Title: Remote and Mobile Worker Relief Act of 2021
Policy area: Taxation

Summary:
Remote and Mobile Worker Relief Act of 2021
This bill prohibits the wages or other remuneration earned by an employee who is a resident of a taxing jurisdiction (i.e., states, localities, the District of Columbia, territories or possessions) and performs employment duties in more than one taxing jurisdiction from being subject to income tax in any other taxing jurisdiction other than (1) the taxing jurisdiction of the employee's residence, and (2) the taxing jurisdiction within which the employee is present and performing employment duties for more than 30 days during the calendar year in which the wages or remuneration are earned. The 30-day requirement is extended to 90 days in 2020 and 2021 for employees performing duties outside the taxing jurisdiction of their residence during the COVID-19 pandemic.
The bill exempts employers from income tax withholding and information reporting requirements for employees not subject to income tax in the taxing jurisdiction. For purposes of determining penalties related to withholding and information reporting requirements, an employer may rely on an employee's annual determination of the time expected to be spent in the taxing jurisdiction in the absence of the employer's actual knowledge of fraud or collusion between the employer and employee to evade tax.
For the purposes of this bill, the term employee excludes professional athletes, professional entertainers, production employees who perform services in connection with certain film, television, or other commercial video productions, and public figures who are persons of prominence who perform services for wages or other remuneration on a per-event basis.
The bill also sets forth a rule for the classification of wages earned by employees working remotely.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 1274 Introduced in Senate (IS)]

<DOC>






117th CONGRESS
  1st Session
                                S. 1274

 To limit the authority of States or other taxing jurisdictions to tax 
 certain income of employees for employment duties performed in other 
        States or taxing jurisdictions, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 21, 2021

 Mr. Thune (for himself and Mr. Brown) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To limit the authority of States or other taxing jurisdictions to tax 
 certain income of employees for employment duties performed in other 
        States or taxing jurisdictions, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Remote and Mobile Worker Relief Act 
of 2021''.

SEC. 2. LIMITATIONS ON WITHHOLDING AND TAXATION OF EMPLOYEE INCOME.

