Taxation Coordination for Corporate Relocation Programs

Relocation taxation is constantly evolving, keeping even the most proactive companies on their toes when it comes to building a cost-effective, but competitive relocation program. In order to save time and money for both the employer and employee, it’s critical to understand which relocation services are treated as income by the IRS. The goal should always be to make the relocation program tax compliant and yet benefit neutral for the transferee. It is important that companies are not only aware of certain stipulations in tax regulations, but that they also have an experienced expert on hand to avoid costly mistakes and tailor policies to corporate culture while maximizing benefits and minimizing cost.

Expat Relocation Relocation works with leaders in the relocation taxation field to stay on top of new regulations and help our clients devise the best program for their employees. We also work with ReloAdvantage by Equus® software to calculate and manage gross ups. The ReloAdvantage program integrates with our own database, giving us great depth and flexibility in meeting the needs of clients, including FAR regulations and multi-state tax situations. The actual gross up methodology is based on client policy, but can also be in customized for special situations. We are able to share any tax information and data directly with HR, payroll and other departments through our online system.

At the onset of a client relationship, Expat Relocation will meet with accounts payable, finance and payroll stakeholders to discuss and confirm the following:

• Details of authorized expenses for employee reimbursements
• Timing and method of reimbursements
• Frequency of payroll reporting and interface for gross up decisions
• Confirmation of payroll platform or multiple payroll systems
• Confirmation of gross-up methodology approved by the client
• Confirmation of required reporting labels for AP and payroll processing

For every relocating employee, Expat Relocation Relocation will produce the gross-up calculations and provide a detailed report with all of the federal, state, local, FICA and Medicare wages to the company’s payroll department to facilitate proper tax treatment of relocation expenses.

Since international tax issues are far more complex, we will subtotal anticipated assignment costs and provide them directly to a client’s expatriate tax consultant to calculate home and host country hypo-tax and social tax if necessary.