# Amicus Curiae Brief — Burlington Northern Railroad Co. Employees v. Montana Department of Revenue > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_0978%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1990 - **Citation:** 494 U.S. 1028 ## Text Supreme Court, US, FILEQD No. 89-1181 : FEB Dn ue —————— ———— acne SPANIOL, JR, CLERK In The -_— - Supreme Court of the United States October Term, 1989 7% 7. BURLINGTON NORTHERN RAILROAD COMPANY EMPLOYEES, r - 4 . Petitioners, MONTANA DEPARTMENT OF REVENUE, , ' wmnsidont Re S} ONGeHT. — ,% v BRIEF OF AMICUS CURIAE WASHINGTON STATE LEGISLATIVE BOARD OF UNITED TRANSPORTATION UNION IN SUPPORT OF PETITION FOR A WRIT OF CERTIORARI y vy *Toun R. Quintan R. Blair STRONG Of - Paine, HAMBLEN, COFFIN, Brooke & MILLER 1200 Washington Trust Financial Center Spokane, Washington 99204 (509) 455-6000 Attorneys for Amicus Curiae * Counsel of Record ‘a February 20, 1990 TABLE OF CONTENTS Page err I goo 5 Se ae eT yw aus Ww ¥ l INTERES! OF tHe AMICUS CURIAE............. 2 REASONS FOR GRANTING THE PETITION....... 6 A. THE LEGISLATIVE HISTORY OF 49 U.S.C. §11504 INDICATES THAT THIS LAW WAS ENACTED TO RELIEVE THE BURDEN ON INTERSTATE COMMERCE CAUSED BY THE INCOME TAX POLICIES OF SOME STATES INSOFAR AS SUCH POLICIES AFFECT THE INCOME OF INTERSTATE CARRIER NN CF ION Se Chie shad eee R eee e eee Obed he aes 6 B. THE MONTANA SUPREME COURT DECISION VIOLATES 49 U.S.C. §11504 AND SHOULD BE SET ASIDE AS VIOLATING THE COMMERCE AND SUPREMACY CLAUSES OF THE USS. CEES es EE ee creates Cee eels C. EVEN ABSENT CONGRESSIONAL ACTION, THE MONTANA INCOME TAX INFORMATION REQUIREMENTS AND UNDERLYING TAX VIOLATE THE COMMERCE AND SUPREMACY se SO earn area a ere Merry sre ae 1] CONCLUSION Pe ES OS 0K Grae Hea eek Ov RO DA OKOKER EROS App. | Yy il TABLE OF AUTHORITIES- Page(s) Cases Amerada Hess v. New Jersey, 490 U.S. __, 109 S.Ct. 1617, 106 1.0 2b 56 (S508). . Gectee Fike Blangers v. Idaho, 763 P.2d 1052 (Ida. 1988), cert. denied, US. _, 109 S.Ct. 1557, 103 L.Ed.2d et.) Em arrears Burlington Northern Inc. v. Montana Department of Revenue, 761 P.2d 1121 (Mom. 2969)... se Gibbons v. Ogden, 22 U.S. 186, 9 Wheat. 186, 6 L.Ed. p< t+. | MIS Se 9 Grooms v. Montana, Flathead County, Montana, District Court Cause No. DV-89-242B ............ 4,5 Hamm v. Rock Hill, 397 U.S. 306, 85 S.Ct. 384, 13 L..BG.20 SOO (1964). 20... 0 soe ee 10 Hinson v. Lott, 75 U.S. (8 Wall.) 148, 19 L.Ed. 387 CPG) ooo koe a nn sod Vee ee eee 11 Jones v. Rath Packing Co., 430 U.S. 519, 51 L.Ed.2d 604, S97 SA. 1305- (19777)... a eee 12 Mountain States Tel. & Tel. Co. v. Pueblo of Santa Ana, 472 U.S. 237, 86 L.Ed.2d 168, 105 S.Ct. 2587 t )..) Beer IAN 12 Reiter v. Sonotone Corp., 442 U.S. 330, 60 L.Ed.2d 931, 99 S.Ct. 2326 (1979); es. eee 12 STATUTES 49 USA. S20(a) 3... ee 6 oe 44: SUSE. eee 4, 5, 7, 69, oka te USA. 11500)... . oe 3, 57 oe to ili TABLE OF AUTHORITIES - Continued Page(s) TE IONE SE os ce ee eee eek esectanda eee 3 LEGtSLATIVE MATERIALS Conference Report No. 91-1666, 91st Cong. 2d i Ree Lae oN 0 Ss acho 5K Wie ae se ee a sR 6, 7 ee as se kag eh wees ak CAGE ORD 6 ee sah naa auee deed nme ee be eta 4 he a a a's uke on Rae TORS 6 S. Rep. No. 1261, 91st Cong. 2d Sess. (1970) Ee eta le Vk aa IA or Pe ee en CONSTITUTIONAL PROVISIONS ED eo, Tk. Se reece ob Ag = le SE Sana a ar ee ae 9 ee > | ae) a me arin 3 OTHER AUTHORITIES Rowland and Vache, Taxing a Moving Target, 22 Idaho L.Rev. 343 (1986) No. 89-1181 4 4 In The Supreme Court of the United States October Term, 1989 rN 4 BURLINGTON NORTHERN RAILROAD COMPANY EMPLOYEES, Petitioners, MONTANA DEPARTMENT OF REVENUE, Responden ¢ y _ BRIEF OF AMICUS CURIAE WASHINGTON STATE LEGISLATIVE BOARD OF UNITED TRANSPORTATION UNION IN SUPPORT OF PETITION FOR A WRIT OF CERTIORARI > wr This brief amicus curiae is filed with the written consent of the parties. The letters giving consent accom- pany this brief filed with the Court. y vy OPINION BELOW The Supreme Court of the State of Montana issued its Opinion in this case which is reported at 781 P.2d 1121 (1989). A copy of the Montana Supreme Court’s Opinion is also included in the Petition for Writ of Certiorari at ho Petitioner's Appendix A-11. The amicus curiae cites the Petitioner’s Appendix when reference is made herein to the Opinion. Ly 4 INTEREST OF THE AMICUS CURIAE The Washington Legislative Board of the United Transportation Union represents State of Washington chapters of the United Transportation Union. The office of the amicus curiae is located at Olympia, Washington. The