Seven Steps for a Smoother, Less Stressful, Year-End Reporting Process
Posted by: Brenda Leal, Director, and Melanie Simmons, Manager, International Assignment Compensation Services
Running an international assignment compensation practice is a highly customized process for most companies. Yet there’s one aspect that’s common to everyone—the year-end process—and judging from the requests and questions we’ve received from clients over the years, it’s one of the most problematic. This is where every data collection failure shows up, as all of the data that has accumulated over the year needs to be verified, reconciled, saved, and included in a final year-end statement of total compensation.
This Global Statement of Compensation (GSOC) report should include base compensation, employee contributions, recurring allowances, and other items that may be provided in company base, home, or host currency. Anything that has been paid to, or on behalf of, an assignee needs to be collected and reported to maintain compliance. The GSOC should be reported in a timely manner to the tax provider to facilitate efficient tax filing on the part of the assignee and be without error, or risk the unpleasant prospect of costly reviews and redo’s by tax firms.
Though many relocation managers find the prospect of year-end reporting daunting, the process actually goes more smoothly if the relocation department runs it. Here are few basic steps that can make this a streamlined, more efficient task. We call this the 7-Step Plan.
Step 1: Develop a year-end checklist
A detailed checklist will itemize all of the information needed to provide accurate and timely year-end compensation reporting. The checklist should include due dates and departmental responsibilities. A comprehensive checklist will also identify early cutoff dates, indicate all employees who will receive the tax filing services (employees on the tax eligibility list), and provide the timing for verification and processing. It will also set firm deadlines for reporting and tax filings. Establishing the responsibility for reporting all of the relevant compensation data is an important component and can include wages, imputed income, benefits, equity, taxes, etc. There are a few things that you should consider.
Don’t forget, year-end isn’t just December 31st! When building your checklist, consider countries such as Australia, Hong Kong, India, South Africa, United Kingdom, etc., where due dates follow a fiscal year-end reporting schedule and tax filing falls next year between March and October. Also, be sure to involve your tax provider. Find out if data is required and when it is needed. Review the tax treatment of moving expenses reimbursed to your employees. Effective tax year 2018, the U.S. tax law changes will affect the reporting of qualified moving expenses if they were incurred in 2017, but paid in following years (i.e., household goods shipments, storage, and en-route travel expenses).
Step 2: Set up a year-end prep call
When setting due dates, remember that several countries will have mandatory vacation times around the end of December, and you must account for a lack of availability at that time. The checklist should be reviewed in this call to ensure that all involved parties are aware of their role and understand the due dates. The prep call also provides an opportunity to build understanding and relationships. Invite all necessary parties such as your tax provider, payroll team, global mobility team, and your relocation provider. Ideally, the call should take place in September or early October, giving enough time for consideration and preparation. If you have not already held a call, consider holding one now. After the call, communicate all agreed upon deadlines back to all parties involved.
Step 3: Verify your data
Accuracy is vital, especially when it comes to compensation reporting. Data such as addresses and tax ID number/Social Security numbers should be confirmed, as well as wages, benefits, sick and vacation time, tax policy, and any changes in tax policy that may impact your employees’ compensation. Double-checking data prevents backtracking and costly errors down the line.
Step 4: Finalize your data!
Make sure that the final payroll reports of the year have been included, plus any end of the year benefits. Then, back up the program data again and be sure to store it in a secure location for future reference.
Step 5: Tackle report completion
Check the deadlines for each country and be prepared to provide specific data for those countries. Some tax providers may ask for data for different assignee populations. Follow your year-end deadlines and, whenever possible, send the data ahead of time. Some locations may have very tight turnaround times to make that final tax payment of the year.
Step 6: Celebrate!
This step is fairly simple and well deserved.
However, don’t forget to follow it immediately with Step 7!
Step 7: Begin preparing for next year
You can get a good head start on next year’s process by setting the foundation now. Consider creating a log where you can add any areas you think you can improve on, and add to or enhance your checklist. Plan for a mid-year meeting in the second quarter of the following year, where all parties involved are invited to share how the year-end process went, and to discuss future considerations for the coming year. Throughout your review process, remember that education, communication, and escalation are your guiding principles. Starting the process off with all parties involved and fully aware of everyone’s roles, and strong communication throughout the process, will take you a long way toward ultimate success. Establish a plan for escalation in the event an issue arises. This will help you avoid wasting critical time in problem resolution. Then you can celebrate again for a job well done!
For more information on Cartus’ International Assignment Compensation Services, contact your Cartus sales representative or account executive, or email us at firstname.lastname@example.org.