5/15. The House passed HR 1864 [LOC | WW], the "Mobile Workforce State Income Tax Simplification Act of 2011", by voice vote.

This bill provides that a state may not impose its income tax on non-resident employees unless they earn wages in the taxing state for more than 30 days.

This bill does not address state business activity taxes.

The impact of this bill on state taxation of non-resident workers on the basis that they work via phone or internet communications with persons in the taxing state is less than clear. See, related story in this issue titled "Commentary: State Taxation of Teleworkers".

The Senate has not yet passed this bill, or any related bill.

Rep. Howard Coble (R-NC) introduced this bill on May 12, 2011. The House Judiciary Committee's (HJC) Subcommittee on Courts, Commercial and Administrative Law held a hearing on the bill on May 25, 2011. See, HJC web page with hyperlinks to prepared testimony.

The HJC amended and approved the bill on November 17, 2011, by voice vote. The HJC reported the bill on February 3, 2012. See, House Report No. 112-386. Rep. Jerrold Nadler (D-NY) and Rep. John Conyers (D-MI) wrote a short dissent.

This bill provides that "No part of the wages or other remuneration earned by an employee who performs employment duties in more than one State shall be subject to income tax in any State other than -- (1) the State of the employee's residence; and (2) the State 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."

This bill contains a definitions section. However, it does not define the terms "present" or "performing employment duties". The bill does not expressly state that a taxing state shall not deem a non-resident to be "present" on days in which he or she works remotely via telecommunications or the internet with persons or servers in the taxing state.

The Congressional Budget Office (CBO) released a report on this bill on January 25, 2012. It states that "Generally, states that have large employment centers close to a state border would lose the most revenue; states from which employees tend to commute would gain revenue. For example, New York would likely lose the largest amount of revenue -- from $50 million to $100 million according to state and industry estimates -- and Illinois, Massachusetts, and California would face smaller losses. New Jersey and Connecticut would likely gain revenue."

House Floor Debate. Rep. Coble stated in the House that "the diversity of State income tax laws places a significant burden on people who travel for work and their employers, many of which are small businesses. Currently, 41 States tax the wages earned by a nonresident for work performed there. I do not take issue with the right of those States to impose an income tax, but I am concerned that the disparity of tax rules among those States is damaging small businesses and stifling economic growth."

He continued that "some States require a nonresident to pay income tax if he or she works in that State for just one day. Other states do not collect tax until the nonresident works for a certain number of days in the particular jurisdiction. Small businesses must expend considerable resources to figure out how much they must withhold for their traveling employees in 41 different jurisdictions. Employees are also confused about when their tax liability is triggered and in which States they must file a tax return."

He said that this bill "establishes a clear 30-day threshold for tax liability and employer withholding. Under the bill, States remain free to set any income tax rate they choose."

Rep. Hank Johnson (D-GA) (at left), the lead cosponsor of the bill, also spoke in support. He said that "this bill will greatly increase compliance rates. This bill will end up saving States the administrative costs of processing and remitting thousands of small returns from nonresidents."

Rep. Lamar Smith (R-TX), the Chairman of the HJC, stated in the House that "Under this current patchwork system, employees who travel out of state for work must file tax returns in other jurisdictions even if their ultimate tax liability to a state is a few dollars."

He added that "In addition to burdening our interstate employees, different state income tax laws require employers to comply with a wide variety of tax withholding laws. Many of those employers are small businesses who can least afford these administrative costs."

Rep. Sheila Lee (D-TX) also spoke in favor of the bill. Texas is one of the few states with no state income tax.

Prior Versions of this Bill. Rep. Johnson and others have been working on this legislation for three Congresses.

For the 110th Congress, see HR 3359 [LOC | WW], the "Mobile Workforce State Income Tax Fairness and Simplification Act of 2007", sponsored by Rep. Johnson. It had a 60 day threshold. See also, story titled "Summary of Teleworker and Mobile Worker Protection Bills" in TLJ Daily E-Mail Alert No. 1,665, October 30, 2007.

