As we at Relocation America plan for the coming year one of the questions we frequently ask our clients is whether they expect an increase in their transfer volume for the next 12 months. What a few of our clients are telling us is they expect transfer volume to increase with temporary assignments becoming increasingly popular.
For many corporations temporary assignments are an important part of their talent management strategy. Many times temporary assignments are for a specific project, such as serving on a transition or integration team during a merger or acquisition. The main difference between a temp assignment and permanent relocation pertains to how long the transferee’s assignment lasts.
For an assignment that lasts 1 year or less, reimbursements to an employee for food, lodging or other expenses can be treated as non taxable as if they were business expenses. An assignment that lasts longer than 1 year should be treated as relocation and subject to tax. If an assignment is initially supposed to last one year or less but later changes to longer than 1 year the assignment is considered temporary up until the date the transferee was notified.. Expenses incurred after notification should be treated as relocation. Examples of temp assignment reimbursements include:
- The cost to travel from the permanent home to the temporary work location at the onset of the assignment (and home once the assignment is completed).
- Lodging, meals and incidentals such as laundry and phone charges.
- Cost of visas, passports and language training if the temp assignment is international.
If an assignment is expected to last more than 12 months but ends early the assignment should still follow relocation laws because the intent was for the assignment to last more than 1 year.
To ensure compliance with all federal, state and local tax laws Relocation America recommends a formal policy dealing specifically with temporary assignments be developed and adhered to. If you have a temp assignment need, Relocation America can develop such a policy for you and manage your temp assignment program with ease and precision-give us a call at 877.500.4466.