Tax Assistance and Your Global Mobility Tax Program

by WHR Global | Feb 6, 2018 | News

Find the updated version of this article here!

In December 2017, the U.S. government passed legislation that directly impacts taxpayers. Under the new law, known as the Tax Cuts and Jobs Act, taxpayers will be unable to claim certain deductions, including job-related moving expenses.

relocation expenses taxable to employee, tax gross-up, global mobility tax

Job-related moving expenses now taxable

In accordance with the new legislation, taxpayers must treat any direct payment or reimbursement of moving expenses received from their employer for job-related moving expenses as taxable income. Previously, employees only needed to pass the time and distance test (criteria 50-miles, 39-weeks, and 1 year) to be qualified to deduct moving expenses related to household goods moves, storage, and final moving expenses. Alternatively, an employee paying their own moving expenses could deduct those moving expenses, even if they didn’t itemize.

Under the Tax Cuts and Jobs Act, all moving expenditures will be taxed accordingly, at least until 2025. However, active-duty military members may still deduct moving expenses.

For employers like you, this can have a significant impact because it could be a deterrent to attracting new talent, or current employees may be less inclined to take a promotion that involves moving. One possible solution you can consider is to offer tax assistance.

What is tax assistance?

Tax assistance, often called gross-up assistance, is an approach where an employer “grosses up” an employee’s taxable relocation benefits. This is done to alleviate some tax burden on a portion of the employee’s income. However, there are some benefits and drawbacks with this approach, and it’s important to consider the impact.

Pros and cons of tax assistance

When considering whether to implement tax gross-up, you should carefully examine the advantages and disadvantages.

Pros of offering tax assistance

Helps your relocation program remain competitive.
Enables you to attract and retain top talent.
Alleviates some tax burdens placed on employees.

Drawbacks associated with tax assistance

Increasing an employee’s taxable income can change their tax bracket, which may increase the employee’s tax rate and phase out certain tax credits.
Increases company relocation expenses.

If your company decides to take the tax assistance approach, it is essential your employees are educated on what gross-up is and how it impacts their taxable income. Relocation management companies can help by explaining how tax assistance works to your staff. RMCs can also manage everything, including ensuring tax assistance is correctly calculated and implemented.

At WHR Global, we are committed to helping our clients hire top talent as well as helping their employees feel comfortable in their new location. We can help your company modify its relocation plans to adjust to the new tax law. We’ll also help you find the best solutions to help alleviate the potential tax burdens associated with moving and relocation for your employees.

For more information on how WHR Global can assist and explain how to incorporate tax assistance, give us a call at +1-800-523-3318 or email sales@whrg.com.

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Are Current Immigration Trends Affecting Your Employee Relocation Program?

by WHR Global | Jan 9, 2018 | News

Current U.S. immigration policy isn’t making things easy for American businesses and their employees, especially when businesses need to bring in talent from all over the world. Uncertainty continues as current immigration trends change and the process works its way through the legal system causing many companies to lose precious time and money in their recruitment efforts.

employee relocation, relocating employees best practices

From coast to coast, U.S. businesses feel the impact of these restrictions. Back in April, when President Trump stressed the need to “Buy American and Hire American,” an executive order was signed in an effort to put H-1B programs under new scrutiny. Companies that seek people with specialized knowledge and training, typically those in engineering, science, and information technology, can temporarily hire foreign workers though the H-1B programs. With this executive order, U.S. Citizen and Immigration Services was told to more rigorously review every H-1B applicant, resulting in hiring and productivity delays from longer processing times.

Then, in October, USCIS changed a policy that had previously allowed anyone eligible for H-1B to get an extension without major reapplication requirements. Implementing a higher level of scrutiny on extension requests was, the service said, “consistent with policies that protect the interests of U.S. workers.”

Some politicians believe reform will increase employment of U.S. citizens. But others are not so sure.

“What a mistake when we are trying to fuel the innovation economy around the United States,” noted Carl Guardino, CEO of the Silicon Valley Leadership Group. Statistics show there aren’t enough qualified American workers to fill openings because not enough American students major in these fields.