Petitioners, Burlington Northern Railroad Company Employees, are members of the United Transportation Union. The Washington Legislative Board oversees and promotes the legislative interests of the Washington United Transportation Union employees. The Petitioners are all residents of the State of Wash- ington. State taxation of income of non-resident employees of. transportation companies is of particular interest to transportation employee residents of the State of Washington, because Washington does not have an income tax. Because of the absence of a State income tax, there is no income tax credit in Washington available to resident transportation employees on account of taxes paid to another State. Any fore’7n State income taxes imposed on Washington transportation employees are therefore extra tax burdens. For Washington resident transportation employees who pass through several income tax States, the heavy tax burden is compounded. An additional burden is the withholding and reporting requirement imposed by multiple jurisdictions. (For a discussion of the overall tax problems of interstate trans- portation employees, see S. Rep. No. 1261, 91st Cong. 2d Sess. (1970) in the Appendix hereto.) Since 1982 the Washington resident rail transporta- tion employees, some of whom are the Petitioners herein, have been engaged in disputes with both the States of Montana and Idaho respecting the application of State income taxes to them. The imposition of Montana and Idaho income taxes arose by virtue of their employment on transcontinental “through” freight trains which tra- verse both States. The Idaho dispute was resolved in 1988 in the Supreme Court of Idaho in Blangers v. Idaho, 763 P.2d 1052 (Ida. 1988), cert. denied, _ US.__, 109 S.Ct. ro-r. 1357, 103 L.Ed.2d 860 (1989).! The Idaho Supreme Court held that there was insufficient nexus present under either the due process clause (Amend XIV, §1) or com- merce clause (Art I, §8, cl. 3) of the U.S. Constitution to subject the employees to Idaho income tax. ' The tax disputes have been disruptive of relations between the different States involved. The Idaho dispute with the Washington transportation employees resulted in what the media termed “a tax border war” between Washington and Idaho. The Washington and Utah legislatures because of ‘ncome tax disputes with Idaho during this period over the transportation employee issue, enacted retaliatory legislation against Idaho residents. The Idaho legislature ultimately enacted Idaho Code §63-3023B which exempted transportation emplovees earning less than 50% of their compensation in Idaho from Idaho income taxes. If the Congressional enactment 49 U.S.C. §11504(d) had been followed, it is unlikely the States would have pursued these matters and these disruptions and the problems confronting the transportation employees would not have occurred. Several of the Employees have brought a legal action in a Montana court? for a determination of whether they are subject to Montana income tax or whether the consti- tutional nexus principles followed in Blangers apply. When assigned to these particular transcontinental routes across Idaho and Montana, these employees board the transcontinental “through” freight trains in Spokane; Washington, and travel across Idaho to Whitefish, Mon- tana. At Whitefish they leave the trains, which continue eastbound on a transcontinental route. After a rest period at Whitefish, as required by federal law, the emplovees return on westbound trains to Spokane. The employees receive their train orders from outside both the States of Idaho and Montana. In 1970 Congress enacted Public Law 91-569, which included what is now 49 U.S.C. §11504, the statute at issue in this case. 49 U.S.C. §11504 does not deal directly with the taxation of interstate transportation employees. Rather, the statute limits the furnishing of income tax information and other reports by an employer to the State of an employee’s residence and the State where the employee earns more than 50% of his income. The employees in this case do not earn more than 50% of their income in Montana. The only issue in this case is whether Burlington Northern Railroad Company must furnish income tax information and other reports to the Montana Depart- ment of Revenue pertaining to non-resident transporta- tion employees. The case does not deal with the question a 2 Grooms v. Montana, Flathead County, Montana, District Court Cause No. DV-89-242B. The hearing on this Declaratory Judgment action is stil pending. SI of whether the employees are taxable in Montana. How- ever, the Montana Supreme Court in its Opinion, assumes that the employees are subject to Montana income tax because “such employees, while in Montana, enjoy the comfort and protection of Montana’s civil and criminal laws, and so must share a proportionate burden of the cost of such protections”. Burlington Northern Inc. v. Mon- tana Department of Revenue Opinion at A-11, 12 of Peti- tioner’s Appendix. Whether the Emplovees are taxable in Montana is in dispute.