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Is Your Employee Global Transportation Policy Strategic?

This article originally appeared in the August 2018 edition of Mobility Magazine.

A well-thought-out and professionally communicated employee household goods transportation policy provides direction and guidance for your employee, protects stockholders, equips recruiters and supports your mobility staff.

I’ve been around global relocation for a long time. I love the service side of the business, and I enjoy the relationships and the opportunity to try to make the relocation process better for families and their employers. I can honestly say that I have always enjoyed dealing with very difficult—and sometimes irrational—transferees.

I know that they are dealing with many challenges, have possibly been burned by a previous experience, and most often just need help getting through a challenging process. Usually with patience and understanding, and the support of competent colleagues and providers, these transferees can be won over. I think many of us in the industry feel the same way and love what we do.

While so many professionals,consultants, and policy gurus have redone policies and shared benchmarking data, I still see gaps and lack of detail regarding household goods transportation in some relocation policies. In my eyes, policies are meant to offer peace of mind, support, and education, especially for the transferee. They communicate to the employee, “You work for a smart global company,” “Your employer has a very good idea of what the employee needs to relocate successfully,” and “We care about you, and about doing what is right.”

Related: Corporations and Business Traveler Well-Being

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U.S. Lawmakers Engaged on Business Immigration Policy

Immigration policy has continued to be an extremely high-profile issue this year in the U.S. and around the globe.

While less so on workforce immigration issues, there still has been activity revolving around the shift in policies in the U.S. and abroad in regard to attracting foreign talent.

In the U.S., the traditional advocates in Congress for increasing high-skilled immigration look for openings to insert the issue into the larger immigration debate as the Administration narrows the focus on employment of foreign nationals. There is unlikely to be movement in the U.S. this year on significant workforce immigration legislation. However, there are still four months left in this Congress, so nothing can be ruled out. At the very least, the stage is being set for 2019.

With that in mind, Representatives of Worldwide ERC®, led by President and CEO Peggy Smith, have been meeting with key congressional offices involved on workforce and high-skilled immigration issues. We have been using our unique voice as the association for the mobility industry to become an invaluable resource for Congress on workforce immigration issues.

Worldwide ERC® has been monitoring and reporting on a number of mobility policies. Below is an update on some of the key immigration issues.

Administrative Actions

Entry Restrictions on Foreign Nationals

On 26 June 2018, the U.S. Supreme Court ruled 5 to 4 in favor of third Presidential action suspending entry of foreign nationals from seven countries into the U.S. The Court ruled that President Trump has the authority on national security grounds to restrict travel into the U.S. President Trump put the current travel restrictions in place on 24 September 2017, through a Presidential proclamation.

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U.S. Congress Passes CFIUS Reform Measure

As part of the John S. McCainNational Defense Authorization Act for FY 2019 (H.R. 5515), Congress has passedlanguage tomake major reforms to the Committee on Foreign Investment in the UnitedStates (CFIUS).

CFIUS is the federal inter-agencybody responsible for reviewing and determining the effect on national securityof transactions involving a foreign entity taking a majority stake in a U.S.company. If CFIUS determines that the transaction poses a potential threat tothe national security of the US, the Committee can impose conditions on thetransaction or refer the request to the President for a final decision.

The profile of CFIUS has beenraised lately with the President intervening since taking office in twosignificant cases involving US semiconductor companies. In 2017, the Presidentdenied the request of Canyon Bridge Capital Partners, a Beijing-based privateequity firm, from taking control of Lattice Semiconductor Corporation ofPortland, Oregon. This year, the President blocked Broadcom from acquiringQualcomm. Broadcom was based in Singapore when the President made hisannouncement, but the company has since finalized incorporation in the US.

Related: U.S. Senate Holds Hearing on CFPB and Ex-Im Bank Nominees

While the reforms are likely tohave a minimal immediate direct impact on the workforce mobility industry,there are future implications regarding the ability of foreign entities toacquire majority stakes in U.S. companies and real estate. This in turn couldlead to changes in certain business sectors in the movement of employees offoreign entities to the U.S. and vice versa. There is also the larger issue ofthe potential impact of reduced foreign investment in the U.S.

The most significant reform isthat requests for CFIUS review by foreign entities will no longer be voluntaryin cases where the entity is looking to control a company in which a nationalsecurity issue could be raised. Until now, requests for review were voluntaryhowever CFIUS has had the right to review the transaction if the Committeethought there was a national security issue. The new reforms also include thosetransactions in which a minority investment is being made instead of acontrolling interest in a company.