The head of an immigration law department representing companies and academic institutions told The Boston Globe that entry-level computer science jobs, “might sound like positions that would be easy to fill with American labor,” but they are often highly specialized.

This change in policy hits Silicon Valley particularly hard because numerous engineers vie for H-1B visas. In 2016, the major technology companies combined applied for more than 30,000 of the 85,000 H-1B visas awarded.

It is not just the tech industry facing difficulties in securing and relocating employees. Experts in oil and gas say recruiting new and younger talent may become more difficult “at a time when oil and gas companies need it most.” Health care facilities, many of them located in medically underserved areas, feel a pinch in their personnel as foreign-born physicians question whether their visas will be renewed. The nation’s nursing shortage grows more dire if foreign-born nurses are not allowed to renew.

The uncertainty of what will happen next continues, especially because the travel ban decisions of lower courts are still in limbo. Because immigration laws constantly change, companies need to be aware of all that is happening and make sure they and their employees abide by regulations. Companies also need to be realistic with timeframes for when employees can start positions in the U.S. It may take months to get the necessary visas due to the additional roadblocks many people now face.

The challenges of employee relocation into the U.S. are extensive, which is why many companies outsource to a relocation management company. Offering immigration benefits allows your employees some peace of mind while going through this very difficult and stressful time.

RMCs keep up to date with everything that occurs in the courts, including what changes go into effect and when. They ensure companies and employees remain compliant and, when necessary, help relocate staff in as little time as possible allowing your business to focus on core personnel decisions.

For more information on how WHR Group can take your relocation program to the next level, call us at 800-523-3318 or email contactus@whrg.com.

How Relocation Can Solve the Current Global Talent Shortage

by WHR Global | Dec 26, 2017 | News

If your company has been experiencing a talent shortage, it’s not alone. Technology and increased mobility have combined to shift worker populations across borders, leaving whole industries barren of employees and facing empty candidate pools. The situation, however, has opened the door to national and international recruitment strategies that are proving to be very successful. Establishing a relocation plan for your new employees reduces the stress that they experience during their move to your community.

A Dearth of Workers

Around the world, managers are reporting a global talent shortage, with 40 percent of respondents to a 2016 survey saying they haven’t seen a challenge this great since 2007. The survey polled over 42,000 employers in Europe, the Middle East, Asia and the Americas about who they are looking for and the skills they need.

Almost half (46 percent) of Asian companies were experiencing hiring difficulties, compared to 36 percent in Europe and the Middle East, and 42 percent in the Americas.
Skilled trade positions remained in highest demand, a trend that has continued over the past five years. Traditionally poor opinions about the value of the skilled trade industries remain persistent across the globe, which causes many young people to steer away from those career opportunities. However, the interconnected global economy has generated strong building and manufacturing industries in many countries, many of which struggle to fill their open positions in time to complete their current and future contracts.
The second most sought-after worker is the information technology and technical employee. Demand for these highly trained staffers is highest in Asia, and IT jobs are the 10th hardest to fill in the U.S.
Engineers, drivers, accountants, managers and operations professionals are all highly sought after in every corner of the world.

Worker Shortage Requires Innovative Recruiting Strategies

The worker shortage has compelled many companies to re-evaluate their hiring strategies, especially if those had traditionally relied on hyperlocal or in-house hiring practices. When there are no “local” candidates, however, corporations must then determine how to canvass a larger, potentially global region for appropriate employee opportunities. Those that include and advertise an attractive relocation incentive in their employment ads can attract a wider, deeper pool of candidates.

For many companies, that new hiring strategy requires intense analysis of what the role is expected to produce and how to best match that need with potential candidates:

Does it require comparable experience over foundational education or the opposite?
Must the skill base match exactly with the expected position? Or can comparative skill be used to enhance or improve on previous expectations?
What are the short-, mid- and long-term goals for the position? Are there advancement opportunities? Will there be additional training expected or offered? How does this specific position factor into the company’s succession planning or future growth activities?

