On the Road and at Risk: Managing Business Travel Exposure. March 15, 2016

Transcription

1 On the Road and at Risk: Managing Business Travel Exposure March 15, 2016

2 Panel discussion Introduction Why is this a pressing issue now? Business and tax issues created by employee travel How do you address it? Common pitfalls and leading practices 2

3 Introductions Moderator Jodi Snedigar, CPA Head of Tax (Senior Director of Tax) Ulta Beauty Bolingbrook, IL Jodi Snedigar is currently Head of Tax (Senior Director of Tax) at Ulta Beauty, where she is responsible for the leadership and all aspects of the tax related functions in-house. Ulta is the largest beauty retailer that provides one-stop shopping for prestige, mass, and salon services, with more than 874 retail stores across 48 states and a growth rate of 100 new retail stores each year. Jodi has 19 years of Large Corporate tax experience at Retail and Manufacturing firms, as well as 3 years of public accounting experience. Prior to Ulta, Jodi held tax roles at Liz Claiborne, CNH Global, and ADM. Jodi holds a Master s in Finance from Millikin University and is a Certified Public Accountant since

4 Introductions Panelists Lorraine Cohen Anupam Singhal Tax Partner Deloitte Tax LLP San Francisco Lorraine is a Partner in the Global Employment Services practice for Deloitte Tax LLP and has over 25 years of experience serving global companies including expatriate tax program management consulting and compliance, tax planning, and human resource policy consulting. Lorraine is the National Leader for Deloitte s Business Traveler service offering. She is one of the leads on the development of our Business Traveler technology and has developed the approach and methodology for this service for Deloitte Tax globally. Co-founder/CEO Monaeo, Inc. New York Anupam Singhal is the CEO and Co-Founder of Monaeo, a technology company that uses data analytics to help businesses identify and manage tax exposures created by business travel. Monaeo provides tax departments with real-time insights into company travel patterns, as well as alerts and data feeds into existing systems. Previously, Anupam was a Principal at Silver Lake, a leading private equity firm. He also has several years of experience at General Atlantic and Morgan Stanley. 4

5 Why is this a concern now?

6 Managing business travelers Why now? Very aggressive regarding wage withholding and tax remittances if no business traveler exemption Barriers to complete and accurate compliance 01/ Different reporting laws and tax treaties Using intercompany corporate tax withholding refund claims to gather information and assess penalties for failure to withhold and report China is seeking advanced approval and documentation to allow treaty claims for business travelers Competing priorities between business and compliance demands, further complicates managing the issue effectively 02/ 03/ 04/ Employer 05/ Administrative Corporate obligations still exist even where tax treaties may apply Concerns about employee experience obligations may include reporting of income, withholding and tax remittance challenges in achieving full compliance 6

7 Recent regulatory activity Canada: Provision of relief from payroll withholding obligations for qualifying business travelers without obtaining a waiver has been proposed U.S.: The proposed Mobile Workforce State Income Tax Simplification Act of 2015 (H.R. 2315) creates a 30-day threshold before a state can levy income tax on the employment income of a non-resident. Chance of enactment per govtrack.us 45% Illinois: HB 675 introduced which will, if passed, permit Illinois to tax non-residents on Illinois-sourced employment income and allow Illinois residents to claim a credit for taxes paid to other states on employment income UK: UK employers can elect to remit income tax withholding on behalf of business travelers at year-end, as opposed to throughout the year China: Clarity provided regarding documents required to be obtained by business travelers Singapore: Updates to the timing of filing of tax clearance returns for business travelers Proposed legislation Regulatory changes Click on the hyperlinks to read more 7

8 Use of technology and data sharing by regulators Global Forum on Transparence and Exchange of Information for Tax Purposes Soon we ll see the automated exchange of: Immigration reports Hotel stays Airline reservations 8

9 Managing business travelers - domestic California Very aggressive regarding nonresident wage withholding and tax remittances Illinois No De Minimus threshold No De Minimus threshold Has quite favorable non-resident guidelines for non residents, but does not allow a state tax credit for residents, however there is a proposed law change that would tax nonresidents and allow a credit for residents. Connecticut De Minimus threshold: 14 days December 2, 2009 CT issued Announcement 2009(9) requiring employer wage reporting and tax withholding for non-residents working 14 or more days in CT throughout the year New York De Minimus threshold: 14 days Uses an informal calendar year de minimus threshold for state tax withholding for a non-resident working in New York as reported in its state Field Audit Guidelines issued July 1, 2004 and TSB-M-12(5)I issued on July 5, / 02/ 03/ Many states have not established a de minimus reporting threshold Many states define the employer withholding obligations as an approximation of what the employee is anticipated to owe in taxes. Standard deductions and/or personal exemptions may provide a de minimus limit for determining when a tax filing obligation arises. 9

10 Business and tax issues raised by employee travel

11 High-risk groups by industry INDUSTRY VERTICAL All Industries Technology Retail Manufacturing Financial Services Energy Professional Services EMPLOYEE GROUPS Senior Executives, Sales, Marketing Implementation Engineers, Tech Consultants, On-site Support Teams Merchandising, Distributors, Regional and District Managers, HR, Expansion Teams Sales, Regional and District Managers, Installation/Maintenance Engineers, Procurement PMs, Analysts, Bankers, BD/Fundraising, HR Engineers, Technicians Consultants, Lawyers, Architects, Engineers, Designers, Project Managers

12 Case study getting in the know The Company Global investment manager HQ in New York 3,000+ employees The Problem Tax team suspected multi-location exposures, but had no way of knowing or managing. The Solution Analyzed historical data from travel and expense systems using a software system (241,000 data points) and discovered a $1.8 million exposure. Successfully initiated an internal risk & controls review and upgrade process. CA 200 visiting employees $950,000 w/h exposure UK 300 employees NY 150 visiting employees $825,000 w/h exposure Canada 190 employees 12

13 How do you address this? Potential pitfalls and leading practices

14 How to tackle this issue? A holistic framework that defines roles, identifies travelers and initiates subsequent compliance activities 1 Build the Case: Quantify potential exposure and garner internal support to address 4 Review and Refine: Monitor results and revise guidelines and processes 3 Embed Processes: Establish the systems and controls and facilitating effective communications 2 Set the Foundation: Develop guidelines and thresholds for acceptable risk and identify available data sources 14

15 How can data and technology help? Data Sources Employee self-reporting HRIS system Timesheets Project management system Travel & expense records Third-party applications Challenges Data in incompatible formats Data owned by different departments Inconsistencies in travel & expense or payroll systems across geographies or entities Manual methods can be time-consuming and inaccurate Leveraging Technology Technology solutions can aggregate data from different sources Reduce interdepartmental friction and bottlenecks Limit potential data entry or calculation errors Save man-hours for tax and other departments Flexible and adaptable to changes in business plan 15

16 Questions?

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