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Relinquishment of U.S. Citizenship Declines Sharply in 2018

The United States Internal Revenue Service (IRS) recently released statistics on the number of U.S. Citizens and long-term residents who have chosen to relinquish that status for recent periods, showing declines over other recent periods.

For the second quarter of 2018, 1,086 individuals ended their U.S. status, some 40% fewer than in the second quarter of 2017.

Relinquishment of U.S. citizenship or long-term residency (called “expatriation” under the U.S. Tax Code) has spiked in recent years. Many observers attribute this trend to the advent of the Foreign Account Tax Compliance Act (FATCA), which was enacted in 2010 but has been gradually put into full effect over recent years.

Under FATCA, foreign financial institutions must report to U.S. authorities any accounts of U.S. taxpayers, which includes not only the accounts of U.S. Citizens, but also those of U.S. legal residents (green card holders). As a result, it is speculated that U.S. taxpayers are increasingly expatriating the U.S. to avoid the required reporting.

Related: U.S. Passport Revocation Could Affect 360,000+ Taxpayers Worldwide

Beginning in 2015, the number of expatrations increased markedly to 4,281. It rose to 5,400 in 2016 and 5,132 in 2017. The number spiked in the 4th quarter of 2016 at more than 2,300, but has begun to decline since then.  

Those who expatriate must file a detailed tax exit form (Form 8854) and pay an exit tax on their assets determined by valuing the assets as of the exit date. The assets are deemed sold on that date, and tax computed.

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Canada Addresses Tax Gap

In several recent reports, theCanadian tax authority has identified various elements of the so-called “taxgap” and undertaken efforts to address it.

The tax gap is the estimateddifference between what taxpayers would have paid if they fully complied withall tax rules, and what was actually paid and collected. The new estimates arepart of an anti-tax evasion strategy that was funded in 2016.

For example, Canada recentlyestimated that the tax gap on offshore investment income was up to C $3 billionin 2014. 

When combined withan earlier estimate of the personal income tax gap, the total estimate is C$11.7 billion. There is also an estimated GST gap of about C $2.9 billion. 

The tax authority has a numberof initiatives to address this problem. It has put new systems in place tocapture all international electronic funds transfers over C $10,000. It alsohas initiated an offshore tax informant program, paying whistleblowers forinformation leading to tax recoveries. That program has yielded C $11.6 millionin additional revenue, with over 350 taxpayers identified for audits involvingoffshore tax noncompliance. Audit capacity has also increased, with a focus onhigh-income taxpayers.  

The tax agency reported that ithas identified over C $500 million of additional taxes owed as a result ofthese programs.

Offshore tax evasion has been aconstant theme of nearly every government in recent years. For example, on 28June, Canada, the United States, the United Kingdom, the Netherlands, andAustralia created an international enforcement group call the Joint Chiefs ofGlobal Tax Enforcement, within which they will work cooperatively to identifyoffshore evasion and collect unpaid taxes.

Related: Canada Looks to Begin Taxing Digital Economy

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Remote Work in India: A New Normal?

Until recently, India lagged behind many other countries in supporting a remote work culture. But if recent studies are any indicator, it appears those times are changing.

More than half of Indian workers (53%) polled in a recent study said they prefer telecommuting. The same study found that the vast majority of workers (61%) are seeking a better work-life balance with less stress – stress that comes in part from a long and crowded commute and time away from family.

Another recent study by global research company IPSOS found that 57 percent of Indian employees telecommute on a frequent basis and nearly one-third work remotely every day.

For Indian businesses, escalating costs of space are causing them to more readily consider those remote work arrangements. Even so, employing remote workers is still a relatively new concept not fully embraced by mainstream Indian society or employers. “However, the trend is slowly and surely changing with young professionals choosing to work from home, especially in crowded and dense cities like Mumbai,” according to the All Things Talent blog.

Fueling that mind shift in part is competition among talent mobility professionals to recruit the best of India’s burgeoning young workforce. “India is one of the very few countries which has the younger workforce with every month a million kids getting added to India’s workforce and potentially to the world’s workforce,” said Indian Staffing Federation president Rituparna Chakraborty.