    (a) In General.--No part of the wages or other remuneration earned 
by an employee who is a resident of a taxing jurisdiction and performs 
employment duties in more than one taxing jurisdiction shall be subject 
to income tax in any taxing jurisdiction other than--
            (1) the taxing jurisdiction of the employee's residence; 
        and
            (2) any taxing jurisdiction 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.
    (b) Income Tax Withholding and Reporting.--Wages or other 
remuneration earned in any calendar year shall not be subject to income 
tax withholding and reporting requirements with respect to any taxing 
jurisdiction unless the employee is subject to income tax in such 
taxing jurisdiction under subsection (a). Income tax withholding and 
reporting requirements under subsection (a)(2) shall apply to wages or 
other remuneration earned as of the commencement date of employment 
duties in the taxing jurisdiction during the calendar year.
    (c) Operating Rules.--For purposes of determining penalties related 
to an employer's income tax withholding and reporting requirements with 
respect to any taxing jurisdiction--
            (1) an employer may rely on an employee's annual 
        determination of the time expected to be spent by such employee 
        in the performance of employment duties in the taxing 
        jurisdictions in which the employee will perform such duties 
        absent--
                    (A) the employer's actual knowledge of fraud by the 
                employee in making the determination; or
                    (B) collusion between the employer and the employee 
                to evade tax;
            (2) except as provided in paragraph (3), if records are 
        maintained by an employer in the regular course of business 
        that record the location at which an employee performs 
        employment duties, such records shall not preclude an 
        employer's ability to rely on an employee's determination under 
        paragraph (1); and
            (3) notwithstanding paragraph (2), if an employer, at its 
        sole discretion, maintains a time and attendance system that 
        tracks where the employee performs duties on a daily basis, 
        data from the time and attendance system shall be used instead 
        of the employee's determination under paragraph (1).
    (d) Definitions and Special Rules.--For purposes of this Act:
            (1) Day.--
                    (A) Except as provided in subparagraph (B), an 
                employee is considered present and performing 
                employment duties within a taxing jurisdiction for a 
                day if the employee performs more of the employee's 
                employment duties within such taxing jurisdiction than 
                in any other taxing jurisdiction during a day.
                    (B) If an employee performs employment duties in a 
                resident taxing jurisdiction and in only one 
                nonresident taxing jurisdiction during one day, such 
                employee shall be considered to have performed more of 
                the employee's employment duties in the nonresident 
                taxing jurisdiction than in the resident taxing 
                jurisdiction for such day.
                    (C) For purposes of this paragraph, the portion of 
                the day during which the employee is in transit shall 
                not be considered in determining the location of an 
                employee's performance of employment duties.
            (2) Employee.--
                    (A) In general.--
                            (i) General definition.--Except as provided 
                        in clause (ii), the term ``employee'' has the 
                        meaning given such term in section 3121(d) of 
                        the Internal Revenue Code of 1986, unless such 
                        term is defined by the taxing jurisdiction in 
                        which the person's employment duties are 
                        performed, in which case the taxing 
                        jurisdiction's definition shall prevail.
                            (ii) Exception.--The term ``employee'' 
                        shall not include a professional athlete, 
                        professional entertainer, qualified production 
                        employee, or certain public figures.
                    (B) Professional athlete.--The term ``professional 
                athlete'' means a person who performs services in a 
                professional athletic event, provided that the wages or 
                other remuneration are paid to such person for 
                performing services in his or her capacity as a 
                professional athlete.
                    (C) Professional entertainer.--The term 
                ``professional entertainer'' means a person of 
                prominence who performs services in the professional 
                performing arts for wages or other remuneration on a 
                per-event basis, provided that the wages or other 
                remuneration are paid to such person for performing 
                services in his or her capacity as a professional 
                entertainer.
                    (D) Qualified production employee.--The term 
                ``qualified production employee'' means a person who 
                performs production services of any nature directly in 
                connection with a taxing jurisdiction qualified, 
                certified or approved film, television or other 
                commercial video production for wages or other 
                remuneration, provided that the wages or other 
                remuneration paid to such person are qualified 
                production costs or expenditures under such taxing 
                jurisdiction's qualified, certified or approved film, 
                television or other commercial video production 
                incentive program, and that such wages or other 
                remuneration must be subject to withholding under such 
                qualified, certified or approved film, television or 
                other commercial video production incentive program as 
                a condition to treating such wages or other 
                remuneration as a qualified production cost or 
                expenditure.
                    (E) Certain public figures.--The term ``certain 
                public figures'' means persons of prominence who 
                perform services for wages or other remuneration on a 
                per-event basis, provided that the wages or other 
                remuneration are paid to such person for services 
                provided at a discrete event, in the nature of a 
                speech, public appearance, or similar event.
            (3) Employer.--The term ``employer'' has the meaning given 
        such term in section 3401(d) of the Internal Revenue Code of 
        1986, unless such term is defined by the taxing jurisdiction in 
        which the employee's employment duties are performed, in which 
        case the taxing jurisdiction's definition shall prevail.
            (4) Taxing jurisdiction.--The term ``taxing jurisdiction'' 
        means any of the several States, the District of Columbia, any 
        municipality, city, county, township, parish, transportation 
        district, or assessment jurisdiction, or any other political 
        subdivision within the territorial limits of the United States 
        with the authority to impose a tax, charge, or fee.
            (5) Time and attendance system.--The term ``time and 
        attendance system'' means a system in which--
                    (A) the employee is required on a contemporaneous 
                basis to record his work location for every day worked 
                outside of the taxing jurisdiction in which the 
                employee's employment duties are primarily performed; 
                and
                    (B) the system is designed to allow the employer to 
                allocate the employee's wages for income tax purposes 
                among all taxing jurisdictions in which the employee 
                performs employment duties for such employer.
            (6) Wages or other remuneration.--The term ``wages or other 
        remuneration'' may be defined by the taxing jurisdiction in 
        which the employment duties are performed.
    (e) Place of Residence.--For purposes of this section, the 
residence of an employee shall be determined under the laws of the 
taxing jurisdiction in which such employee maintains a dwelling which 
serves as the employee's permanent place of abode during the calendar 
year.
    (f) Adjustment During Coronavirus Pandemic.--With respect to 
calendar years 2020 and 2021, in the case of any employee who performs 
employment duties in any taxing jurisdiction other than the taxing 
jurisdiction of the employee's residence during such year as a result 
of the COVID-19 public health emergency, subsection (a)(2) shall be 
applied by substituting ``90 days'' for ``30 days''.

SEC. 3. STATE AND LOCAL TAX CERTAINTY.

