Tax And Compliance Implications In The Rise Of A Mass Rush Of Remote Work Requests

Tips to navigate the remote work management challenges

It’s no secret that remote work is exploding. What’s not talked about as often are the massive workloads and tax risks this shift to remote work is piling onto HR professionals. HR teams are receiving an influx of remote work requests, and most companies are positioned to let critical tax and compliance issues slip through the cracks. 
 

As a result, HR professionals may be left scrambling to approve requests and manage a large remote workforce with little help and few ways to track employees. However, HR professionals don’t need to push the panic button just yet. There are ways to rise to the challenge now to avoid future reputational damage, compensation misalignment, corporate fines, and costly tax violations amid this shifting job landscape.

Growing Remote Work Is Piling Problems onto HR Professionals

Across sectors, the very nature of work is changing. Remote work was already rising prior to the pandemic, and Covid-19 drastically accelerated that trend. According to Statista, 17 percent of US employees worked remotely five days per week before the pandemic. The same report found that the number jumped to 44 percent during the pandemic. 

What’s more, it doesn’t appear that this increase in remote work will recede in the future. A Gartner survey found that 82 percent of 127 surveyed corporate leaders will let employees continue to work remotely at least part-time after Covid-19 dissipates. Additionally, employees are expected to ask for more flexible work in the future. A State of Remote Work report by Buffer found that 99 percent of remote workers want to keep working remotely at least part time for the entirety of their careers. 

Unfortunately, the task of managing those remote work requests and keeping remote workers safe and compliant is falling squarely on the shoulders of HR professionals. These trends are causing HR teams to become overwhelmed and are exposing corporations, employers, and individuals to tax risks. 

What Are the Challenges Rising Out of This Move to Remote Work?

It is becoming increasingly difficult to keep track of employees, and technology is making it easier than ever for tax enforcement and government entities to monitor who is working within which borders. This makes the growing tax complications at the corporate, employer, and individual levels an even more pressing concern. 

As corporations begin to recognize the risks of remote work trends, several high-profile companies have already reigned back their remote work policies. For instance, Google recently announced that it won’t allow permanent remote work in the future, despite plans to allow part-time remote options. 

While corporations brace for change, HR professionals will face a bumpy road ahead. Here are a few challenges HR professionals can expect to encounter as remote work expands:

1. HR professionals could see their roles and responsibilities shift
In the immediate term, the growth in remote work requests is adding stress to HR professionals’ jobs. It’s also forcing HR professionals to take on responsibilities outside their realm of expertise. As HR teams work to help employees stay tax compliant abroad and across state lines, they may be expected to understand everything from immigration and tax reporting obligations to legal tax and international compliance. 

2. The remote work approval process is becoming unmanageable
At the current moment, HR professionals are experiencing the first wave of remote work approval requests. This influx of requests is uncovering questions that are difficult to answer, including these common concerns: 
 

• When should requests be approved?
• How can HR professionals cope with this high request volume in such an unpredictable environment? 
• What’s the best way to approach the tax, legal, and immigration implications surrounding the mobile workforce?
• How should professionals approach compensation for global employees?

3. Compliance is posed to reach a new level of complexity
Processes around traditional business travelers were once relatively straightforward. However, with employees now racing into undefined roles across borders, many HR professionals are finding that they don’t have the policies in place to define what business travel is, let alone track employees, stay on top of immigration requirements, and understand the tax-specific obligations for each host country or state. In turn, employees, employers, and corporations are in danger of violating tax laws, and HR professionals risk under-compensating employees or discouraging travel to areas that carry a heavier tax burden. 

How Can HR Professionals Plan for Better Compliance?

If HR professionals want to stay ahead of this shifting work landscape, keep all parties compliant, and reduce their own work burden, they need to adopt a proactive approach. There are key steps HR teams should take immediately to help navigate the remote work management challenges mounting on the horizon:

1. Determine where your employees are
An employee’s tax reporting responsibilities can vary dramatically based on where they are working, how long they plan to work there, and the specific withholdings or social security regulations in that region. That’s why it’s crucial for HR professionals to start by understanding where the company’s employees are, where they plan to go, and how long they intend to stay. This is an area in which technology can be a tremendous advantage because—especially at larger organizations—manually tracking employees can quickly become cumbersome. 

2. Build a global remote workforce policy
A solid policy will be a lifesaver when it comes time to making decisions about remote work. To map out clear remote work policies, start by defining what remote work is and what it means to be a permanent global employee. Try to answer these key questions as you form a policy: 
 

• What does it mean to be a business traveler at your company?
• What is the number of days required to qualify as a business traveler?
• What are your remote workers entitled to?
• Are there countries, regions, or remote work situations that are off limits?
• Do you need to adjust compensation to better fit working circumstances in certain areas?

3. Communicate a clear vision
Once HR professionals set clear policies, the next step is launching those initiatives. Be sure to communicate policies and expectations to both employees as well as their management teams. It’s also advantageous to build out a thorough FAQ document to address employee questions. The more in-depth your FAQ document is, the more room you’ll have for flexibility in the actual policy documents. 

A Final Checklist for HR Professionals

With these broad measures in mind, HR professionals should be on track to meet the challenges of managing a global workforce head-on. Still, there is a final set of tips that can help HR professionals succeed:
 

• Craft centralized processes: Implementing a centralized tracking process for monitoring approvals and cases is essential if you want to keep business running smoothly. Without centralized processes, it’s easy for employees and departments to operate in an incohesive manner, exposing the entire company to greater compliance risk.
• Examine your resources: Proper tax risk management requires hard work and expertise in specialized areas. That is why it is important to examine the resources that are available within the company, build out the required internal team, and assess what external advice is necessary.
• Build policy and communicate: There is no such thing as over-communicating when it comes to compliance and tax policy. HR professionals are best off when they create a policy that encourages remote working on corporate terms, lay out a plan to manage the company’s risk, and clearly communicate these measures to the workforce.
• Clearly define roles: Process management can be overwhelming if roles are not clearly defined. Undefined roles pose an immediate source of confusion for HR professionals , who could find themselves buried under a pile of responsibilities in areas outside their realm of expertise. The best way to combat these unrealistic expectations is to map out who should do what and when.

Work is changing quickly, and HR professionals will end up facing the brunt of this shift. However, by recognizing the challenges now and chiseling out a plan, HR professionals can rise above the chaos and tax dangers that are on the way. 

David Livitt is the National Practice Leader of Business Traveler Services at Global Tax Network. He has over 20 years of experience in mobility tax working with multinational companies of all sizes, assisting them and their employees to navigate the complexities that come with global mobility programs. With a view to managing corporate and employee individual tax compliance, there has been a growing trend to assist companies with their short-term business traveler populations to develop global governance structures, policy design, process management, and technology enabled solutions. David has successfully led and implemented a number of such global business traveler projects. Connect David Livitt  Follow @GTN_US