For the 111th Congress, see HR 2110 [LOC | WW], the "Mobile Workforce State Income Tax Simplification Act", introduced by Rep. Johnson. It had a 30 day threshold.

5/15. The issue of telework did not arise during the floor debate in the House on HR 1864 [LOC | WW], the "Mobile Workforce State Income Tax Simplification Act of 2011". In contrast, members frequently referenced traveling workers. Nor is telework addressed in the HJC report.

Also, TLJ spoke with several House staffers who declined to offer a definitive statement regarding the impact of this bill on taxation based upon teleworking.

TLJ spoke with Maureen Riehl of the Council on State Taxation (COST), a group that supports this bill. She said that this bill is directed at state taxation of business travelers. However, she added that it does impact state taxation of teleworkers.

Riehl said that the word "present" in the bill means that the employee must be "actually physical present" in the taxing state for 30 days to be subject to income taxation by the taxing state; telecommuting does not constitute presence.

No Representatives from the state of New York spoke during the floor debate. Yet, the aggressive tax policies of New York are the main target of this and other Congressional bills that would limit state taxing authority.

New York taxes non-resident non-present teleworkers. See for example, memorandum [6 pages in PDF] of the New York State Department of Taxation and Finance titled "New York Tax Treatment of Nonresidents and Part-Year Residents Application of the Convenience of the Employer Test to Telecommuters and Others".

Members of the Connecticut delegation in the House and Senate have long been introducing bills that would limit New York's taxation of teleworkers. For the current Congress, see S 1811 [LOC | WW] and HR 5615 [LOC | WW], the "Telecommuter Tax Fairness Act".

See also, story titled "Connecticut Representatives Again Introduce Telecommuter Tax Fairness Act" in TLJ Daily E-Mail Alert No. 2,383, May 15, 2012.

And see, stories titled "Supreme Court Denies Cert in Challenge to State Income Tax on Out of State Teleworkers" and "Connecticut Legislators Seek End to New York's Taxation of Out of State Workers" in TLJ Daily E-Mail Alert No. 1,244, November 1, 2005.

5/17. Sen. Robert Casey (D-PA) and Sen. Charles Schumer (D-NY) held a news conference at which they announced that they will introduce a bill titled the "Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy Act", which comes close to producing the acronym of EXPATRIOT Act.

See, excerpts of CNN video [YouTube]. See also, Sen. Casey's release with bill summary.

The two Senators discussed the renunciation of US citizenship last September by Eduardo Saverin, one of the founders and owners of Facebook. Under US tax law he would have realized a taxable capital gain at the time of Facebook's initial public offering. Saverin resides in Singapore, which has no capital gains tax.

The two Senators asserted that Saverin renounced citizenship to avoid US taxes. Sen. Schumer asserted that "we aren't going to let him get away with it".

Sen. Casey's release states that this bill will provide that "any expatriate with either a net worth of $2 million or an average income tax liability of at least $148,000 over the last five years will be presumed to have renounced their citizenship for tax avoidance purposes. The individual will then have an opportunity to demonstrate otherwise to the IRS by meeting specific IRS requirements. If the individual has a legitimate reason for renouncing his or her citizenship, no penalties will apply. But if the IRS finds that an individual gave up their passport for substantial tax purposes, then it will prospectively impose a tax on the individual’s future investment gains, no matter where he or she resides. This would eliminate any tax benefit and financial incentive from renouncing one’s citizenship. The rate of this capital gains tax will be 30 percent, in keeping with the rate that is already applied on non-resident aliens for dividends and interest earnings."

Also, "So long as the individual avoids these taxes, they would be inadmissible to the United States forever."

Sen. Casey stated that Saverin "has benefited greatly from being a citizen of the United States but he has chosen to cast it aside and leave U.S. taxpayers with the bill. Renouncing citizenship to simply avoid paying your fair share is an insult to middle class Americans and we will not accept it."

