The unprecedented shut downs as a result of business restrictions and shelter-in-place orders have led to sweeping relief programs with extensive tax stipulations that will impact businesses both large and small, as well as individuals and, of course, mobile talent.
XONEX has been in touch with INEO tax consultants, as well as tax experts from the Worldwide Employee Relocation Council. Many of these recently passed relief efforts may impact your business.
For example, according to David Oltman, Chief Compliance Officer, INEO, some mobility expenses incurred as a result of COVID-19 may be considered business expenses. Specifically, pursuant to IRC Section 139, the very first item says it all. As long as payments are reasonable and necessary and caused due to the disaster (COVID-19) companies can treat these types of expenses as non-taxable business expenses. Hence, in these cases, there should be no impact to the employees W-2. This is very good news for companies as it means that no gross-up will be needed. At this time, no substantiation requirements are defined. The costs need to be deemed “reasonable and necessary.” It’s important to note that we have seen this in years past for expense reimbursements to employees who were affected by floods and hurricanes. Most companies are familiar with IRC. Section 139. Extended duplicate housing costs and costs (i.e. airfare, lodging, car rental, food) associated with bringing employees back home would be perfect examples of expenses that would be covered under IRC Section 139.
This is one of many tax implications as a result of COVID 19 relief efforts. Here you can read more updates from INEO Mobility.
Please also visit the Worldwide Employee Relocation Council webpage on COVID-19
If you would like to discuss your tax situation with a relocation tax professional, please contact David Oltman at firstname.lastname@example.org for assistance.