Wait and see or take action now? We look at how companies are coming to grips with recent changes in tax legislation for US expats.

The real bite of the law is in the housing allowance provision.

Recent changes to the US tax law governing expatriates have decreased the exemptions allowed under the US tax code and will potentially increase costs dramatically for US-based assignees.  The primary change in the law reduces the amount of housing allowance an expatriate can exclude to USD 11,536 regardless of the actual housing costs incurred.  Accordingly, many companies are now struggling to find ways to respond to these new tax codes and keep the costs of US-based assignees under control.


What are companies doing now?

In coming to grips with recent changes in US tax legislation around expatriate allowances, the majority of companies are adopting a 'wait and see' approach.  Most International Mobility Managers recognize that the new tax law means the cost of US-based expatriates will increase.  However, these assignees are seen to be critical to the mission of the business as a whole, and they are perceived to be worth the increased cost to the business.

Within the US, both US-headquartered firms and non-US companies alike have stepped up lobbying efforts on Capitol Hill.  These efforts have focused on making Senators and Representatives aware of the negative impact of making US-parented expatriates - already among the highest cost employees in the world - even more difficult for local operating budgets to take on.  Lobbying efforts aimed a repealing the changes are being carried out by individual companies' lobbyists, as well as through interest groups such as the Employee Relocation Council, National Foreign Trade Council and others. 

Already, a number of different bills aimed a repealing or changing the laws have been introduced into committees in both the US House of Representatives and the US Senate.

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