. 2. LIMITATION ON STATE TAXATION OF COMPENSA2 TION EARNED BY NONRESIDENT TELECOM3 MUTERS. 

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

5 States Code, is amended by adding at the end the fol6 lowing new section: 

7 ‘‘§ 127. Limitation on State taxation of compensation 

8 earned by nonresident telecommuters 

9 ‘‘(a) IN GENERAL.—In applying its income tax laws 

10 to the compensation of a nonresident individual, a State 

11 may deem such nonresident individual to be present in or 

12 working in such State for any period of time only if such 

13 nonresident individual is physically present in such State 

14 for such period and such State may not impose non15 resident income taxes on such compensation with respect 

16 to any period of time when such nonresident individual 

17 is physically present in another State. 

18 ‘‘(b) DETERMINATION OF PHYSICAL PRESENCE.— 

19 For purposes of determining physical presence, no State 

20 may deem a nonresident individual to be present in or 

21 working in such State on the grounds that— 

22 ‘‘(1) such nonresident individual is present at 

23 or working at home for convenience, or 

24 ‘‘(2) such nonresident individual’s work at 

25 home or office at home fails any convenience of the 

26 employer test or any similar test. 


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•S 1811 IS

1 ‘‘(c) DETERMINATION OF PERIODS OF TIME WITH

2 RESPECT TO WHICH COMPENSATION IS PAID.—For pur3 poses of determining the periods of time with respect to 

4 which compensation is paid, no State may deem a period 

5 of time during which a nonresident individual is physically 

6 present in another State and performing certain tasks in 

7 such other State to be— 

8 ‘‘(1) time that is not normal work time unless 

9 such individual’s employer deems such period to be 

10 time that is not normal work time, 

11 ‘‘(2) nonworking time unless such individual’s 

12 employer deems such period to be nonworking time, 

13 or 

14 ‘‘(3) time with respect to which no compensa15 tion is paid unless such individual’s employer deems 

16 such period to be time with respect to which no com17 pensation is paid. 

18 ‘‘(d) DEFINITIONS.—As used in this section— 

19 ‘‘(1) STATE.—The term ‘State’ means each of 

20 the several States (or any subdivision thereof), the 

21 District of Columbia, and any territory or possession 

22 of the United States. 

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

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


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•S 1811 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) EMPLOYEE.—The term ‘employee’ means 

10 an employee as defined by the State in which the 

11 nonresident individual is physically present and per12 forming personal services for compensation. 

13 ‘‘(6) EMPLOYER.—The term ‘employer’ means 

14 the person having control of the payment of an indi15 vidual’s compensation. 

16 ‘‘(7) COMPENSATION.—The term ‘compensa17 tion’ means the salary, wages, or other remuneration 

18 earned by an individual for personal services per19 formed as an employee or as an independent con20 tractor. 

21 ‘‘(e) NO INFERENCE.—Nothing in this section shall 

22 be construed as bearing on— 

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

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

25 trusts, estates, limited liability companies, or other 


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•S 1811 IS

1 entities, organizations, or persons other than non2 resident individuals in their capacities as employees 

3 or independent contractors, 

4 ‘‘(3) the taxation of individuals in their capac5 ities as shareholders, partners, trust and estate 

6 beneficiaries, members or managers of limited liabil7 ity companies, or in any similar capacities, and 

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

9 annuities, rents, royalties, or other forms of un10 earned income.’’. 

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

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

13 following new item: 

‘‘127. Limitation on State taxation of compensation earned by nonresident telecommuters.’’. 

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

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

16 of this Act. 

Æ 


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