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2018 Scholarship Award Winners

Aug 08 2018

Published in: Mobility

| Updated Apr 27 2023

Worldwide ERC® Foundation is proud to recognize the 11 students who were awarded with scholarships after submitting their relocation essays to the 2018 Foundation Scholarship award contest!

In partnership with several regional groups around the United States, the Worldwide ERC® Foundation holds an annual Student Essay Scholarship Program to support and promote its mission to energize the global community through charitable giving. This year, 11 students were recognized for their outstanding submissions:

Lucia CarreroEmily Perez GarciaEve Rachel GlennHalakhe GodanaUuad IsmailManit KaushalRebecca LinSarah OhKaguya Okawa-O’ConnellSindhu PemmasaniMaddie Zubrod Hayes

Mobility can open up career opportunities for professionals, but can also be difficult for their families to undertake. This is especially the case for their children, who are tasked with adapting to a new environment and school system.

The scholarship award winners—plus all other contestants—shared their stories to lend a hand to those who are going through those difficult changes. After all, they encountered the relocation process themselves.

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2018 Sao Paulo Summit News

With more than 20 million residents, a multitude of attractions and an economy that rivals any other cosmopolitan city in the world, it would be hard to call São Paulo a hidden gem. The truth is that travelers have long been drawn here for its stunning architecture and art, vibrant entertainment and culinary scene, and diverse culture.

But beyond that, São Paulo is rapidly taking its place as a leading global financial center, business hub and entrepreneurial hotbed. It recently was ranked the world’s 12th best ecosystem for startups, with some 2,700 active startups based here, fueled by a thriving network of private equity firms alongside many of the world’s largest banks. Co-working spaces abound, and its young, highly diverse and still relatively inexpensive workforce provides an abundant pool of talent for mobility professionals to tap.

Indeed, today São Paulo is the 10th richest city in the world, and one that is attracting the attention of mobility professionals from innovative companies across the globe seeking to establish a presence below the equator.

It is also the location of Worldwide ERC®’s São Paulo Summit 2018, where talent mobility professionals will have an opportunity to boost their knowledge of this must-market for multinationals.

“The diverse talent, business ecosystem, infrastructure, cosmopolitan appeal and thriving culture have combined to make São Paulo an exceptional region in which to do business in Latin America,” said Worldwide ERC® board member Gustavo Higuera, CRP, GMS-T, Regional Vice President Latin America, Weichert Workforce Mobility. “We are thrilled to host the São Paulo Summit and deliver the kind of talent mobility knowledge that can help companies maximize this dynamic place.” 

Startups, long-established firms and all organizations in between will benefit from the dynamic exchanges, small-group interactions and unique learning opportunities at the Summit. Additionally, mobility professionals will have the chance to listen to influential speakers discuss key mobility trends which will drive the future of the industry and apply those lessons in their everyday tasks.

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U.S. Courts Divide on Penalty For Failing to Report Foreign Accts

Two recent U.S. District Court opinions, Colliot v United States, and United States v. Wahdan, have cast doubt on the maximum penalty for willfully failing to file reports of foreign bank accounts, holding that an old regulation limits the penalty to $100,000 despite subsequent legislation allowing a penalty of 50% of the account value.

The government has routinely relied on the later legislation to collect penalties that can run into the millions of dollars based on 50% of the value of the accounts not reported.

Subsequent to the Colliot and Wahdan cases, the United States Court of Claims held in Norman v. United States, that the later legislation had superseded the regulation relied upon in those cases, upholding a penalty of over $800,000. Consequently, there is now a split of authority. 

Schedule B of the U.S. Form 1040 tax return includes an often-overlooked question as to whether the taxpayer had signature authority over any foreign financial account, such as a bank or securities account. Many U.S. expatriates working in foreign countries undoubtedly have such accounts, as do numerous foreign nationals residing and working in this country. 

Indeed, the relevant accounts include even accounts in foreign branches of U.S. banks, if the account is held by a U.S. person. If the aggregate amount of such accounts exceeds $10,000 at any time during the year, the taxpayer is required to file a separate Treasury Department Report of Foreign Bank and Financial Accounts (usually referred to as the “FBAR”) by 15 April of the following year.

The penalty for failing to file is severe; even a non-intentional failure is subject to a penalty of up to $10,000, while the penalty for a willful failure can be the greater of $100,000 or 50% of the amount in the account.  

