We are quickly coming up on mid-year. Where are you in this process?
Tax changes that affected relocation benefits were made December 22, 2017 and were effective January 1, 2018.
Every company with relocations in process or anticipated in the near term had to respond quickly and make at least one core, significant decision….to gross-up, or not, the items that moved from tax excludable to taxable – household goods moving, storage and final move trip.
With little time to react and review policy beyond this core decision, a multitude of industry surveys conducted revealed the majority of companies did in fact make this singular major decision relative to tax treatment.
Additionally, it is to be noted, that on the heels of the tax changes, major van lines moved forward with significant tariff increases and contract changes that further increased the cost of household goods moving, storage and autos shipped with goods.
Clearly, the cost of relocation has increased in 2018 – for the company, the transferee or both. On the other hand, administration did get easier – at least for federal tax compliance. Except for tax protected home sale benefits, all other typical relocation benefits paid by the company are taxable income. Yes, a few states continued to allow these expense deductions as in the past. However, at the end of the day, relocation expense and tax administration and reporting was simplified.
The tax law changes did lower corporate taxes and the economy currently is good. Now is the time to take a deeper dive into your policy and make decisions that you may have been thinking about anyway.
What options exist to offset or recover these rising relocation costs?
- Should we evaluate and adjust relocation benefits or tiers in a way that better aligns with our company’s future view and culture?
- What about cost containment initiatives? Other worker benefits? Talent acquisition and retention? Industry?
- Should we evaluate and adjust administration, responsibilities, costs/fees? Either internally and/or with our outsourced supplier(s)?
Gather Baseline Opinions
Ask the above questions internally to
- Key internal stakeholders
- Key suppliers – ones you have today and those who want your business
- Independent and experienced relocation management consultants
The HR&Relo Advisors’ Team
Contact us via www.HR&ReloAdvisors.com