The bill would establish a uniform standard for the withholding of state income taxes on nonresident employees. It would lessen the burden the current system places on employers and traveling employees.
Both bills would require nonresidents to work in a state for more than thirty days before becoming subject to a state‘s income tax withholding.
Why is this an issue? Let’s say that you start a consulting firm. Business takes off. You develop a national client base and hire employees. You send your employees throughout the country, sometimes for 4 or 5 days and other times for longer. You meet with me to discuss your tax filing requirements, especially your payroll. You tell me that you have engagements coming up in the following states and ask me how to handle the employee withholding.