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Technology Advancements & The Future of Mobility

Thisarticle originally appeared in the August 2018 edition of Mobility Magazine.

Only a little money, a littlework, and some early adopters stand between us and innovations that are alreadytechnically feasible.

Bill put his coffee down on hisdesk, reached up, and answered the phone by touching the base of his jaw.“Relocation Management, Bill Jacobsen,” he said.

“Hey Bill, Peter George herewith Global Moving and Storage. I am at the Smith residence, and we have adelay. Our moverbot is stuck at the top of the stairs flashing a ‘refuse’ code.Looks like the armoire is too much for it to handle on the stairs. I’ve calledcentral, and they’re sending someone over with a powered exoskeleton. We’lljust have to get it downstairs the old-fashioned way.”

Bill chuckled. “Theold-fashioned way,” he thought. Bill was well into his second century and stillgoing strong—one of those lucky enough to still be healthy when rejuvtreatments were made widely available. He could remember when “theold-fashioned way” meant you put the furniture on your back and hoofed it downthe stairs. The powered exoskeleton was just coming into vogue when he was wellinto his first career as an owner-operator. 

Bill was not overly worried.Peter and his wife, Molly, did not trust the bots with the breakables, so theystill packed all the dishes, glassware, and expensive stuff by hand. Theyrarely had a claim. They’d get everything wrapped and loaded, and then send thetruck off to Scottsdale. Peter and Molly would sleep at home tonight, and a newcrew would handle the unload at the destination. Bill would wait to notify thecrew in Arizona. It should not take the truck more than 20 hours to travel1,700 miles, so it should still be able to make the scheduled unload themorning of the second day. 

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Top Articles for July

This past month, Worldwide ERC®’s articles covered a wide range of mobility topics – from far-reaching geopolitical regulations to the future of mobility. Check out the top-five most-read articles from July and discover valuable mobility insights to drive your organization forward.

1. U.S. Passport Revocation Could Affect 360,000+ Taxpayers Worldwide

The U.S. Internal Revenue Service (IRS) has confirmed press reports that more than 362,000 U.S. citizens could lose their passports due to delinquent tax debt exceeding $51,000.

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2. 10 Questions to Ask Your Employer Before Your Relocation

Relocating for your career can be a huge step. Here are 10 questions you need to ask your employer—and yourself—before relocating.

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Mexico City: At a Crossroads Geographically and Historically

With a new President-elect and a new political party set to take office in December, an economy seemingly content to send mixed messages of both growth and stagnation depending on the month and the chosen economic indices, and on-again, off-again NAFTA negotiations, Mexico City appears at a geographical and historical crossroads.

“Snapshot” at the Crossroads

Mexico City is the oldest and most populous major city in North America. The centuries-old city proper now holds almost 9 million residents, with the Greater Mexico City Metropolitan Area boasting over 21 million, or approximately 20 percent of Mexico’s national population. While that age and size make the city the most established in the region, they bely the accompanying dynamism of the city.

Politically, Mexico City, as the country’s Federal District, serves as capitol of Mexico and the seat of the federal government. This July’s election of center-left President Andres Manuel Lopez Obrador marked a decided shift in the politics for the country, but whether it marks a true shift in national direction is yet to be determined.

Economically, the Greater Mexico City Metropolitan Area contributes almost one-fourth of Mexico’s national GDP that makes it the 15th largest economy in the world.

Long the financial center of Latin America, 17 of the Fortune Global 500 call Mexico City home. While Mexico’s GDP growth is above one percent this year after a sluggish 2017, and most economic indices indicate continued overall health, economists cite uncertainty surrounding the future of NAFTA as the major factor holding back real growth.

Of the three nations involved in the current renegotiation of the North American Free Trade Agreement (NAFTA),Mexico seems most vulnerable to a “no deal” or a “bad deal”. The past 25 years of NAFTA have seen the Mexican economy quadruple, due in no small part to increased exports to the U.S., which account for four-fifths of its total exports.

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Gala Walk Set For 2018 Global Symposium

Heading to the 2018 Global Workforce Symposium this year? You won’t want to miss the Worldwide ERC® Foundation Gala and Walk!

Each year, the Worldwide ERC® Foundation hosts the Foundation Gala and Foundation Walk to benefit their selected charity. This year, the events benefit Family Promise, whose goal is to “help homeless and low-income families achieve sustainable independence.” Be sure to pack your cocktail attire and walking shoes and join us for a great cause!