“ In any event the Montana tax- ability of the Employees is not an issuein this case. The only issue is Montana’s power by subpoena or otherwise to require the employer to furnish employee tax informa- tion under the provisions of 49 U.S.C. §11504. ~ * — ~ * The assumption by the Montana Supreme Court that the employees are taxable in Montana, although unnecessary to the Opinion, also apparently prejudges the dispute in Groonrs, supra note 2. The Montana Supreme Court Opinion ignores Blangers which deals with the general and constitutional taxa- tion principles applicable to the unique situation of these workers whose employment on interstate trains takes them across Montana and Idaho. The Supreme Court of Idaho in Blangers held that the constitutional nexus required for impos- ing a State income tax involves more than providing a non- resident traveler protection and comfort while within the taxing state. A contrary holding would have meant that any non-resident working traveler traversing a taxing State would be subject to that State’s income tax regardless of whether the traveler did any business in that State, an untenable result. 6 REASONS FOR GRANTING THE PETITION A. THE LEGISLATIVE HISTORY OF 49 U.S.C. §11504 INDICATES THAT THIS LAW WAS ENACTED TO RELIEVE THE BURDEN ON INTERSTATE COM- MERCE CAUSED BY THE INCOME TAX POLI- CIES OF SOME STATES INSOFAR AS SUCH POLICIES AFFECT THE INCOME OF INTER- STATE CARRIER EMPLOYEES. What is now 49 U.S.C. §11504(d) was enacted in 1970 and reads as follows:4 (d) A rail... private carrier withholding pay from an employ ee under subsection (a) or (b) of this section shall file income tax information returns and other reports only with - (1) the State and subdivision of residence of the employee; and (2) the State and subdivision in which withholding of pay is required under sub- section (a) or (b) of this section. 4 Between the date of its enactment in 1970 and 1978 this provision, though not in these exact words, was embodied in 49 U.S.C. §26(a). 49 U.S.C. §26(a) was recodified in its sub- stance along with other Interstate Commerce Act provisions in 1978 in P.L. 95-473 to its present 49 U.S.C. §11504(d). It should also be noted that the House proposal to restrict income ax reporting requirements found in HR 10634 in 1970 was even more restrictive than the Senate proposal ultimately adopted by the House-Senate Conference Committee. The House, though recognizing possible tax liability to a transportation employee, would have limited income tax information report- ing to the State of employee residence only. See first paragraph of quotation from Conference Report No. 91-1666, 91st Cong., 2d Sess. (1970) “Filing Information Returns” infra p. 7 ~ The Senate-House Conference Committee makes the following statement concerning what is now 49 U.S.C. §11504(d): FILING INFORMATION RETURNS The House bill provided that only the State of the employee’s residence could require the filing of information returns for income tax purposes. The Senate amendment provided that both the State of employee’s residence and the State in which he earned more than 50% of his com- pensation could require the filing of information returns for income tax purposes. The conference substitute follows the Senate amendment. Conference Report No. 91-1666, 91st Cong. 2d Sess. (1970). Further legislative history of 49 U.S.C. §11504 are found at S. Rep. No. 1261, 91st Cong. 2d Sess. (1970), relevant portions of which are reprinted herein. Amicus Appendix, pp. I to 7. S. Rep. 1261 indicates that there was an extensive legislative hearing on this legislation with testimony taken from State tax agencies, governmental transportation officials and representative of the trans- portation industry itself. (Amicus Appendix, pp. 3 and 4.) The burdening of interstate commerce by the income tax policies of some States necessitated the legislation. (Amicus Appendix, pp. 1 and 2.) S. Rep. 1261 points out not only the problems of employers who must withhold tax and report payroll information for multiple States but also the State income tax problems of transportation employees who traverse multiple States in the course of their employment: _ There is no uniform taxing formula which must be applied by the States with the result that it is possible for an employee to be subjected to tax liability in a number of different states. (Amicus Appendix, p. 3.) 