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Advice for Employers-Be Informed of Employment Insurance
and Other Laws
Substantial penalties face all businesses, both
small and large, that do not adhere to laws and regulations concerning hiring
people to work for them. These include regulations concerning carrying mandatory
non occupational disability insurance, worker's compensation insurance,
employment tax withholding, OSHA standards, discrimination laws, American's With
Disabilities Act, etc. It is strongly advised that anyone who owns a small
business or are thinking of owning and operating any type of business cannot
ignore thoroughly understanding the rules that affect their business, and not to
rely on someone else to tell them. That someone else may end up being the state
Worker's Compensation Board assessing a very STIFF PENALTY for not having
disability or worker's compensation insurance, or not posting your coverage
notice in a place that employees can see. Don't assume that your insurance agent
or your accountant is going to "take care of it". When things go wrong, you, the
owner, are responsible.
EMPLOYEE RELOCATIONS
 Relocating
employees or placing them on overseas assignment presents unusual and complex
tax and HR issues. This applies to both Americans working abroad as well as
foreign nationals working in the U.S. Choosing Powers
& Company to assist you with the tax aspects of this area will
help avoid costly complications.
Powers
& Company can help you with:
Employee Tax Return Preparation
Tax Protection/Tax Equalization
Policy Implementation and Administration
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Employee
incentive
Because
foreign assignments result in multiple jurisdiction taxation, foreign
service allowances, reimbursements and company provided resources are often
subject to taxation both in the host country as well as the home country.
Accordingly, this additional tax burden can make an employee’s acceptance
of the foreign assignment prohibitive. For this reason multinational
employers often seek to protect their employees by offering a guaranteed net
compensation package or providing full tax equalization.
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Tax
Protection vs. Tax Equalization
While the objective of both tax equalization and tax protection policies are
similar in that both are intended to ensure that the employee suffers no
additional tax burden as a result of the foreign service assignment, full
tax equalization provides a much more cost effective approach for the
employer and is most equitable.
Procedurally,
this is accomplished by discontinuing U.S. tax withholding at the time that
the employee begins the foreign assignment and is expected to qualify for
expatriate tax benefits. The employees’ base salary is then reduced by the
amount of “hypothetical tax” that the employee would be expected to pay
had the employee not been on foreign assignment.
The
employer then assumes full responsibility for paying all domestic and foreign
income taxes that are associated with the foreign assignment income. Because
all tax benefits associated with the foreign assignment are claimed for the
benefit of the employer the cost of providing tax assistance is significantly
reduced while avoiding an unintended tax windfall to the employee at the
employer’s expense.
Whether
your business adopts a policy of tax protection or full tax equalization, Powers
& Company’s many years of experience will enable your company to develop,
implement and administer the plan in an equitable, cost efficient and effective
manner. We will help you:
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Design,
Develop and Implement your Expatriate or Relocation Tax Policy
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Prepare
Hypothetical Tax Calculations and Updates
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Prepare
Employee Tax Returns
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Calculate
Year End Tax Gross Ups and Employee Settlements
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Address
Expatriate and Relocation Payroll and Withholding Tax Issues
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