The FINANCIAL -- The most serious compliance issue noted by almost two-thirds (61%) of respondents in a recent Mercer survey involved tax return revisions caused by improper reporting of worldwide income by expatriates.

Moreover, one-quarter (25%) of survey respondents cited fines and penalties imposed on expatriates due to inaccurate reporting of income as another trouble spot. A comparable percentage also mentioned the challenge posed by tax audits as a result of under-reporting of income by expatriates. While these issues are troublesome, other concerns that employers had to address included penalties due to late tax payments and uncertainty over correct withholding amounts.

These findings are from Mercer’s Global Mobility Compliance Issues Survey, conducted in August, 2010. It analyzes critical areas of compliance related to the management of global mobility programs and includes responses from 240 companies throughout the US and Canada. As a leader in employee mobility information, Mercer’s areas of expertise include administrative applications, international talent management consulting, and extensive compensation and workforce data.

“The growth in recent years of extended international business travel has only exacerbated the difficulties faced by employers in tracking income,” said Geoffrey W. Latta, Partner with Mercer, “as well as meeting both home- and host-country tax and immigration laws.”

Mercer’s survey found the majority of respondents to be without procedures or systems in place to specifically handle international business travelers who often fly under the radar. In fact, almost half (45%) do not track the movement of business travelers at all, and 59% do not have a policy or procedural requirements to ensure that such employees track their own travel.

But the outlook is not necessarily grim. “Some employers do try to enforce a level of monitoring in order to minimize their own risk of not being compliant with government requirements,” explained Mr. Latta.

For example, for more than two-thirds (67%) of companies that have an existing policy or procedure, efforts to ensure compliance is evident in the business travel policy, which not only states the employees’ responsibilities for reporting travel, but also highlights potential immigration and tax implications should they fail to do so. In fact, 38% of companies will not allow individuals to book travel unless they agree to follow the rules regarding travel reporting. Fourteen percent go a step further and withhold reimbursement of expenses or payment of per diems unless the employee submits a timely travel report.

“Noncompliance by expatriates with respect to accurate and timely income reporting puts an employer at risk,” said Mr. Latta. “In serious cases, the company faces potential fines, a tarnished image in the public arena and difficulties with the host-country government – unwelcome headaches for a company striving to balance the needs of management and expatriate families.”

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