Experts assert that matching the company’s culture with a comparably cultured employee is the best strategy to pursue, to achieve the closest fit with the lowest likelihood of failure. If the worker shares a similar occupationally relevant mindset with the enterprise, then the education and skills background can modify to fit the work.

Finally, when the recruitment team identifies eligible candidates who will have to relocate to take the position, those companies that provide attractive relocation incentives are more likely to secure the hire. WHR Group research roots out the best relocation practices and standards that exist anywhere, not just across the globe but within separate industries, too. With this information, your company will know that its relocation packages are as enticing as any other company in your sector, so you don’t lose top talent because of an insufficient offer of relocation support. In this job-seeker economy, no company can afford to cut corners on this critically important incentive.

At WHR Group, we specialize in helping our clients find the right candidate and helping that employee feel at home in their new location. As more workers relocate to fill the needs of the growing global economy, the last thing they should worry about is how they are going to get their stuff from the old home to the new one. How can we help you find and relocate your next worker?

For more information on how WHR Group can take your relocation program to the next level, call us at 800-523-3318 or email contactus@whrg.com.

Recruiting Top Talent with Shifting Demographics

by WHR Global | Dec 12, 2017 | News

Research shows workforce demographics are changing. The pools of possible employees and what they are seeking in the workplace will greatly influence businesses moving forward. As candidates become more diverse and educated, organizations must adapt their practices. Being aware of these shifts helps you attain and retain top talent, which is especially important when investing time and resources such as relocation.

Women & Diversity

Gender equality in the workplace has gathered much attention over the last few years and companies are making efforts to narrow the gap. While progress is occurring, studies show women continue to be “underrepresented at every level in corporate America, despite earning more college degrees than men for 30 years.”

Diversity in the workplace is vital for companies and hiring women is good for business. For example, a study by the International Finance Corporation shows women in the workplace make for a better work environment because women have a “greater willingness to communicate and receive feedback.” They also help strengthen team dynamics and improve productivity and innovation.

Overall, employees are impacted in a positive way when a diversity plan is in place. An author who specializes in human resource issues stresses, “Business reputations flourish when companies demonstrate their commitment to diversity through aggressive outreach and recruiting efforts.” Additionally, she states that workplace diversity is important because it greatly impacts a company’s reach to markets in foreign countries. Thus, businesses seeking to bring in and retain top talent should be aware of how important a diverse population impacts business performance and ultimately their bottom line.

Millennials

According to findings by the Pew Research Center, millennials (people born between 1980 and 1997) are the largest living generation (an estimated 79.8 million as of 2016). For years, employers have come to understand that millennials in the workforce are different from their predecessors and so are the things they value. For example, some benefits are more important than a large salary.

This generation craves flexibility. Studies show 22 percent of millennials say they would be willing to work more hours if their options were flexible. Overall, 84 percent of millennials report their companies are making these concessions, including adapting to rapidly changing technology to allow for mobile working.

Millennials have been stereotyped as a job-hopping generation, but trends are changing. After a globally turbulent year socially and politically, younger employees who just last year thought about leaving jobs now appreciate job security. As these hires desire the feeling of being a part of the family when they enter a new job, improved onboarding practices help with engagement and commitment.

Short-Term Assignments

Short-term, temporary assignments have always been part of the U.S. employee experience, but they are now on the rise for international relocations. Surveys indicate the flexibility many employees seek is driving changes in relocation services.

Relocation efforts for millennials are a bit different than in the past. More than a quarter of Baby Boomer employees had stay-at-home spouses. Nearly 80 percent of millennial families are dual-income and spouses work full-time in their own careers. Thus, they want to be sure relocation is the right move for every person in the family.

To keep top talent, this requirement must factor into the equation in addition to long-standing goals companies have always had to be cost effective and make sure the right people are in the right place organizationally. Today, companies need to deliver a positive experience for those who relocate because it brings better employee engagement and productivity.

As research by Gallup News reveals, if millennials are not “engaged in those jobs, companies’ profitability, productivity and innovation will suffer. And if they are not thriving in their well-being, they will struggle in life, affecting how they perform as citizens, consumers and employees.”