    (a) Status of Employees During Covered Period.--Notwithstanding 
section 2(a)(2) or any provision of law of a taxing jurisdiction, with 
respect to any employee who is working remotely within such taxing 
jurisdiction during the covered period--
            (1) except as provided under paragraph (2), any wages 
        earned by such employee during such period shall be deemed to 
        have been earned at the primary work location of such employee; 
        and
            (2) if an employer, at its sole discretion, maintains a 
        system that tracks where such employee performs duties on a 
        daily basis, wages earned by such employee may, at the election 
        of such employer, be treated as earned at the location in which 
        such duties were remotely performed.
    (b) Status of Businesses During Covered Period.--Notwithstanding 
any provision of law of a taxing jurisdiction--
            (1) in the case of an out-of-jurisdiction business which 
        has any employees working remotely within such jurisdiction 
        during the covered period, the duties performed by such 
        employees within such jurisdiction during such period shall not 
        be sufficient to create any nexus or establish any minimum 
        contacts or level of presence that would otherwise--
                    (A) subject such business to any registration, 
                taxation, or other related requirements for businesses 
                operating within such jurisdiction; or
                    (B) cause such business to be deemed a resident of 
                such jurisdiction for tax purposes; and
            (2) except as provided under subsection (a)(2), with 
        respect to any tax imposed by such taxing jurisdiction which is 
        determined, in whole or in part, based on net or gross receipts 
        or income, for purposes of apportioning or sourcing such 
        receipts or income, any duties performed by an employee of an 
        out-of-jurisdiction business while working remotely during the 
        covered period--
                    (A) shall be disregarded with respect to any filing 
                requirements for such tax; and
                    (B) shall be apportioned and sourced to the tax 
                jurisdiction which includes the primary work location 
                of such employee.
    (c) Definitions.--For purposes of this section--
            (1) Covered period.--The term ``covered period'' means, 
        with respect to any employee working remotely, the period--
                    (A) beginning on the date on which such employee 
                began working remotely; and
                    (B) ending on the earlier of--
                            (i) the date on which the employer allows, 
                        at the same time--
                                    (I) such employee to return to 
                                their primary work location; and
                                    (II) not less than 90 percent of 
                                their permanent workforce to return to 
                                such work location; or
                            (ii) December 31, 2021.
            (2) Employee.--The term ``employee'' has the meaning given 
        such term in section 3121(d) of the Internal Revenue Code of 
        1986, unless such term is defined by the taxing jurisdiction in 
        which the person's employment duties are deemed to have been 
        performed under subsection (a), in which case the taxing 
        jurisdiction's definition shall prevail.
            (3) Employer.--The term ``employer'' has the meaning given 
        such term in section 3401(d) of the Internal Revenue Code of 
        1986, unless such term is defined by the taxing jurisdiction in 
        which the person's employment duties are deemed to have been 
        performed under subsection (a), in which case the taxing 
        jurisdiction's definition shall prevail.
            (4) Out-of-jurisdiction business.--The term ``out-of-
        jurisdiction business'' means, with respect to any taxing 
        jurisdiction, any business entity which, excepting any 
        employees of such business who are working remotely within such 
        jurisdiction during the covered period, would, under the 
        existing law of such taxing jurisdiction, not otherwise--
                    (A) be subject to any registration, taxation, or 
                other related requirement for businesses operating 
                within such jurisdiction; or
                    (B) be deemed a resident of such jurisdiction for 
                tax purposes.
            (5) Primary work location.--The term ``primary work 
        location'' means, with respect to an employee, the address of 
        the employer where the employee is regularly assigned to work 
        when such employee is not working remotely during the covered 
        period.
            (6) Taxing jurisdiction.--The term ``taxing jurisdiction'' 
        has the same meaning given such term under section 2(d)(4).
            (7) Wages.--The term ``wages'' means all wages and other 
        remuneration paid to an employee that are subject to tax or 
        withholding requirements under the law of the taxing 
        jurisdiction in which the employment duties are deemed to be 
        performed under subsection (a) during the covered period.
            (8) Working remotely.--The term ``working remotely'' means 
        the performance of duties by an employee at a location other 
        than the primary work location of such employee at the 
        direction of his or her employer due to conditions resulting 
        from the public health emergency relating to the virus SARS-
        CoV-2 or coronavirus disease 2019 (referred to in this 
        paragraph as ``COVID-19''), including--
                    (A) to comply with any government order relating to 
                COVID-19;
                    (B) to prevent the spread of COVID-19; and
                    (C) due to the employee or a member of the 
                employee's family contracting COVID-19.
    (d) Preservation of Authority of Taxing Jurisdictions.--This 
section shall not be construed as modifying, impairing, superseding, or 
authorizing the modification, impairment, or supersession of the law of 
any taxing jurisdiction pertaining to taxation except as expressly 
provided in subsections (a) through (c).

SEC. 4. EFFECTIVE DATE; APPLICABILITY.

    (a) Effective Date.--This Act shall apply to calendar years 
beginning after December 31, 2019.
    (b) Applicability.--This Act shall not apply to any tax obligation 
that accrues before January 1, 2020.
                                 <all>