49 U.S.C. §11504 was enacted to benefit both the employer, burdened with administrative reporting requirements, and the employee, burdened with paying taxes and reporting income in multiple States. As evi- denced by the Committee Reports, Congress was con- cerned with the lack of uniformity in the State practices respecting the ambulatory transportation employees, and what ultimately was enacted as 49 U.S.C. §11504(d) was the solution of Congress to multiple and inconsistent tax reporting requirements which burdened interstate com- merce. Congress did not exempt interstate employees from taxation in States where they do not earn more than 50 percent of their income. Nor did Congress forbid States from taking other steps to collect taxes from non- resident workers, such as contacting the workers directly. Congress did, however, mandate in 49 U.S.C. §11504(d) that if any employee does not earn more than 50 peicent of his income in any given State, income tax information shall not be furnished by the employer to that State unless it is the State of the employee's residence. Moreover, S. Rep. 1261 specifically indicates that a State which is nei- ther the residence nor more than 50% earnings State of the employee (e.g. Montana in this case) lacks the power to require the employer to furnish employee tax informa- tion. (Amicus Appendix, p. 7.) B. THE MONTANA SUPREME COURT DECISION VIOLATES 49 U.S.C. §11504 AND SHOULD BE SET ASIDE AS VIOLATING THE COMMERCE AND SUPREMACY CLAUSES OF THE U.S. CONSTITUTION. This case arises from a collision between the power of the Congress under the Commerce Clause (Art. I, 88, cl. 3) to limit the manner in which States may enforce their tax laws against nonresident employees of interstate carriers and the power of the State of Montana to choose the method of enforcing its tax laws. The Supremacy Clause (Art. VI, cl. 2) requires that the laws of Montana vield to laws enacted by Congress. Gibbons v. Ogden, 22 U.S. 186, 9 Wheat. 186, 6 L.Ed. 23 (1824). Congress did not merely suggest in 49 U.S.C. §11504(d) that the payroll information under the circumstances of this case not be furnished; it prohibited it. The decision of the Montana Supreme Court asserts an unfettered power by the State of Montana to require the furnishing of earnings information of non-resident employees of interstate Carriers: Since the furnishing of such information is nec- essary for the Department of Revenue properly to administer and apply the Montana state income tax on nonresident employees, the requirement that Burlington Northern furnish such information pursuant to the administrative subpoena cannot be an unreasonable burden on interstate commerce. Burlington Northern, Inc. v. Montana Department of Revenue, Opinion at p. A-11 of Petitioner’s Appendix. The Opinion is a direct challenge upon the authority of Congress to 10 limit the manner in which States may enforce their taxa- tion statutes against nonresidents. That Congress intended to exercise its power under the Commerce Clause is illustrated by the legislative history of 49 U.S.C. §11504. Contrast the following state- ment from S. Rep. No. 1261 with the quotation imme- diately above from the Opinion of the Montana Supreme Court in this case: The Senate Commerce Committee in favorably reporting this legislation determined that inter- state commerce is unreasonably burdened by certain income taxation policies of some States insofar as such policies affect interstate carrier employee’s income. S. Rep. No. 1261, 91st Cong., 2d Sess. (1970). (Amicus Appendix, pp. 1 and 2.) There cannot be two more diametrically opposed per- spectives than that of the Congress which views some taxation reporting requirements imposed by States upon non-resident interstate carrier employee’s income as an unreasonable burden upon interstate commerce, and that of the State of Montana which views the mandatory fur- nishing of tax information from such employees as not being an unreasonable burden. However, Congress expressly exercised its power under the Commerce Clause by enacting 49 U.S.C. §11504, resulting, therefore, in a direct conflict between the application of an other- wise valid Montana enactment and federal law, which conflict must be resolved in favor of the federal enact- ment. Hamm v. Rock Hill, 397 U.S. 306, 311-312, 85 S.Ct. 384, 13 L.Ed.2d 300 (1964). 