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Corporate Policy Design for Domestic Short Term Assignments - DSTA

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Title: Right For Today Ready For Tomorrow Author: cpaddock Last modified by: Equity Residential Created Date: 11/12/2009 9:45:39 PM Document presentation format – PowerPoint PPT presentation

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Title: Corporate Policy Design for Domestic Short Term Assignments - DSTA


1
  • Corporate Policy Design for Domestic Short Term
    Assignments - DSTA
  • November 16, 2010
  • Bill Nemer - CRP, GMS, Vice President, Client
    Services Graebel Relocation Services Worldwide
  • Pat Papenbrok Director of Relocation Services
    McDonalds Corporation
  • Karrie DeBlauw - CRP, GMS, Manager
  • Accenture Domestic U.S. Relocation
    Services/RMS-US

2
Short Term Domestic Assignments
  • Bill Nemer, CRP, GMS
  • Vice President Client Services
  • Graebel Relocation Services Worldwide

3
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4
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5
Short Term Assignments-Definition
  • What is Temporary
  • The United States Tax Code has specific rules
    around the duration of a work related assignment
  • Publication 463, specifically addresses temporary
    assignments
  • Intended duration of the assignment at its outset
    is critical
  • Generally, a temporary assignment in a single
    location is one that is realistically expected to
    last for 1 year or less
  • Keeping a permanent tax residence in the old
    location is a must

6
Benefits of a Temporary Assignment
  • Expenses, such as transportation, lodging, and
    meals are considered not part of compensation and
    deductible
  • Company avoids the cost of tax protection for the
    employee
  • Employee avoids the additional income and tax
    burden
  • Travel back to the home location is also
    deductible

7
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8
Rules Concerning Intent
  • If the duration of a temporary assignment is
    unknown at its outset the new location is
    considered the employees new tax home and all
    expenses paid to the employee are taxable
  • If the intent of the assignment is over 1 year
    (even if it lasts less than 1 year) the new
    location is considered the employees new tax home
    and all expenses paid to the employee are taxable
  • If a planned temporary assignment of 8 months
    extends to 13 months all the expenses retroactive
    to the date it was known the assignment was to
    extend past the year are taxable non-business
    expenses

9
Sequential Temporary Assignments
  • The tax code is silent on the break between
    assignments and the impact on taxability
  • The intent to avoid taxable compensation and the
    change of tax home is clearly a violation
  • An 11 ½ month temporary assignment followed by
    another 11 ½ month assignment in the same
    location would raise a red flag
  • In many companies a break of a month or more
    between assignments is practice
  • It is unknown what the safe duration is between
    assignments should be since no precedent has been
    set
  • Factors such as assignments of different
    durations to different locations might be more
    defendable than the same location for multiple
    times

10
Factors to Consider
  • The IRS in the past has looked at practice across
    the organizations and looks for patterns
  • Having a well defined start and end date of an
    assignment will be on fact to show intent (use
    an assignment letter)
  • Having a business case on why an employee has
    sequential temporary assignments is a best
    practice
  • A business practice that has a return trip home
    for 30 days after a lengthy assignment and right
    back to the same location will be hard to defend
  • State taxes will also come into play with
    sequential assignment, especially to the same
    location. Consult with your tax counsel.

11
McDonalds Domestic Short Term Assignment
Strategy
  • Pat Papenbrok
  • Director of Relocation Services
  • McDonalds Corporation

12
McDonalds Domestic Short Term Assignment Strategy
  • McDonalds provides program to Hiring Managers,
    HR and Management as a talent management tool to
    increase mobility job experiences
  • Intent is to provide moving assistance for 12-24
    month assignments with employee returning home

13
McDonalds Domestic Short Term Assignment Strategy
  • Not intended to be a cost savings as may be cost
    neutral with Homeowner program.
  • Does avoid employee moving back-to-back or
    eating large loss on sale (key in todays
    economy)
  • Relocation must approve all DSTAs to ensure
    proper use and application

14
DSTA Policy Components
  • Assignment housing allowance/Budget guidelines
    (if retains home)
  • Furniture Appliance Allowance/Budget guidelines
  • One Rental Housing Finding Trip
  • Property Management on current home up to
    150/month
  • Small shipment of personal belongings
  • Misc. Allowance of 3,000 (gross)
  • Rental car, if needed
  • Direct move

15
DSTA Policy Components
  • Family may / may not stay behind policy based on
    employee only
  • Trips back home are determined and paid by new
    location
  • Company will not financially support the purchase
    nor sale of property during DSTA nor the sale of
    primary residence
  • If home is purchased while on DSTA, all
    allowances stop
  • Some items taxable

16
DSTA Return from Assignment
  • Upon return of your DSTA
  • Lease breakage of rental, if needed
  • Return shipment of personal belongings
  • Direct Move

17
DSTA Reality Check
  • DSTAs can be complicated, i.e. employee decides
    mid-assignment to sell or buy house
  • Family decides cant live apart
  • Temp assignment turns into permanent
  • Locations think this is a more cost effective way
    vs. homeowner program
  • Locations use this as a way around providing
    buyouts or paying loss on sale

18
Accenture Domestic Short Term Assignment Strategy
  • Karrie DeBlauw, CRP, GMS
  • Manager
  • Accenture Domestic U.S. Relocation Services/RMS-US

19
Purpose of DSTA Program
  • The intent of our U.S. Domestic Temp Relo
    program is to allow an alternative to our
    Domestic travel policy (as it becomes
    compensatory at the 1 year mark of the
    assignment).

20
Key Elements of DSTA Program
  • Enrolling in the program is the EEs choice it
    is employee driven
  • Once enrolled, the EE receives a monthly stipend
    (taxable/not grossed up) based on level,
    accompaniment status, and destination location
  • EEs also receive a small shipment of household
    goods, both to the new location, and back to the
    old location once the assignment is finished

21
Key Elements of DSTA Program
  • Senior Executive Temp Relos also receive a 5000
    resettlement allowance
  • While on Assignment, the employee (and
    accompanying family) is allowed 1 annual personal
    fly back
  • EEs headcount remains in the old location while
    on Temp Relo Assignment
  • We require a one year commitment of assignment to
    enroll

22
  • Questions

22
23
Thank you!
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