Related: Game Changer & Innovator Seth Mattison to Keynote 2018 Global Workforce Symposium

2018 Foundation Gala – Sold Out

Located at the beautiful Chihuly Garden & Glasshouse, this year’s Foundation Gala will feature live music, a banquet dinner, plus silent and live auctions to benefit charities. The event will take place Thursday, 18 October 2018 from 6:30 p.m. to 10:30 p.m.

If you’ve never been to Chihuly Garden & Glasshouse, you won’t want to miss this opportunity. The combination of exquisite glass designs, their dazzling array of colors, and lush plant life have made the venue a top tourist attraction in Seattle.

Worldwide ERC® Foundatio nChair-Elect Robert Giese SCRP, GMS noted on the Gala’s festivities and charity:

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U.S. House Leader Proposes Large Fuel Tax Increases

Representative Bill Shuster (R.Pa.), Chairman of the House Transportation Committee, on 20 July 2018 releaseda wide-rangingdiscussion draft proposing to overhaul the federal HighwayTrust Fund, including hikes in the current tax rates for gasoline and dieselfuel. 

The U.S. federal Highway TrustFund is the mechanism by which the government raises funds for highways andother necessary transportation infrastructure, and it is funded primarily bytaxes on motor fuels. The current tax of 18.3 cents per gallon for gasoline and24.3 cents for diesel fuel was last raised in 1993. 

Due to a number offactors, including increased vehicle fuel efficiency and much higherconstruction costs, the amounts raised by the current tax have been woefullyinsufficient to fund the Trust Fund for many years. This problem is likely tobe exacerbated by the increased use of electric vehicles.

Rep. Shuster proposes the formationof a Highway Trust Fund Commission that would be charged with recommending toCongress long-term solutions to the problems. The Commission’s recommendedlegislation would be submitted for an expedited up or down vote by Congresswith no amendments.

Shuster also proposes that thefederal government undertake a pilot program to evaluate shifting from aper-gallon fuel tax to a per-mile user fee based not on consumption, but onmiles driven.  Similar test programs havebeen done in several states in recent years, including Oregon and Colorado. Thisshift would address the problem presented by higher miles-per-gallon fuel efficiency,and the advent of electric vehicles. The proposal would also impose a 10% userfee on the wholesale price of electric batteries used to propel motor vehicles.

To provide increased fundingwhile these other proposals are being evaluated, Shuster would temporarilyincrease the gasoline tax by 15 cents per gallon, to 33.3 cents, and the dieseltax by 20 cents to 44.3 cents per gallon. These increases would be phased inover three years, would then be indexed for inflation, and would expire in2028. According the Joint Committee on Taxation, the gasoline tax increasewould raise $194.4 billion over ten years, and the diesel tax increase wouldraise $85.7 billion.

Although it is unlikely thatShuster’s proposal will be enacted in full during this year’s Congress, it willprovide a base for Transportation Committee hearings and other activitiesrelated to the Highway Trust Fund, which expires periodically and must berenewed. 

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Business Objectives Key in Mobility’s Transformation

“Mobility needs to understand the business and then be able to determine very quickly how we can assist,” says Head of Global Mobility at Adobe Jacquie Davidson. “We need to have answers and solutions faster.”

A deeper understanding of overall business objectives—with the imperative of speedier solutions—is all part of mobility’s transformational journey, detailed in Worldwide ERC®’s recent report “The Perfect Storm: Mobility Professionals Decode the Future.” Today’s mobility reaches out beyond the tactical and operational to serve as a strategic partner to talent management and business leaders.

Leveraging Business Objectives

First up for mobility professionals: Acquiring knowledge of the company’s business objectives, because this is what drives the talent management requirements where mobility can offer recommendations and solutions.

A survey of 371 in-house mobility practitioners undertaken for the Perfect Storm report shows this is an area that needs more attention; in fact, 65% of respondents note they are at best moderately knowledgeable about the objectives of the business units for which they move employees (Chart 1). How can the mobility function quickly respond and offer solutions to business challenges if it first must take time to get up to speed on the business units’ objectives?

Related: Mobility: It's Your 'Exotic Specialty!'

Being Agile Means Being Prepared

Agility to meet changing business requirements can be difficult in large, more traditional organizations with established procedures on policy writing, communications, training and technology.