Saverin has denied the Senators' tax allegations. He stated in a release that "My decision to expatriate was based solely on my interest in working and living in Singapore, where I have been since 2009."

Commentary. There also exists the argument that US capital gains taxes are very high, both absolutely and relative to other countries, and that this is one source of competitive disadvantage for the US in the global economy.

Investors make investment decisions in large part on the basis of expected return on investment. This includes an assessment of tax consequences. Investors do not make investment decisions on the basis of how they will facilitate the spending ambitions of politicians around the world.

Senators Casey and Schumer could have advocated reforms to US tax policies that would draw capital to the US economy, rather than advocate new punitive policies that would further drive capital away.

There also exist the related arguments that US corporate taxes are both high relative to other countries, and in need of reform to address the global scope of many companies, and that these current tax policies further place the US at a competitive disadvantage.

5/15. Sen. Charles Schumer (D-NY) introduced S 3186 [LOC | WW], the "Mobile Device Theft Deterrence Act of 2012", a bill to make it a crime to alter or remove the identification number of a mobile device.

This bill was referred to the Senate Judiciary Committee (SJC). Sen. Schumer is a member.

On April 10, 2012, the CTIA announced that certain wireless service providers will take coordinated action "to help deter smartphone thefts and protect consumer data". The gist of that program is the creation of integrated databases of unique identifiers of mobile communications devices reported as stolen, by participating wireless service providers, combined with a commitment by such providers to not provide service to the unique identifiers associated with devices reported as stolen.

At that time, Sen. Schumer announced in a release that he would introduce a bill that would "make it a federal crime to tamper or alter a cell phone IMEI numbers in order to activate a stolen phone. Schumer's legislation will be modeled on similar federal statutes with respect to VIN numbers on automobiles. Anyone convicted of tampering with or altering the IMEI number on a cell phone could face a maximum of five years in prison."

See, story titled "Wireless Service Providers Announce Plans for Disabling Stolen Smart Phones" in TLJ Daily E-Mail Alert No. 2,369, April 12, 2012. See also, story titled "House Commerce Committee Democrats Question Companies Regarding Smart Phone Theft" in TLJ Daily E-Mail Alert No. 2,356, March 25, 2012.

Sen. Schumer issued a release on May 16. It states that "Currently, when cell phones are reported stolen, many American cell phone companies only deactivate the phone's ``SIM´´ card, which is the account data storage component of the device. While deactivation of a SIM card does not allow for the device to be used with existing data and account information, SIM cards are easily removed and replaced, allowing stolen phones to be easily resold on the black market."

Theft and sale of stolen property are already criminalized. Yet, mobile devices are stolen and resold. Sen. Schumer did not explain why criminalizing the associated act of changing identification numbers should be expected to have a deterrent effect.

Steve Largent, head of the CTIA, stated in a release that "CTIA's members are committed to protecting their customers and their wireless devices from theft. We are pleased to support Senator Schumer’s legislation and believe it will be an important tool in the effort to combat the theft of wireless devices. We hope Congress moves quickly to pass this important bill."

The House will meet at 10:00 AM for morning hour, and at 12:00 NOON for legislative business. It will resume consideration of HR 4310 [LOC | WW], the "National Defense Authorization Act for Fiscal Year 2013". See, Rep. Cantor's schedule.

The Senate will not meet.

12:15 - 1:45 PM. The Federal Communications Commission (FCC) will hold an event titled "Nuts and Bolts of Filing Transfer of Control Applications: Satellite Licenses and Radio/Television Licenses". The speakers will be David Brown (Associate Division Chief of the FCC's Media Bureau), Wayne McKee (Deputy Chief of the FCC's MB's Engineering Division), Karl Kensinger (Associate Division Chief of the FCC's International Bureau), and Kenneth Satten (Wilkinson Barker Knauer). The FCBA states that this is a brown bag lunch hosted by its Transactional Committee. Location: Hogan Lovells, 555 13th St., NW.

