Sure, payroll taxes are not in scope of a travel manager’s job. But there is a great way for travel managers and TMCs to add real value here by being proactive with traveler data.
Curious?
The Problem
Many countries and other taxing jurisdictions are aggressively seeking more payroll taxes from business travelers. This means their pay could be docked for spending just one day in a foreign country on business.
This article reports that “more than 100 countries have joined The Global Forum on Transparency and Exchange of Information for Tax Purposes, which is working toward automated exchange of immigration reports, hotel stays and airline reservations. Better-informed enforcement bodies will have an easier time catching non-compliant firms and individuals.” (emphasis added)
The problem is not limited to international travel. In the US, many states have some form of traveler tax, according to this 2013 Pew report.
The Solution
File this under “Being a proactive problem solver”. These traveler tax issues place the burden of proof on the employer. So travel managers should reach out to their payroll tax liability folks to discuss the types of travel data needed to manage these risks.
There is the historical travel angle, and the future travel angle. The key is to analyze each traveler’s location and duration history, and calculate how many days the traveler has until triggering some type of tax liability.
Complex? OMG, yes. Fortunately, there are at least two firms working specifically in this area. Blackspark uses TMC booking data and is integrated with Concur, while Monaeo uses the traveler’s mobile phone data.
The point is that there are automated ways to feed traveler data into the equation. This can keep travelers from triggering significant tax liabilities – and from refusing to travel for fear of losing more of their hard-earned pay.
TMCs, you should raise this issue with your clients. If you get enough traction, why not incorporate pre-trip alerts to help manage these future tax liabilities?
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Gillespie's Guide to Travel Innovation 
Scott, great post and thanks so much for the mention.
Increased collection and sharing of travel data amongst regulatory bodies is an enterprise concern that is moving up the ladder. Beyond risk of compliance review – organizations are concerned that, depending upon the specific taxing authority that they are in front of, their exposure can span multiple tax years.
It’s certainly not a popular topic – I mean the last thing you want to think about while on business travel is tax :) But, as you note – TMC’s and travel and expense platform vendors can offer a lot of value in terms of not only technology – but also the requisite business traveler and HR level support to minimize or even avoid these issues.
Thanks for the mention and for drawing attention to this issue, Scott!
It’s worth noting that tax problems also arise domestically for U.S. companies and individuals that travel between states (Tax Analysts did a great summary of the issue here: http://www.forbes.com/sites/taxanalysts/2014/12/01/nonresident-income-taxes-not-just-for-professional-athletes/).
I also wanted to note that Monaeo recently signed a partnership with Concur, so we now offer the option to integrate travel and expense reports, as well as use data from our mobile, tablet or laptop apps.
Vic, Madeline
Could either or both of you point to a case study or other good description of how a travel manager has contributed in some way to helping solve this issue for his/her company?
I bet many travel managers are thinking “Good God, this looks like the last kind of problem I’d ever want to get pulled into!”
My guess is that it’s easier than it appears. Is it basically a data reporting task, or does the travel manager need to take on additional responsibilities once this problem is raised with senior management?
Any insights you can offer will be appreciated!
Correct, Scott – it is much easier than it appears, especially if you already have a travel system like Concur in place. We plug into Concur via the App Center (we walk the customer through it on the phone in 20 minutes) and that’s it – the borderFile tool takes care of the reporting which can be shared directly with payroll stakeholders and/or existing tax service providers that the customer already uses, if any.
Here is a testimonial to that effect from a recent Blackspark customer:
Scott, I am updating my reply, as we now have a customer Case Studies page on our site that describes the engagement process: http://www.blacksparkcorp.com/case-studies/
In many cases, the travel manager at the customer organization is the initial contact for us. Frequently, they are already being asked to generate periodic travel reports for another functional area such as payroll, tax or immigration. Although they are doing their best, the data they are able to get from the TMC or their travel and expense tool is usually not sufficient and/or requires a lot of extra manual scrubbing to get an accurate picture for compliance. Once they introduce us to the internal stakeholders, they are generally able to unburden themselves from these data collation tasks, as we may provide our services directly to payroll, for example.