If you manage a corporate relocation program, there’s no doubt you’ve been bombarded over the last few weeks with information on the U.S. tax reform and how it will impact your program. It’s a lot to weed through but don’t fret! Matthew Pascual, our resident tax guru and SVP of Weichert Mobility Tax Services, has created a one-page summary of everything a mobility manager needs to know regarding the new tax law. Download it, save it, study it, know it.
On Tuesday, December 19, and Wednesday, December 20, 2017, the U.S. Senate and House voted “yes” to pass the Tax Cuts and Jobs Act. This represents the most sweeping tax reform in over three decades in the United States. The Tax Cuts and Jobs Act now heads to President Trump for his approval and signature.
In our latest Client Advisory, Matthew Pascual of Weichert Mobility Tax Services offers commentary on the impacts for both U.S. Domestic and International mobility programs and recommend specific actions that can be taken by mobility managers to prepare proactively with their stakeholders for the tax law changes.
On December 13, 2017, a preliminary agreement was reached on a final tax bill that would significantly overhaul the Federal tax code. Titled the “Tax Cuts and Jobs Act,” the tax legislation represents a collaboration to sort out the key differences between the House and Senate proposals. This bill represents a big step forward toward passing the tax reform before the end of the calendar year. The updated bill is now in a Conference Committee to address discrepancies between the House and Senate versions. A vote is expected next week on the bill by both the House and Senate.
While the official text of the bill has not been publicly released as of this release, here’s what you need to know. Continue Reading →
The proposed U.S. tax reform, if approved, will have significant impact on corporate domestic relocation programs. Under this reform, certain benefit payments that were previously considered excludable from employee income if paid by the employer would become taxable. These expenses fall under 3 categories as follows:
• Household Goods Moving Expenses
• Storage Expenses
• Final Move Travel Expenses
With moving expenses no longer receiving preferential tax treatment, several long-standing tenets of relocation taxation, including the “50-mile distance test” and the “39-week rule” would be dissolved. Of additional interest to corporate relocation managers and mobile employees are changes to the treatment of capital gains on the sale of a primary residence which impose more stringent requirements to be considered excludable.
Although these reforms will likely result in an increase in mobility costs for most companies, workforce mobility will still remain a vital tool for companies to grow their business and attract and develop talent. With that in mind, let’s take a look at one example of how these changes will affect the cost of a move. Continue Reading →
Following up on our earlier post about the Ontario Non-Resident Speculation Tax that became effective June 1, the following is a summary of current status as obtained from reliable sources but which cannot and should not be relied upon as legal or tax advice and Weichert clients should review this tax law status with their applicable tax advisors.
Quite simply, several material developments have occurred that corporate clients and relocation companies should be aware of as they undertake home sale transactions within the Greater Golden Horseshoe* Region (GGH).
Foreign national purchasers (essentially any buyer who is not a Canadian citizen or permanent resident or a couples purchase in which neither spouse is a Canadian citizen) will be subject to paying the 15% purchase price speculation tax, and relocation companies and clients should be prepared accordingly. Please note that some special foreign purchaser exemptions may apply, and would need to be pursued by experienced local counsel with the Ontario Ministry of Finance.
Last week, Marianne Schmidt, our VP of US Domestic Tax and Reporting, conducted an engaging webinar on ways companies can save cost by re-examining their tax gross-up processes. Attendees had a lot of questions, and while we didn’t have time to address them all during the Q&A segment of the webinar, we have, as promised, presented them here, along with Marianne’s responses, for your reading pleasure. Marianne remains happy to continue this dialogue with anyone interested; feel free to reach out to her directly or through your Weichert contact.
In what situation would a person only gross up deductible items for FICA only? If items are deductible wouldn’t they normally be non-reportable on the ER side?
Deductible moves and deductible expenses are two entirely different subjects. A deductible move is one that meets all the criteria (is closely related to the start of work, meets the distance test and meets the time test). HHG and final move expenses (except meals and mileage > IRS limit) are not reportable if paid to a third party and are only reportable (not taxable) if they are reimbursed to the employee. Deductible expenses are taxable expenses that have been paid to or on behalf of your employee and are the types of expenses that are deductible on schedule A of your 1040. Those deductible expenses should be grossed up for FICA only, otherwise your employees will experience a tax gross up windfall.
I thought the US payroll is pay-as-you-earn, therefore you need to issue the withholding payments and report the income when the transaction occurred to be compliant?
We do not withhold taxes from payments, we only provide gross up calculations to payroll. Once payroll assigns a check date, normally the taxes are due the next day.
What is the risk involved with moving to gross-up once per year?