As demographics shift and changes become necessary, the challenges of relocating an employee can be extensive. This is why many companies outsource to a relocation management company (RMC). RMCs keep apprised of numerous trends and how they affect the efforts of human resource departments. Additionally, RMC’s help relocate employees, creating the positive experience you desire while optimizing company resources to best align with your business goals.

Choosing the Right Home Sale Benefit: BVO vs Direct Reimbursement

by WHR Global | Nov 7, 2017 | News

The Guaranteed Buyout (GBO) home sale program is typically the highest-level home sale benefit a company will offer its relocating employees, as it guarantees a home sale for employees based on appraisal value. However, the risk associated with this type of home sale, considering the employee’s home is then taken into inventory to be resold, may not be the best option for your relocation program. There are two additional home sale options that present less risk for your company—the Buyer Value Option (BVO) and Direct Reimbursement (DR).

So, what’s the difference between DR and BVO?

The BVO program is similar to a GBO in that you will be purchasing the home from your employee. However, with the BVO program, you will only purchase the employee’s home if they secure an outside buyer first. The great thing about the BVO program is that your company and employee will experience the same tax benefits that you would receive with the GBO. This means the home sale cost can be considered a business expense for your company as opposed to taxable income for the employee. This can occur because it is a three-part transaction, which includes your employee securing the buyer, the company purchasing the home from the employee for the agreed sales price, and then your company will sell the home to the outside buyer. Your employee won’t have to pay for any home sale costs or attend closing.

With a DR program, your employees will be responsible for selling their homes on their own. They will need to secure the buyer, as well as pay closing costs and commission fees up-front. You may then reimburse the employee all or part of these costs depending on your relocation policy. The IRS considers this type of reimbursement as taxable income, so, in order to cover that additional cost for your employee, you will need to gross-up the reimbursement.

Pros

Cons

Direct Reimbursement

> No risk of bringing homes into company inventory

> No tax benefits for your company

> Additional cost of gross-up

> Employee responsible for all costs up-front (closing costs, commission fees, inspections, etc.)

> Employee must attend closing

> Longer relocation process

Buyer Value Option

> Tax benefits for your company

> Employee not required to attend closing

> Broker Market Analysis completed by two qualified Real Estate Agents

> Home sale could fall through, resulting in home going into inventory

How do you choose which home sale benefit to offer your relocating employees?

It’s really all about what is going to work best for your employees, your company, and your bottom dollar. While it may seem easier and less costly to have your employees sell their homes on their own and reimburse them later, this isn’t necessarily the case. You could be spending an exponential amount more using DR because of tax and gross-up

A concern many companies have with the BVO program is they may still have to take homes into inventory. So, why then would you want to offer a BVO when there is still that possibility? While there is a chance a home could go into inventory if a sale falls through, it is minimal. The BVO process typically includes two qualified agents completing Broker Market Analysis reports, a comprehensive marketing strategy created by your relocation counselors, and a full review of all offers with your employees to make sure the offer is bona fide. Your employee’s relocation counselor will then follow the offer through to closing to ensure everything goes smoothly.

When a corporation reimburses an employee for relocation expenses, the IRS treats that reimbursement as ordinary income, taxing it at the rate dictated by the employee’s tax bracket.

	Direct Reimbursement	Buyer Value Option
Home Sale Price	$300,000	$300,000
Real Estate Commission (6%)	$18,000	$18,000
Closing Costs (2%)	$6,000	$6,000
TOTAL COST TO SELL HOME	$24,000	$24,000
Gross-Up Tax Assistance (40%)	$9,600	$0
TOTAL COST FOR CLIENT	$33,600	$24,000

CLIENT SAVINGS	$0	$9,600

The average home costs $300,000, which means if you are offering just 10 employees a home sale benefit, you could be saving roughly $96,000 annually by using a relocation management company and offering a BVO program.

The Pros and Cons of Going Out to Bid for a Relocation Supplier

by WHR Global | Oct 24, 2017 | News

Read the updated version of this article here.

So, you have made the decision to outsource your employee relocations to a Relocation Management Company, or RMC. If only that was where the work ended!