1] C. EVEN ABSENT CONGRESSIONAL ACTION, THE MONTANA INCOME TAX INFORMATION REQUIREMENTS AND UNDERLYING TAX VIO- LATE THE COMMERCE AND SUPREMACY CLAUSES. State legislative authority to burden interstate com- merce is siete eae d circumscribed by the dormant com- merce clause, which grants to Congress plenary power over it. Cf. Amerada Hess v. New Jersey, 490 U.S. ___, 109 S.Ct. 1617, 104 L.Ed.2d 58 (1989). Thus even before Con- gress takes specific action with respect to State tax or regulatory requirements, States lack the authority to enact laws which unduly burden interstate commerce. Id.; see generally Rowland and Vaché, Taxing a Moving Target, 22 Idaho L.Rev. 343 (1986). In this case, both reporting requirements and the underlying State income tax would be preempted by the effect, in each case, of unduly burdening interstate com- merce, even absent Congressional action. In 1970, the Senate Commerce Committee concluded, after extensive hearings, that the withholding and payroll reporting State tax problems faced by both employers and employees unreasonably burden interstate commerce. S. Rep. No. 1261, 91st Cong. 2d Sess. (1970); Rowland and Vaché, supra, 22 Idaho L.Rev. at 375. The Idaho Supreme Court agreed in Blangers v. Idaho, 763 P.2d 1052 (Ida. 1988), cert. dented, __ U.S.___, 109 S.Ct. 1557, 103 L.Ed.2d 860 (1989). But this is not a case involving Congressional inac- tion. Congress has very clearly spoken in 49 U.S.C. §11504, and this Court has repeatedly stated that conflict- ing State laws must give way to Congressional action. E.g., Hinson v. Lott, 75 U.S. (8 Wall.) 148, 19 L.Ed. 387 12 (1869); Jones v. Rath Packing Co., 430 U.S. 519, 51 L.Ed.2d 604, 97 S.Ct. 1305 (1977); cf. Amerada Hess, supra. Respondent herein may argue that Moentana’s tax and reporting requirements do not “conflict” with 49 U.S.C. $11504. However, the construction given 49 U.S.C. §11504 by Montana is wide of the mark and such construction only avoids conflict with §11504 by rendering the provi- sions of §11504 completely ineffective and meaningless. This Court has repeatedly-stated that courts are obliged to give effect to every word Congress used, and every part of a statute. Reiter v. Sonotone Corp., 442 U.S. 330, 60 L.Ed.2d 931, 99 S.Ct. 2326 (1979); Mountain States Tel. & Tel. Co. v. Pueblo of Santa Ana, 472 U.S. 237, 86 L.Ed.2d 168, 105 S.Ct. 2587 (1985). If we give effect to every part of 49 U.S.C. §11504, we see that Congress prohibited States from collecting income tax information from employers regarding non- resident interstate carrier employees not earning more than half their income in such States. Petitioners fit squarely within this class. Yet Montana insists that it is free to collect such withholding information from Peti- tioner’s employer and that so doing does not conflict with 49 U.S.C. §11504. Such an anomalous result should not be tolerated. This Court should accept review of the instant case, and reverse. & vw CONCLUSION This case presents the singular and concise question of the supremacy of Congress in regulating interstate commerce in enacting an important federal statute. The Montana decision nullifies in Montana the federal statute 49 U.S.C. §11504(d). The Montana decision unless reversed may also serve as a precedent in other States for the ignoring of the federal law. For the reasons set forth above the amicus curiae requests this Court to grant the Petition for Writ of Certiorari. Respectfully submitted, *JouNn R. Quintan R. Brair STRONG Of - PAINE, HAMBLEN, COFFIN, BROOKE & MILLER 1200 Washington Trust Financial Center Spokane, Washington 99204 Attorneys for Amicus Curiae *Counsel of Record for Amicus Curiae February 20, 1990 App. 1 APPENDIX INCOME TAXATION - INTERSTATE CARRIERS AND EMPLOYEES House Report (Interstate and Foreign Commerce Committee) No. 91-1195, June 15, 1970 [To accompany H.R. 10634] Senate Report (Commerce Committee) No. 91-1261, Oct. 1, 1970 [To accompany H.R. 10634] Conference Report No. 91-1666, Dec. 3, 1970 [To accompany H.R. 10634] Cong. Record Vol. 116 (1970) DATES OF CONSIDERATION AND PASSAGE House September 14, December 8, 1970 Senate October 12, December 8, 1970 The Senate Report and the Conference Report are set out. SENATE