Navigating the Impacts— COVID-19 Update
As the COVID-19 pandemic continues, CapRelo is regularly curating information from our suppliers, clients and partners to share insights on the impact of the pandemic on transferring employees. Questions on specific cases should continue to be directed to your Client Services contact or to email@example.com.
Internationally— currently we are seeing international mobility delayed, cancelled or temporarily suspended. There was a flurry of repatriations in March, before many countries put lockdowns in place. This resulted in an unusually high volume of rushed household goods moves and lease cancellations; however, that activity is slowing down.
We observed some signs of improvement in parts of the APAC region, which was encouraging. However, China has now closed its borders and other APAC countries have declared a lockdown status.
- Asia has seen additional and strengthened measures go into effect in the past few days, including the first Stay-at-Home notice issued in Singapore. Some self-isolation measures have escalated to mandatory quarantine in government facilities and crossing borders has become even more challenging.
- For companies with mobile employees, it will be important to identify how international government stimulus payments and incentives are handled as part of assignment and tax policies. The approach should be properly documented and communicated.
- Conditions continue to change daily; therefore, we strongly advise monitoring immigration updates. One of our valued partners, Newland Chase, provides updated advisories: https://blog.newlandchase.com/ (updated daily at 7am EST and 1.30pm EST).
In the US, conditions continue to vary from state to state. Additional guidance, as it relates to COVID-19 expenses as well as Recovery Rebates under the CARES Act, has been included in this weekly update:
- According to Worldwide ERC, when the President declared a National Emergency on 13 March 2020, he triggered the provisions of Internal Revenue Code, § 139 - Disaster Relief Payments.
- Employers can use the provisions to provide nontaxable relief for employees who incur COVID-19 related additional expenses, including those stemming from relocations that are interrupted or cancelled. In such cases, employers will avoid tax gross-up costs.
- The provisions do not have any requirements for substantiation, or any limits on the amount of frequency of payments. However, since payments must be for reasonable and necessary COVID-19 related expenses, companies are advised to establish some form of substantiation and company-wide guidelines for the operation of such a program.
Coronavirus Aid, Relief, and Economic Security (CARES) Act—Recovery Rebates
- In calculating the Recovery Rebate amount for individual taxpayers, Treasury will use tax year 2019 returns if available. If a taxpayer has not filed for tax year 2019, Treasury can fall back on 2018 return information.
- If a taxpayer’s high income in 2019 puts them above the threshold, they may be in or above the phaseout range and remain eligible for a partial refund or no refund. If their income is lower in 2020 when they file taxes, any remaining credit that they are eligible to receive will also be refunded or deducted from their tax liability when they file taxes for 2020.
- If the 2020 tax return reveals that the filer received a rebate for too much money (based previous year’s return), the IRS will not penalize them and will not collect the funds back. It is important to note that these stimulus checks are actually advances against credits to be included in the 2020 tax filing, so we do not recommend our clients augmenting them due to any relocation benefits paid in previous years.
- As with the international stimulus and incentive payments, companies with U.S. citizen or resident mobile employees are advised to review their assignment and tax policies to ensure an approach on how to handle these payments is properly documented AND communicated.
As of Friday, 10 April 2020, 42 states have announced statewide stay-at-home orders, with a variety of restrictions state by state.
- States are continuing to require travelers from coronavirus hotspots, and in some cases from any other state, to self-quarantine for a period of 14 days from the time of entry or the duration of the person’s presence, whichever is shorter.
- U.S. Social Security Administration (SSA) local offices continue to remain closed to the public for in-person service and no applications are being taken for new Social Security Numbers at this time.
- Destination services, rental assistance and intercultural training continue to be delivered exclusively on a virtual basis.
- Household goods moves transportation remains an essential service in all areas despite restrictions, and household goods moves are continuing. Enhanced health and safety protocols remain in effect.
Individual states continue to define whether essential services include these business lines: real estate, mortgage, title, appraisals and real estate inspections. This determines the ability to progress a home sale or home purchase transaction through closing.
- Our real estate supplier partners have reported several statewide orders being revised to include real estate activities as ‘essential business.’
- It should be noted, local counties in some states have denied appeals to consider real estate as ‘essential’ thereby locally limiting real estate activities in states that have considered it an ‘essential business.’
- Most lenders are continuing to evaluate their loan products and are offering fewer options to consumers. Cash-out refinance, home equity in excess of $250,000 and riskier non-conforming purchase loans are the top candidates to be put on hold. Underwriting some of those loans has become harder, with home interior inspections being suspended by some lenders while others are authorizing drive-by appraisals or asking customers to take pictures of properties with their phones.
- Those currently in the loan application process are strongly encouraged to contact their lender and evaluate options.
CapRelo continues to actively monitor all cases to determine how moves will be impacted. Our strong remote workforce and technology solutions remain fully operational; therefore, we anticipate no significant disruption to service fulfillment for our clients and their transferees.
The safety and care of our employees, clients and customers is our highest priority. As circumstances evolve, we will continue to share our observations as it pertains to the relocation landscape.
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