Committee approves 30-day exemption model for nonresident remote workers

The House Ways and Means Education Committee approved House Bill 379, adopting two amendments and passing the measure on a voice vote.

Representative Garrett, speaking as sponsor, described the bill as adopting a "cost model" used by professional accounting organizations to reduce compliance burdens for employers and remote workers. Under the bill as amended, a nonresident who performs work in Alabama for no more than 30 days in a calendar year would not be subject to Alabama income tax withholding, provided other statutory conditions are met. The bill also requires reciprocal or compatible rules from the other state in some cases and includes a provision that, if the Department of Revenue later determines a worker exceeded the 30-day threshold, the worker would owe the tax but the department could waive penalties and interest.

Garrett said the bill was intended to ease compliance for employers that would otherwise withhold tax for short-term work or conference attendance, and he noted a prior tax court decision during the COVID period that affirmed Alabama's authority to tax certain remote work income.

Committee amendments were adopted to conform the bill to the cost-model language and to add a disaster-relief exception: workers who come from out of state to assist with disaster response declared by the governor or president would not be subject to Alabama tax for that disaster work. The committee accepted both amendments and passed the bill on a voice vote.

A member asked whether, if a worker exceeded the 30-day threshold and thereby owed tax, the entire period would become taxable; the sponsor confirmed that the full period would be taxable if the threshold were exceeded.

The transcript records adoption of both amendments and a final voice vote giving the bill passage out of committee.