REPORT NO. 91-1261 The Committee on Commerce, to which was referred the bill (H.R. 10634) to amend the Interstate Commerce Act and the Federal Aviation Act of 1958 in order to exempt certain wages and salaries of employees from withholding for income tax purposes under the laws of States or subdivisions thereof other than the State of subdivision of the employee's residence, having consid- ered the same, reports favorably thereon with amend- ments and recommends that the bill as amended do pass. BACKGROUND AND NEED SECTION The Senate Commerce Committee in favorably reporting this legislation determined that interstate App. 2 commerce is unreasonably burdened by certain income taxation policies of some States insofar as such policies affect interstate carrier employee’s income. The problem addressed by this legislation is peculiar to those employees who are required by the nature of their employment to work in more than one State on a regular basis. Tax policies in some States have created great hardships both for interstate carriers and interstate carrier employees. Certain States have insisted upon withholding from employees an amount based upon the employee’s entire annual income even though the portion of the employee’s income derived from performance of duties within the State in question may have represented a very small proportion of his total income. In many instances this has meant that some employees were deprived of a substantial amount of their income throughout the year. It is no answer that at the end of the vear a good portion of that money might be returned to the employee. The employer is also confronted with serious prob- lems. State withholding provisions typically require that the employer determine the amount of income earned by an employee in a particular State and that the employer take care of all other administrative details that are related to withholding. Some States which do not require withholding nonetheless require the employer to file periodic information returns. Where several States and numerous employees are involved, the administrative load can be extremely onerous for the employer. However, withholding and the requirement of filing information returns with all of the jurisdictions asserting App. 3 a right to tax any portion of the compensation of the employee are not the only problems. For the employee multiple State tax liability is itself a burden. There is no uniform taxing formula which must be applied by the States with the result that it is possible for an employee to be subjected to tax liability in a number of different States. In hearings before the committee, numerous wit- nesses, representing all manner of viewpoints on the issues, appeared or provided statements for the hearing record. Included among those who testified were repre- sentatives of the Interstate Commerce Tax Reform Com- mittee (a group formed by certain members of the International Brotherhood of Teamsters; Flight Engineers International Association; Marine Firemen’s Union of the SIU; Sailor’s Union of the Pacific, SIU; National Engi- neer’s Beneficial Association; the Airline Pilots Associa- tion, and the Marine, Cooks, & Stewards of the Seafarer’s International Union); the Brotherhood of Locomotive Engineers; Association of American Railroads; Wester Highway Institute; National Association of Motor Bus Owners; Congress of Railway Unions; Multistate Tax Commission; Flight Engineers’ International Association, AFL-CIO; American Trucking Associations, Inc; Air Lines Pilots Association; Greyhound Lines; Department of Rev- enue for the State of Arkansas; National Association of Tax Administrators; Tax Commissioner for the State of North Dakota; New York State Department of Taxation and Finance; Bureau of Revenue for the State of New Mexico; State of Nebraska, Income Tax Division; Depart- ment of Revenue for the State of Iowa; Director of Reve- nue State of Illinois; Income Tax Division, State of App. 4 Alabama; State Tax Commission, State of Nebraska; Department of Revenue, State of Alaska; Department of Revenue, State of Washington; and Air Transport Association. The hearing record provides several examples of the difficulty. One trucking company provided the committee with information showing that it had numerous drivers who worked in several different States. For example, 342 of its drivers drove in 19 different States, 397 of its drivers drove in 11 States and hundreds of additional drivers for just this one company worked regularly