Senate Republicans’ opening bid for Phase Four relief legislation includes many eye-catching elements, including another round of economic impact payments and an extension to the federal plus-up to unemployment benefits. But also included in the package is crucial relief for remote workers, relief which should see broad support across party lines.
Since the beginning of the pandemic, many businesses have followed either lockdown orders or public health guidelines urging employers to facilitate more remote work to minimize in-office contact. As a result, an April MIT study found that roughly 56 million American workers have started working from home instead of commuting to an office.
Concurrently, tens of thousands of Americans have volunteered to selflessly risk life and limb, journeying to coronavirus hotspots to provide badly needed medical aid. Around 25,000 Americans flew in from other states to aid New York City when it was quite literally begging for help.
What Americans shifting to remote work or volunteering to provide surge capacity to hard-hit areas probably didn’t realize is that, in doing so, they were exposing themselves to new tax liabilities. By performing work in a state other than the state they normally work in, they were setting themselves up for a more complicated, and often more expensive, state tax return absent Congressional action to protect them.
Based on census data of Americans who commute across state lines, the National Taxpayers Union Foundation estimated that as many as 2.1 million Americans were working remotely in a different state than their usual office location. Even that is a conservative estimate, since it does not include partial remote work.
That means that millions of Americans are, currently, on the hook to file taxes to at least two states and keep track of what days they worked in what state, a burden that is likely not at the forefront of most Americans’ minds. Moreover, businesses can find their carefully-planned apportionment schedules skewed by a single worker working remotely in a new state.
Volunteers responding to states’ distress calls, meanwhile, can also run into aggressive state tax collectors. New York Governor Andrew Cuomo responded to the generosity of these American volunteers by hitting them with income tax bills, justifying this by stating that “we’re not in a position to provide any subsidies right now.”
Fortunately, Congress is in a position to right these wrongs, and Senate Republicans attempted to do so with the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act. Under the HEALS Act, through 2024, employees who work remotely must do so for at least 90 days in a state other than their primary residence or primary work site before they can be expected to file taxes in that state. This would also apply to volunteer workers.
There’s no reason why this provision should be a part of the partisan horsetrading sure to follow. The legislation this provision is based off of, the Mobile Workforce State Income Tax Simplification Act, drew 19 of its 38 cosponsors from the Democratic caucus.
So where does opposition to a common-sense bipartisan measure like this come from? Well, the Democratic Leader in the Senate is Chuck Schumer of New York, the state most infamous for targeting non-residents for income taxes. Not only is New York infamous for taxing the volunteers who responded to their desperate pleas for help, but its “convenience of the employer” rule allows it to claim income tax liability for employees of New York businesses who work remotely out-of-state, but could conceivably work in New York.
Fellow Democratic members of Schumer’s caucus should hold the Senator to a higher standard, however. This legislation was supported by many of them outside the context of a pandemic, and the health emergency has only made the legislation more urgent. Any standard of consistency and concern for Americans impacted by the pandemic would expect Democrats to support this provision of the HEALS Act.
Andrew Wilford is a policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to tax policy research and education at all levels of government.