Corporate Policy Design for Domestic Short Term Assignments - DSTA November 16, 2010

1. Corporate Policy Design for Domestic Short Term Assignments - DSTA November 16, 2010 Bill Nemer -CRP, GMS, Vice President, Client Services Graebel Relocation Services Worldwide Pat Papenbrok – Director of Relocation Services McDonald’s Corporation Karrie DeBlauw - CRP, GMS, Manager Accenture Domestic U.S. Relocation Services/RMS-US

2. Short Term Domestic Assignments Bill Nemer, CRP, GMS Vice President Client Services Graebel Relocation Services Worldwide

5. Short Term Assignments-Definition What is “Temporary” • The United States Tax Code has specific rules around the duration of a work related assignment • Publication 463, specifically addresses temporary assignments • Intended duration of the assignment at its outset is critical • Generally, a temporary assignment in a single location is one that is realistically expected to last for 1 year or less • Keeping a permanent tax residence in the old location is a must

6. Benefits of a Temporary Assignment • Expenses, such as transportation, lodging, and meals are considered not part of compensation and deductible • Company avoids the cost of tax protection for the employee • Employee avoids the additional income and tax burden • Travel back to the home location is also deductible

8. Rules Concerning “Intent” • If the duration of a temporary assignment is unknown at it’s outset the new location is considered the employees new tax home and all expenses paid to the employee are taxable • If the intent of the assignment is over 1 year (even if it lasts less than 1 year) the new location is considered the employees new tax home and all expenses paid to the employee are taxable • If a planned temporary assignment of 8 months extends to 13 months all the expenses retroactive to the date it was known the assignment was to extend past the year are taxable non-business expenses

9. Sequential Temporary Assignments • The tax code is silent on the break between assignments and the impact on taxability • The intent to avoid taxable compensation and the change of tax home is clearly a violation • An 11 ½ month temporary assignment followed by another 11 ½ month assignment in the same location would raise a red flag • In many companies a break of a month or more between assignments is practice • It is unknown what the “safe” duration is between assignments should be since no precedent has been set • Factors such as assignments of different durations to different locations might be more defendable than the same location for multiple times

10. Factors to Consider • The IRS in the past has looked at practice across the organizations and looks for patterns • Having a well defined start and end date of an assignment will be on fact to show “intent” (use an assignment letter) • Having a business case on why an employee has sequential temporary assignments is a best practice • A business practice that has a return trip home for 30 days after a lengthy assignment and right back to the same location will be hard to defend • State taxes will also come into play with sequential assignment, especially to the same location. Consult with your tax counsel.

11. McDonald’s Domestic Short Term Assignment Strategy Pat Papenbrok Director of Relocation Services McDonald’s Corporation

12. McDonald’s Domestic Short Term Assignment Strategy • McDonald’s provides program to Hiring Managers, HR and Management as a talent management tool to increase mobility & job experiences • Intent is to provide moving assistance for 12-24 month assignments with employee returning home

13. McDonald’s Domestic Short Term Assignment Strategy • Not intended to be a cost savings as may be cost neutral with Homeowner program. • Does avoid employee moving back-to-back or “eating” large loss on sale (key in today’s economy) • Relocation must approve all DSTA’s to ensure proper use and application

14. DSTA Policy Components • Assignment housing allowance/Budget guidelines (if retains home) • Furniture & Appliance Allowance/Budget guidelines • One Rental Housing Finding Trip • Property Management on current home – up to $150/month • Small shipment of personal belongings • Misc. Allowance of $3,000 (gross) • Rental car, if needed • Direct move

15. DSTA Policy Components • Family may / may not stay behind; policy based on employee only • Trips back home are determined and paid by new location • Company will not financially support the purchase nor sale of property during DSTA nor the sale of primary residence • If home is purchased while on DSTA, all allowances stop • Some items taxable

16. DSTA – Return from Assignment • Upon return of your DSTA: • Lease breakage of rental, if needed • Return shipment of personal belongings • Direct Move

17. DSTA Reality Check • DSTA’s can be complicated, i.e. employee decides mid-assignment to sell or buy house • Family decides can’t live apart • Temp assignment turns into permanent • Locations think this is a more cost effective way vs. homeowner program • Locations use this as a way around providing buyouts or paying loss on sale

18. Accenture Domestic Short Term Assignment Strategy Karrie DeBlauw, CRP, GMS Manager Accenture Domestic U.S. Relocation Services/RMS-US

19. Purpose of DSTA Program The intent of our U.S. Domestic Temp Relo program is to allow an alternative to our Domestic travel policy (as it becomes compensatory at the 1 year mark of the assignment).

20. Key Elements of DSTA Program: • Enrolling in the program is the EE’s choice – it is employee driven • Once enrolled, the EE receives a monthly stipend (taxable/not grossed up) based on level, accompaniment status, and destination location • EE’s also receive a small shipment of household goods, both to the new location, and back to the old location once the assignment is finished

21. Key Elements of DSTA Program: • Senior Executive Temp Relo’s also receive a $5000 resettlement allowance • While on Assignment, the employee (and accompanying family) is allowed 1 annual personal fly back • EE’s headcount remains in the old location while on Temp Relo Assignment • We require a one year commitment of assignment to enroll

22. Questions 22

23. Thank you!