in five or more States. If the majority of those States taxed the income of the driver, it can readily be seen that the employer and the employee would be faced with a monu- mental task of first of all determining tax liability and secondly complying with the individual tax laws of every one of those States. Some of the difficulties created by multiple State taxation were set forth in the hearings. For example the following assertions were made: (1) Proper withholding for nonresident employees requires complete knowledge of what are often numerous and often complicated State laws, rules and regulations. (2) Determination of the exact amount to be withheld is very difficult, due to lack of uniformity among the State withholding laws. (3) Payroll procedures, even though in many instances computerized, are subject to continuous change because the routes traversed by an individual driver or airline pilot vary from State to State and in the case of airlines probably vary on each flight. — App. 5 (4) The cost of administering the nonresi- dent withholding requirements is extensive. (5) In the majority of instances, cost of administration exceeds the amount of tax with- held and transmitted to the State. One of the more burdensome problems is confronted by airline pilots who in the course of a few hours of employment might fly over several different States. And these pilots for the same general route may fly over different States for different periods of time each time that same route is flown. To be sure, not all States impose net income taxes On individuals. But at the present time 38 States do impose such a tax. All of those States require withholding on the full amount earned by residents and 31 of those States require withholding on amounts earned by residents and nonresidents within their borders. In addition, numerous cities impose income taxes and require withholding as to both residents and nonresidents. The original version of S. 2044 and H.R. 10634 related solely to the withholding and reporting problems. Each State except the State of residence would have been pre- cluded from requiring reporting or withholding for tax purposes from the wages of interstate carrier employees. It became apparent in the course of the committee’s hearings and later deliberations on the problems con- fronting interstate carrier employees that elimination of multiple withholding was only a partial answer and, in fact, could place the employee in greater jeopardy than he would have been had the bill not been passed. This is true because the elimination of a State’s power to require App. 6 withholding has no bearing on the State power to tax. So it could easily happen that an employee would find him- self at the end of the year with tax liability in several States but with an inadequate amount of money withheld and consequently a very serious and unexpected financial burden. Indeed, it has come to the Committee’s attention since the hearings that certain railroad employees and others are being required-to file information returns prior to the taxing date. On the other hand, the hearing record includes testimony expressing concern that a bill con- fined to limiting withholding and the filing of informa- tion returns to the State of an interstate carrier’s employee's residence, as originally contemplated, might induce non-resident interstate carrier employees to evade non-resident State income taxes which might properly be due. The Committee concluded, therefore, that legislation in this area would be incomplete if it did not address the very basic problem of multiple State tax liability along with the problem of multistate withholding and/or reporting for taxation purposes. SUMMARY OF BILL The amended bill does three basic things: (1) Limits power to tax income of interstate carrier employees to the employee’s State of residence and any State in which he earns more than 50 per centum of the compensation paid to him y such employer; (2) Limits power to require withholding for tax pur- poses from income of interstate carrier employees to App. 7 either the State in which such employee earned more than 50 per centum of the compensation paid to him by such carrier during the preceding calendar year or the State of residence; (3) Limits the power to require the filing of informa- tion returns to the State of residence and the State by which withholding may be required. * . * --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_0978%3A3. Public record. Not legal advice.