Short-term travel, long-term consequences

By Robyn Shutak posted 03-08-2016 17:12

  
Getting a handle on tax and payroll requirements for business travelers with equity awards...

By now, most companies are making an effort to tackle the complexities of tax and payroll compliance for cross-border employees with equity awards, and rightfully so, since internationally mobile employees have been the focus of tax enforcement initiatives in many countries. In doing so, companies have typically limited their focus to those employees who are formal assignees or permanent transfers. Often these employees are already part of formal mobility programs so companies may already have mechanisms in place for tracking demographic and location data for such employees as part of existing expatriate tax compliance efforts. However, there is another segment of the mobile employee population that has historically received far less attention but which has just as much potential to create significant exposure for employers – Short-Term Business Travelers (“STBTs”).

STBTs are employees who travel outside their base location for business and who are not necessarily on a formal assignment or transfer. The nature of business requires frequent travel, not only for executives but for employees throughout an organization. This is true for all companies, but particularly for those that specialize in project based work such as engineering, construction, consulting and professional services. Couple the rise in the number of STBTs and the frequency of their trips with the fact that certain types of equity awards are being granted more broadly within organizations, and you increase the risk of non-compliance in multiple jurisdictions.

Governments in need of revenue are taking a tougher line on enforcement, and we are seeing an increase in the number of tax and immigration audits related to STBTs. In addition, governments and tax authorities are showing increased sophistication on this issue, with enhanced information sharing among different agencies within the same country/region and even across different taxing jurisdictions.  The same trends are being seen within the U.S., wherein states are becoming more aggressive in relation to employment tax audits on STBTs.

Leading companies have started to recognize the issues and potential exposure surrounding STBTs with equity, and are now working to quantify the risk and to develop policies, procedures and controls to address their STBT compliance issues.

Please join Cathy Goonetilleke, Candy Mendoza, and Jason Jones of EY, Joe Machewirth of Prudential, and Ryan Strong of Fidelity at GEO’s 17th Annual Conference from 20-22 April, 2016 in Boston, for a panel discussion on STBTs and equity awards. The panel will focus on identifying and prioritizing areas of tax and payroll compliance risk for STBTs with equity, and will share their experiences in developing practical approaches for mitigating such risks both domestically and internationally.

Register for the conference here!

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