Deadline to submit comments to the U.S. Customs and Border Protection regarding its interim rules that implement the preferential tariff treatment and other customs related provisions of the US-Korea Free Trade Agreement. See, notice in the Federal Register, Vol. 77, No. 53, Monday, March 19, 2012, at Pages 15943-15960.

The House will not meet on the week of Monday, May 21, through Friday, May 25. It will return on Wednesday, May 30.

The Senate will meet at 2:00 PM. It will resume consideration of the motion to proceed to S 3187 [LOC | WW], a bill to amend the Federal Food, Drug, and Cosmetic Act regarding generic drugs.

12:00 NOON - 1:15 PM. American Bar Association's (ABA) Section of Antitrust Law will host a webcast and teleconferenced panel discussion titled "Government Enforcement of the Antitrust Laws: Do Public Attorneys General Trump Private Attorneys General?". The speakers will be James Donahue (Office of the Attorney General of Pennsylvania), Brady Johnson (Office of the Attorney General of Washington), Jamie Manning (Office of the Attorney General of Illinois), Eric Cramer (Berger & Montague), and Tracy Kirkham (Cooper & Kirkham). The price ranges from $15 to $20. See, notice. No CLE credits.

1:00 - 2:30 PM. American Bar Association (ABA) will host a webcast panel discussion titled "Cloud Computing: The Impact on Practicing Law". The speakers will be Gina Bongiovi, David Cox, and Christopher Anderson (LexisNexis). CLE credits. See, notice.

1:00 - 3:00 PM. American Bar Association's (ABA) Section of International Law will host a webcast and teleconferenced panel discussion titled "A Cast of Thousands: Corruption Risks and Enforcement in the Media & Entertainment Industry". The topics will include the Foreign Corrupt Practices Act (FCPA). The speakers will be Mikhail Reider-Gordon (Navigant Consulting), Bruce Searby (Paul Weiss), Dan Shallman (O'Melveny & Myers), and Chris Fenton (DMG Entertainment, North America). The price ranges from $15 to $25. No CLE credits. See, notice.

2:00 - 3:15 PM. The American Enterprise Institute (AEI) will host a panel discussion titled "US, China and Taiwan: Why the Triangle Might Get More Complex". The speakers will be Bonnie Glasser (Center for Strategic and International Studies), Gary Schmitt (AEI), Randy Schriver (Project 2049 Institute), and Michael Mazza (AEI). See, notice. Location: AEI, 12th floor, 1150 17th St., NW.

2:00 - 5:30 PM. The New America Foundation (NAF) will host an event regarding federal government funding of universities and research. It is titled "How to Save America's Knowledge Enterprise". See, notice and registration page. Location: NAF, Suite 400, 1899 L St., NW.

10:00 AM - 12:00 NOON. The Federal Communications Commission (FCC) will host an event titled "Channel Sharing Worskshop". The speakers will be John Cunney (Santander), Eric De Silva (Wiley Rein), John Hane (Pillsbury Winthrop), and Lonna Thompson (Association of Public Television Stations), Bill Lake (Chief of the FCC's Media Bureau) and Rebecca Hansen (FCC). Location: FCC, Commission Meeting Room.

12:45 - 2:15 PM. The New America Foundation (NAF) will host a panel discussion titled "Infiltration and Surveillance: Countering Homegrown Terrorism". See, notice and registration page. Location: NAF, Suite 400, 1899 L St., NW.

1:00 - 2:00 PM. American Bar Association (ABA) will host a webcast and teleconferenced panel discussion titled "Locked Down: How Security for Mobile Devices Helps to Avoid Ethical Dilemmas". The speakers will be John Simek (Sensei Enterprises, Inc.) and David Ries (Thorp Reed & Armstrong). CLE credits. See, notice.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed markup meeting. See, notice. Location: Room 219, Hart Building.

