We´re getting a lot of questions about tax advances from our international assignees.  Is there an efficient way to communicate tax advance information to our assignees?

The key to having assignees understand tax advances is to advise assignees when a tax advance is made.  This should be done in a timely manner.  The communication vehicle should mirror the process used to send critical information to employees within your organization, be it email or snail mail. 

One method for communicating tax advances is to include the advance information with the regular paycheck.  Since most employees review their paycheck, they should notice the amounts advanced on their behalf.   You can also notify the employee of all the annual tax advances when you send him a copy of his annual compensation report.  The annual compensation report should list and summarize tax advances by type of tax.

Good communications are the benchmark of a well-run international program with satisfied assignees.  Avoid communicating tax advances only through the annual tax equalization.  Companies that report tax advances only through the annual tax equalization are guaranteeing employee confusion and additional questions.

Is it really necessary to give international assignees tax advances?

The short answer here is no, you do not have to provide tax advances.  However, using tax advances and meeting the required accounting steps to treat these payments as advances assists the company in keeping the costs of an international assignment as low as they can be.  With the costs of an international assignment frequently being approximately 3 times an employee´s annual salary, any steps that can control costs helps you remain competitive.

 Carol Rutlen, can be contacted at ExpatEdge.