Now, you must choose the one RMC that best fits your workplace culture, employee needs, company budget, and any other criteria that you require in a supplier. With so many RMCs to choose from, the question becomes how do you find the right one?

The Procurement Process

When selecting a relocation supplier, it really comes down to two options: Going out to bid (competitive procurement), or selecting a supplier on your own (non-competitive procurement).

Procurement Option 1

Going out to bid, also known as competitive procurement or open tendering, occurs when you send out a bid request, typically in the form of a request for proposals (RFP). RMCs can choose to respond to your request and submit a proposal explaining their company, capabilities, and pricing. Once you receive the proposals, you will compare each against your most important evaluation criteria. This process can include multiple rounds of meetings or bidding.

Procurement Option 2

If you’ve already decided which RMC you want to pursue based on your research and previous communications, then you don’t need to open your search to other suppliers. This non-competitive procurement process, also known as sole sourcing, occurs when you choose an RMC without a bidding process. However, in some instances, a company will choose two or three RMCs to reach out to, resulting in a smaller, more intimate bidding process.

Each procurement process has its own pros and cons, so it’s essential that you choose the path that best suits your company’s and relocating employees’ needs.

Advantages of Going Out to Bid

It encourages competition: Typically, when you go out to bid, you will have a greater pool of RMCs to choose from, and those responding are likely to offer you their best pricing right away. Another consideration is you may learn about other benefits or service offerings that you didn’t think to ask for initially.

Advocates transparency: The idea behind the bidding process is each RMC will essentially lay all their cards on the table: They show you their pricing, services, and value-adds, and you choose a supplier based on those responses. This results in a fair selection process while offering you a clear vision of what is most important to your company.

Easily compare different RMCs: Having RMCs follow a certain format, and each answering the same questions, allows you to easily compare answers and rule out any RMCs that don’t meet your immediate requirements.

Fully vet your options: Creating an RFP lets you choose what you want to learn about the responding suppliers. This helps you fully understand what each RMC has to offer and allows you to ultimately choose the company that best fits your needs.

Disadvantages of Going Out to Bid

It can be time-consuming: The bidding process can take anywhere from 2 – 6 months, or even longer, depending on your internal decision-making process. It also involves several intricate steps from RFP development to initial bids and follow-up questions to final presentations and on-site visits to help you make your decision.

Associated costs: It will undoubtedly cost more to go through the RFP process than to simply choose an RMC to work with. The cost of developing the RFP, screening suppliers, reviewing responses, and follow-ups can take a toll on your company’s time and budget. Typically, a company’s relocation program accounts for 90-95% of the relocation “spend”, with only 5-10% being paid out to the RMC.

Eliminating the wrong suppliers: There are many viable RMCs that simply don’t participate in competitive bidding opportunities. The reasons vary from high associated costs to having a different pricing structure that does not compare easily in an “apples to apples” review process. You could be missing out on an RMC that would be your ideal fit.

Promises of unattainable pricing: For some RMCs, winning new business is more important than upholding your needs throughout a long-term partnership. These RMCs will solely bid for your business to undermine competitors, even if their proposed pricing is unattainable for their own bottom line. This can cause a headache during the implementation process, or result in a requested fee increase in the first or second year.

Choosing Non-competitive Procurement

If going out to bid doesn’t sound like the best option for your company, the other option is the non-competitive procurement process.

You can select a supplier you know will best service your relocation requirements based on your research and prior communications. This process really works best if you know one or two RMCs that already fit your needs and company culture.

This option also works best if you are working within a small window of time. You won’t have to review multiple in-depth proposals—just the pricing proposals from the RMCs of your choosing.

Next Steps

So, ask yourself, what is in the best interest for your company? Do you have the time to fully vet RMCs through a competitive procurement process, or do you need an RMC now? Do you have a couple RMCs already in mind, or do you need more information on other options out there?

Selecting an RMC is an important business decision for your company. You want to find an RMC that best meets your company’s needs, whether that be high-quality support for your relocating employees, lowest cost, the most advanced technology, or a combination of all three.

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