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U.S. Senate Holds Hearing on CFPB and Ex-Im Bank Nominees

On 19 July 2018, the Senate Committeeon Banking, Housing and Urban Affairs held a hearing on the pendingconfirmation of two federal agency nominees.

The first nominee is Ms. Kathleen Laura Kraninger, of Ohio,who has been nominated as the Director of the Consumer Financial ProtectionBureau (CFPB). The second is Ms.Kimberly A. Reed, of West Virginia, who has been nominated to be thePresident of the Export-Import Bank of the United States (EX-IM).

Leading up to the 19 July hearing,Senate Committee Democrats called on Chairman Mike Crapo (R-ID) to postpone thehearing over having not yet received a response to their request to theadministration for relevant documents pertaining to Kraninger’s work in herposition of Associate Director at the Office of Management and Budget (OMB). Thehearing proceeded on the originally scheduled date. The next step in theconfirmation process is for the Committee to schedule a vote on thenominations.

Kraninger was well received byRepublican members of the Committee and faced criticism from Democrat members.Kraninger specifically faced concerns with her assumed involvement with the TrumpAdministration’s zero-tolerance immigration policy as well as the disasterrelief response to Puerto Rico in her role at OMB. In the hearing, Kraninger pledgedto establish four initial priorities for CFPB if confirmed including ensuring fairnessof the bureau, working closely with other financial regulators and states onsupervision and enforcement, protecting sensitive data, and remainingaccountable to the American people. If confirmed, Kraninger would replaceacting CFPB Director Mick Mulvaney.

In December 2017, Reed was voted in ona bipartisan basis as First Vice President of EX-IM. Reed maintains thatoverwhelming support on both sides of the dais for her current nomination forPresident of EX-IM. In the hearing, Reed promised to hold review to ensure thatEX-IM is truly being used as a bank of last resort. Reed announced that she plansto work with Congress and the Administration in order to address China’s biasedtrade policies. Reed also pledged that she would do all that she can to reducewaste, fraud and abuse within the bank. If confirmed, Reed would replace actingEX-IM President Jeffrey Gerrish.

Reed was well received on anon-partisan basis. Kraninger received some pointed questions and disapprovingcomments throughout the hearing from the Committee Democrats. Chairman Crapo(R-ID) voiced support for both Reed and Kraninger. The Senate Committee RankingMember verbally supported Reed’s nomination and believes she is well qualifiedfor the position. Kraninger did not receive such support from Ranking MemberBrown (D-OH) who questioned her previous work in her position at OMB and herability to perform as Director of CFPB.

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U.K. Parliament Approves Brexit Plan

Despiteturmoil, the United Kingdom (UK) Parliament has approved the plan being pushedby UK Prime Minister Theresa May for the UK to leave the European Union (EU).

Theclose vote of 318 to 285 followed the resignation of three senior members ofthe cabinet who believed the plan was not strong enough for the full exit ofthe UK from the EU. The cabinet ministers were David Davis who was BrexitSecretary, Boris Johnson who was Foreign Secretary, and Steve Baker who was juniorBrexit minister. The three were members of the conservative party and loudpro-Brexit voices.

Theconcerns of the three members of Parliament (MPs) revolved around the planbeing negotiated with the EU and not clean enough exit. But in the end, May hadthe votes to get the plan passed.

Brexitwill likely result in the curbing of free movement of workers between the UKand the EU. This would have a direct impact on the ability to transferemployees between the UK and much of the rest of Europe. There are also broaderimplications regarding Brexit which could result in businesses relocatingoffices and employees between the UK and EU.

Thisis also the case with the Schengen agreement on free movement of people betweenthe UK and EU. The guidelines note the sensitivity around the need to maintainthe free movement of individuals between the Republic of Ireland as an EUmember and Northern Ireland as part of the UK.

Whilethe triggering of Article 50 provides for a two-year withdrawal timeframe of amember state from the EU, the UK and EU have agreed to a transition period. Thetransition period starts at the end of the 2-year period on 29 March 2019 andends on 31 December 2020. The two parties are therefore negotiating on both aplan for the transition period as well as the full withdrawal starting in 2021.

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Hawaii Increases Withholding Rate

The state of Hawaii has enacted legislation that changes the withholding rate on real estate sales by nonresidents from 5% to 7.5%, effective for transfers on or after 15 September 2018.