Moving to an annual reporting schedule is the decision of your company, the risk would be whatever you make it or not. From my perspective, however, the risk is no different than other frequencies. Our clients have always been compliant and have never failed or been questioned under audit. Continue Reading →
On April 20, 2017, the Province of Ontario enacted a 15 per cent non-resident speculation tax (NRST) on the purchase or acquisition of properties in Metropolitan Toronto and its surrounding areas, referred to as the “Greater Golden Horseshoe” (GGH).
The GGH incorporates the greater Toronto area, including Toronto itself as well as Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Waterloo, Wellington and York.
Similar to the 15% NRST tax imposed for greater Vancouver area in British Columbia in August 2016, the Ontario NRST, which went into effect on April 21, 2017, is intended to hamper the bid-up by foreign buyers/corporations in the metropolitan Toronto residential housing markets. The announcement was included as part of the 16-point proposal introduced in the Ontario government’s Fair Housing Plan, which aims to bring stability to Ontario’s real estate market.
Among the greatest challenges facing managers of mobile employees and business travelers, three stand tall: remaining compliant with ever-changing visa/immigration laws, accurately tracking days in specific locations for tax purposes, and the ability to contact expatriate employees in the event of emergency. We are proud to announce the first app to simplify and streamline all three, the Weichert Global Organizer.
This app improves visa/tax compliance by tracking time in each location, alerting the employee and HR of pending tax or immigration events—such as visa renewal or days in a certain jurisdiction triggering tax liability. These features allow HR managers to be proactive, rather than reactive, to any concerns. Further, at tax time, all of the critical data that the employee and company need for filing and reporting is easily accessible in one place.
Additionally, in the event of an emergency, the app empowers HR managers to instantly locate their employees at any point on the globe, alert them to danger and, if necessary, evacuate them to a place of safety.
The Weichert Global Organizer represents a quantum improvement in managing these processes for today’s companies, many of which rely on a corporate travel agent or a tax provider for this information. But these solutions have limitations; travel agency data merely suggests that someone bought a ticket, not that they actually traveled, nor does it indicate a traveler’s precise location. This would not meet the IRS’s requirement that companies have an adequate process to track their employees. Likewise, Big Four firms usually bundle their trackers with larger advisory services and they do not include integrated immigration or duty of care.
Simply put, today’s companies need a better way to keep track of their entire globally mobile population, where they are going and what they are doing. That’s why we developed the Weichert Global Organizer. In detail, here’s what it tracks:
global taxation: through direct link to their phones’ GPS system, the app tracks the time employees spend in country and monitors it against local, federal and state compliance requirements, and provides alerts to potential compliance issues.
visa/immigration: the app monitors employees’ time in country against visa and immigration requirements, providing renewal reminders and live alerts of potential infringements.
emergency communication: when emergencies unfold, the app instantly pinpoints your global assignees and travelers and allows you to transmit instant safety alerts.
With the steady increase in demand for a highly flexible and mobile workforce, Companies are growing concerned about a number of risks when it comes to business travel. These include employees using business visas to circumvent work visa obligations, violations of tax laws, the inability of their company to track length of trip stays, and employees misrepresenting their business travel activities. In this post, I’ll present statistics that demonstrate the urgency of the situation, identifying red flags and recommendations for overcoming the obstacles in managing extended business travelers.
A recent survey (2015) sponsored by NFTC and conducted by the law firm Berry Appelman and Leiden revealed the following statistics:
• Although about 60% of companies reported that their employees take over 500 international business trips annually, only one third of all respondents has a written business visa travel policy.
• The overwhelming majority of respondents (77 percent) would like to have improved capability to track business visa travel. Today, only one in ﬁve global mobility pro grams track all business visa travel.
• Authorization for business travel is generally approved by the business unit or employee manager in the employee’s home country. Companies then rely on a variety of resources (e.g. law ﬁrm, visa processing company, internal resources) to process the business visas.
In response, we felt it appropriate to create what we consider to be the Best Practices for extended business travelers. To get started, it makes sense that your company understands your areas for exposure, engages in due diligence and identifies specific risk areas: Continue Reading →
As the end of the year approaches, so do the gentle reminders that tax season will soon be upon us. While the tax filing and reporting process can be cumbersome, for folks who have relocated for work over the past year, it can be extremely complex.
To shed some light on the process, our in-house tax affiliate, Weichert Mobility Tax Services, has developed a year-end tax planning guide. This informative piece will be a handy guide for reviewing the past year’s tax activities, and also offers invaluable tax planning techniques that can help save you time and money.
Please consider this required reading as you take down the decorations and mistletoe.