US Tax Reform Update: 2018 Employer Reimbursements for 2017 Moves are Excludable

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US Tax Reform Update: 2018 Employer Reimbursements for 2017 Moves are Excludable

Whether your employees are heading across the country or crossing continents, Sirva has the on-the-ground international relocation services you need. From Canada to Australia and everywhere in between, we understand the nuances across each region .

We provide offerings to satisfy your unique needs, whether selling a home in the U.S., managing a cross-country household goods move, or helping employees to get settled into their new homes in Europe. Our global experience means that you can count on seamless international relocation, no matter what’s next.

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From the initial policy consulting call through the move itself, there are a lot of moving pieces associated with employee relocation. Whether planning a domestic or international relocation, SIRVA is expertly positioned to offer the best departure services available during a relocation in every region around the world.

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Setting your employees up for success upon arrival at their new locations will be key to successfully meeting your company’s goals. SIRVA’s global network and expansive resources allow us to you achieve your goals. Our destination services and international movers help employees and their families settle in and prosper in their new homes.

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SIRVA’s team of experienced international relocation specialists are expertly equipped to manage inbound and outbound global immigration services. With SIRVA’s Immigration team, the focus is on providing a smooth customer experience that enhances the relocation process, not just achieving a successful application.

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For your employees, a single relocation professional assists with end-to-end coordination of services: a relocation consultant for domestic/intra-country moves or global assignment consultant for international relocation. These consultants are your employees’ resource for all communication and services relating to their move, and coordinate the delivery of all authorised services. Regardless of the service being delivered (temporary housing, moving services, etc.), the employee can rely on the consultant as their go-to resource to address any concerns.

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If you are searching for an enhanced service for your employees, SIRVA offers VIP services such as personal relocation assistants, in-home cleaning services, personalised family assistance, and many other tailored and luxury enhancements.

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In a recent blog post, we discussed the 2017 US Tax Cuts and Jobs Act,enacted by the Federal Government on the 1st of January 2018, and its impact on relocation. The information below summarises an update released by the Internal Revenue Service on the 21st of September 2018, regarding the taxability of moving expenses incurred in 2017 that were invoiced and/or paid in 2018.

Background and Highlights:

Prior to the 21 September clarification, there was a great deal of ambiguity regarding the treatment of payments or reimbursements processed in 2018 for moves implemented in 2017. Initially, the 2017 Tax Cuts and Jobs Act stated that the exclusion for qualified moving expenses [in sections 132(a)(6) and 132(g)(1)] did not apply for taxable years beginning after 31st of December 2017 and before 1st of January 2026, but it failed to specify how payments and reimbursements tied to 2017 moves should be treated if paid or reimbursed in 2018.

IRS Notice 2018-75, 2018-41 IRB 1 provided clarification to this grey area of the Act. It stated that the suspension of the exclusion only applies to payments or reimbursements for expenses related to moves that occurred on or after the 1st of January 2018. Reimbursements or employer payments made in 2018 for employee moves occurring in 2017 would remain excludable from the incomes of employees.

Third-Party Payments for Moving Services and Moving Reimbursements

With this in mind, if an employer pays a third party in 2018 for moving services that were provided to an individual in 2017 (or reimburses an individual in 2018 for moving expenses that were incurred before 1st of January 2018) these payments and reimbursements are not to be included in an employee’s income. In cases where employers have included such amounts in employee wages in relation to employment taxes, the notice also states that these employers can either use the adjustment process under section 6413 or the refund claim process under section 6402 to correct any overpayment of federal employment taxes.

For further information and updates related to the 2017 Tax Cuts and Jobs Act visit the IRS Website,where you can also find information specific to Notice 2017-75You may also contact Taryn Kramer, Vice President, Global Consulting or Kathy Burrows, Director, Global Consulting to learn more about how this current tax reforms impact relocation and your mobility programme.