9:30 AM - 12:00 NOON. The New America Foundation (NAF) and Public Knowledge (PK) will host an event titled "From Broadcast To Broadband New Theories of the Public Interest in Wireless". Larry Irving will give a keynote speech. At 9:45 AM there will be a panel titled "The End of Scarcity? What, If Any Public Interest Obligations Are Necessary in Broadband?" The speakers will be Joaquin Alvarado (American Public Media), Mark Lloyd (FCC Associate General Counsel), Andy Schwartzman, Kevin Werbach (University of Pennsylvania business school), and Ellen Goodman (Rutgers University School of Law). At 11:00 AM there will be a panel titled "What is the Public Interest in Wireless?". The speakers will be Wally Bowen (Mountain Area Information Network), Michael Calabrese (NAF), Amalia Deloney (Center for Media Justice), Amina Fazlullah (Benton Foundation Margaret McCarthy (staff of Rep. Henry Waxman (D-CA)), and Harold Feld (PK). See, notice. Location: NAF, Suite 400, 1899 L St., NW.

12:15 - 1:30 PM. The Federal Communications Commission (FCC) will hold an event titled titled "Domestic Deployment and Operation of Emergency Communications in Times of Disaster: Procedures, Pitfalls, Best Practices". The speakers will be Richard Lee (Associate Bureau Chief of the FCC's Public Safety and Homeland Security Bureau), Brian Luu (Electrical Engineer and Roll Call Program Manager in the FCC's PSHSB), Clifford Gonsalves (Radio Frequency Engineer and TEMS Program Manager in the FCC's PSHSB), and Gordon Fullerton (consultant). Register with Zenji Nakazawa at Zenji dot Nakazawa at fcc dot gov or 202-369-4406. The FCBA states that this is a brown bag lunch of its Homeland Security and Emergency Communications Committee. Location: FCC, Room TW-C468, 445 12th St., SW.

2:00 - 4:00 PM. The Senate Banking Committee's (SBC) Subcommittee on Security and International Trade and Finance will hold a hearing titled "Reviewing the U.S. – China Strategic and Economic Dialogue". The witnesses will be Stephen Roach (Yale University), Fred Bergsten (Peterson Institute for International Economics), John Dearie (Financial Services Forum), and Dean Garfield (Information Technology Industry Council). See, notice. Location: Room 538, Dirksen Building.

2:30 PM. The Senate Judiciary Committee (SJC) will hold a hearing titled "Nominations". The SJC will webcast this event. See, notice. Location: Room 226, Dirksen Building.

10:00 AM. The Senate Judiciary Committee (SJC) will hold an executive business meeting. See, notice. The SJC will webcast this event. Location: Room 226, Dirksen Building.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) International Telecommunications and Young Lawyers Committees will host a brown bag lunch titled "A Look at Cross-Border Issues between the U.S. and Mexico". The speakers will be Lindsey Tonsager (Covington & Burling), Hal Grigsby (Department of State), Larry Olson (FCC's International Bureau), Tim McGuire (FCC's Wireless Telecommunications Bureau), and Brian Marenco (FCC's Public Safety and Homeland Security Bureau). Location: Hogan Lovells, 555 13th St., NW.

2:30 PM. The Senate Intelligence Committee (SIC) will hold a closed hearing titled "Intelligence Matters". See, notice. Location: Room 219, Hart Building.

6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host an event titled "Spring Reception". Location: Microsoft, 901 K St., NW.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its proposed revisions [4 pages in PDF] to its June 2009 FIPS 186-3 [130 pages in PDF] titled "Digital Signature Standard". See, notice in the Federal Register, Vol. 77, No. 69, Tuesday, April 10, 2012, at Pages 21538-21539.

20th anniversary of the Supreme Court's opinion in Quill v. North Dakota, 504 U.S. 298 (1992).

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