GTN Mobility Tax Blog

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When employees relocate across borders, whether internationally or within the US, they can face major tax complexities. A move from a low-tax location to a high-tax location, for example, can significantly increase their tax liability. Beyond this, they may face challenges related to the sale or rental of a home, moving expenses for state reporting purposes, residency issues, and a range of other tax considerations they may not be prepared to handle on their own.

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Managing mobile employees across borders can get complex fast. From tax residency and short-term business visitor rules to payroll, social security, and treaty relief, there’s a lot to coordinate to stay compliant and reduce risk. That’s why the Mobile Workforce Collaborate (MWC) hosted a corporate-only roundtable designed to help HR and mobility teams tackle these challenges in Canada, Mexico, and the UK, with clear, practical takeaways.

Managing mobile employees comes with more than just logistical and HR challenges. It also requires careful coordination between your global mobility and corporate tax functions. Mobile employee activity can trigger corporate tax exposures such as permanent establishment risks or tax reporting obligations. At the same time, your company’s corporate tax position can directly impact the individual tax outcomes for your mobile employees.

Important note on streamlined filing compliance procedures -- This article specifically discusses the streamlined foreign procedures, not the domestic procedures. To qualify for the foreign procedures, a taxpayer must meet the IRS’s non-residency requirement. For a US citizen, this means that in one of the past three years for which the original or properly extended US tax return due date has passed, they did not have a US residence and were physically present outside the US for at least 330 full days.

US citizens and permanent residents (green card holders) working outside the United States generally are still required to file annual US tax returns, and the IRS is constantly updating its technology to better locate non-filing taxpayers and bring them into compliance. However, in addition to increasing its enforcement capabilities, the IRS has also taken steps to encourage non-filers to come into compliance by waiving penalties for those taxpayers eligible to take advantage of the streamlined filing compliance procedures (streamlined procedures).

Navigating the complex landscape of US tax regulations can be daunting, especially for individuals who may have inadvertently found themselves delinquent in their tax filings. Many Americans living abroad, including "accidental Americans"—those who hold US citizenship by birth but have never lived or worked in the US—are often unaware of their obligation to file US tax returns. And this lack of awareness can lead to unfiled returns and substantial penalties.