Recent Changes in Australian and U.S. Tax Laws May Offer Some Opportunities for International Assignment Tax Planners

Recent legislation amending tax laws in the United States and Australia has obliged international assignees, and especially their employers, to consider their tax situations and the related costs. IES professionals Daniel Hodgson and Andy Hutt, based in Sydney, suggest the amendments have introduced some potential complications—but there are also some potential opportunities!
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U.S.-Canada Treaty May Provide Relief from U.S. Expatriation Tax for Former Long-Term Greencard Holders

Did you know that the United States-Canada income tax treaty may provide relief to former long-term greencard holders who would otherwise be subject to the U.S. expatriation tax? As IES professionals Benita Loughlin and Ben Francis inform, after August 21, 2006, the U.S. expatriation tax rules should no longer automatically override any conflicting treaty provision. This article offers a discussion of section 877 of the U.S. Internal Revenue Code and how it now relates to the U.S.-Canada income tax treaty. The authors caution employers with employees who may be giving up their greencards upon their return to Canada to be aware of the potential impact of a treaty override.
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Nothing's Ever Simple: Tax Exemption for Foreign Students and Trainees Is Not Automatic

Experience has shown that many foreign students and trainees in the United States—and their payroll managers (if they have them)—take it on faith that their visas lend them tax-exempt status, and make no further investigation, nor file the required forms. Unfortunately, qualifying for a benefit is not the same as claiming it, and to claim this benefit, these individuals should file Form 8843 in a timely manner. As IES professional Bob Rothery notes, even this may not render all income tax-exempt—time limits, restrictions on the source of compensation, and the tendency of many states not to conform to this provision of federal tax law, combine to cause many foreign students and trainees to be subject to income tax in the United States.
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Technology Issues: More Companies Moving Toward One Technology Platform To Manage Both International Assignments and Domestic Relocations

Is your company looking for a central technology-driven system to manage all international assignment and domestic employee relocation data? IES professionals Leann Balbona and David Graff urge that before acquiring a "one-stop" system, international assignment and relocation managers consider some basic questions to determine if it is right for their companies. The authors outline those questions and discuss the related issues in this article.
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U.S. IRS Offers Employers Correction Program Concerning Misdated Stock Options

The U.S. Internal Revenue Service recently announced a program allowing employers to enter into a closing agreement and resolve certain issues arising from misdated (discounted) stock options. This article from Karen Field, a tax managing director with the Washington National Tax practice, discusses the IRS correction program (which only applies to misdated stock options exercised in 2006) and the correction methodologies permitted under Internal Revenue Code section 409A for misdated stock options not yet exercised. The article also provides background information and considers the effects of misdated stock options pursuant to the incentive stock option rules, section 162(m), and section 409A.
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Worldwide Digest

We are providing readers with a link to the IES practice's Flash International Executive Alert newsletters, which are archived right through the most recent issue on the IES Web site. Readers can scan the titles and select the news stories that are most relevant to their international assignment situations.
Go to IES practice's Flash International Executive Alert newsletters