Like a number of other U.S. states, Hawaii law requires buyers or transferees of Hawaii real property from nonresidents to withhold and remit a tax, which is designed to make sure the nonresident seller reports and pays any income tax due on the sale. The withholding rate has been 5% since the law was enacted in 1991. It is not clear what prompted the legislature to increase it to 7.5%.

The law exempts sellers where the real property has been used as the seller’s principal residence for the year preceding the date of the contract, and the contract price does not exceed $300,000, or the seller is not required to recognize any gain under a non-recognition provision of the Internal Revenue Code. Tax Information Release No. 2002-2 (May 8, 2002) explains that the latter includes section 121 of the Internal Revenue Code, which has been adopted by Hawaii. 

Consequently, if gain is not taxable because a property was the principal residence for qualifying periods and the other requirements of section 121 are met, no withholding is required.

Corporations are exempt if they are chartered or domesticated in Hawaii; domesticated partnerships are also exempt. Generally, this means that corporations registered to do business in Hawaii are exempt. Hawaii defines an individual as a "resident" in a detailed manner and the "resident" exemption needs to be determined in light of these definitions. TIR 2002-2 says that residency status is determined at the time the sale closes. 

Exemptions are certified on Form N-289, which does not require Hawaii Department of Taxation approval. If there is no gain on the sale, the seller may obtain a waiver from the Department of Taxation by filing Form N-288B at least 10 days before the date of transfer. 

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IRS Reiterates Limiting Deduction of Pre-Paid 2018 Taxes

In a letter to the Attorney General of New Jersey released 29 June 2018, the U.S. Internal Revenue Service (IRS) restated and supported the position it took in December of 2017 that prepayments of 2018 property taxes in 2017 are allowable as 2017 deductions only if the 2018 tax has been assessed.

The latest IRS letter makes clear that it is not backing away from its earlier position. The correct answer will eventually have to be decided by the courts. 

Following enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), which imposed an aggregate deduction limit of $10,000 on state and local income, property, and sales taxes beginning in 2018, many taxpayers sought to prepay 2018 taxes in 2017 hoping to achieve a full deduction on their 2017 returns. The TCJA explicitly forbade such deductions for 2018 income taxes, but was silent as to property taxes.

Several states, including New Jersey, facilitated prepayments of property taxes in one way or another. In New Jersey, the governor issued an executive order requiring municipalities to accept payments of estimated 2018 taxes postmarked on or before December 31, 2017.

Related: 4 States Sue U.S. Federal Government Over State & Local Tax Deduction Limit

The IRS issued an advisory on 27 December 2017 stating that such payments would be allowable as 2017 deductions only if the tax was assessed in 2017. It cited authorities for that position, which are repeated in the letter to the New Jersey Attorney General.

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Seth Mattison to Keynote 2018 Symposium

Renowned innovator, author, and futurist Seth Mattison is set to keynote the 2018 Global Workforce Symposium on 18 October 2018 as sponsored by Quicken Loans.

As the summer continues to heat up, Worldwide ERC® is proud to welcome workforce strategist and management trendspotter Seth Mattison as the keynote speaker for this year’s Global Workforce Symposium.

Internationally renowned, Mattison will dive into innovation in the global mobility space during his speech at this year’s Global Workforce Symposium, one of the world’s most prominent mobility events. He already advises leading brands on key shifts happening around talent management, change and innovation, leadership, and the future of work, and will certainly have valuable insight for the many organizations in attendance.

As a whole, the mobility industry has seen quite a bit of digital innovation and disruption in the past few years. From the rise of digital nomads and the gig economy to augmented and virtual reality, there is plenty of opportunity for organizations to gain a competitive edge as “The Perfect Storm“ rolls in.

Related: Hey, HR! Your New Talent Acquisition Partner is Next Door

“I see disruption as ‘extreme change,’ and our industry manages change so expertly that we welcome new perspectives – and remarkable keynoters like Seth – that show us how to leverage the current environment. The more we understand about the future of work, the more strategic we can be in our own companies and careers,” said Mark Lozano, SCRP, GMS, 2018 Chairman, Worldwide ERC®.  

Don’t miss out on this great opportunity to discuss innovation in the global mobility industry with a recognized expert on the matter. Mattison’s keynote is set to take place 18 October 2018 from 8:15 a.m.to 10:00 a.m. at the Washington State Convention Center in Seattle, Washington.

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