CGMP Migration Risk Assessment & Management 4 — Questions and Answers
Question 1: A company is expanding operations to a country with which the US has no bilateral social security totalization agreement. What is the primary risk for US employees assigned there?
- The employee's US citizenship may be jeopardized
- The employee may be required to pay social security taxes in both the US and the host country simultaneously (Correct answer)
- The employee's H-1B status cannot be extended during the assignment
- The employee becomes ineligible for US Medicare upon return
Correct answer: The employee may be required to pay social security taxes in both the US and the host country simultaneously
Without a totalization agreement, employees and employers may owe social security contributions to both countries on the same earnings, creating a double-taxation burden.
Question 2: A foreign national employee has accumulated more than 330 qualifying days outside the US during a tax year. Which IRS provision is relevant to their tax risk profile?
- The Foreign Tax Credit under IRC §901
- The Physical Presence Test for the Foreign Earned Income Exclusion under IRC §911 (Correct answer)
- The Treaty Tiebreaker provision under OECD Model Art. 4
- The Substantial Presence Test under IRC §7701(b)
Correct answer: The Physical Presence Test for the Foreign Earned Income Exclusion under IRC §911
The Physical Presence Test under IRC §911 allows qualifying individuals to exclude a portion of foreign-earned income, but meeting the 330-day threshold is required.
Question 3: During a merger, an acquiring company discovers the target company employed hundreds of H-1B workers without maintaining public access files. Which due diligence risk does this represent?
- Criminal liability that transfers automatically to the acquirer
- Inherited DOL compliance liability and potential back-wage obligations that could accompany the acquisition (Correct answer)
- Immediate deportation orders for all H-1B employees
- USCIS discretionary denial of all future petitions by the acquirer
Correct answer: Inherited DOL compliance liability and potential back-wage obligations that could accompany the acquisition
In an asset or stock acquisition, the acquiring company may assume compliance liabilities including DOL violations tied to H-1B public access file deficiencies of the target.
Question 4: A global mobility manager is assessing risks for a long-term assignment to Germany. Which factor most significantly determines whether the employee creates a permanent establishment (PE) risk for the company?
- The employee's job title and seniority level
- Whether the employee has authority to conclude contracts on behalf of the company in Germany (Correct answer)
- The length of the assignment exceeding 183 days
- Whether the employee uses a home office in Germany
Correct answer: Whether the employee has authority to conclude contracts on behalf of the company in Germany
An employee who habitually exercises authority to conclude contracts on behalf of the company in the host country is a classic trigger for PE risk under most tax treaties.
Question 5: A CGMP professional is advising a company on shadow payroll for a long-term US assignee in France. What is the primary purpose of establishing a shadow payroll?
- To reduce the employee's overall tax burden below both countries' standard rates
- To ensure proper withholding and reporting of host-country social taxes while the employee remains on home-country payroll (Correct answer)
- To hide compensation from host-country tax authorities
- To convert the employee's home-country benefits to host-country equivalents
Correct answer: To ensure proper withholding and reporting of host-country social taxes while the employee remains on home-country payroll
Shadow payroll allows host-country tax and social security obligations to be calculated and remitted without moving the employee off their home-country payroll.
Question 6: Which scenario most clearly triggers a corporate immigration compliance obligation under the H-1B portability provisions of AC21?
- An H-1B employee changes job titles within the same employer
- An H-1B employee with a pending I-485 filed over 180 days ago accepts a new job in a same or similar occupational classification (Correct answer)
- An H-1B employee's employer is acquired and the role changes significantly
- An H-1B employee moves to a new worksite in a different state
Correct answer: An H-1B employee with a pending I-485 filed over 180 days ago accepts a new job in a same or similar occupational classification
AC21 portability allows an H-1B holder with an I-485 pending 180+ days to change to a same or similar job without restarting the green card process, provided specific conditions are met.
Question 7: An employer wants to transfer an employee from Canada to the US under the TN category. The employee holds a degree from a country other than Canada or the US. Which risk must be assessed?
- TN is unavailable to employees educated outside Canada
- Whether the foreign degree is evaluated as substantially equivalent to a US or Canadian degree for the qualifying TN profession (Correct answer)
- The employee must obtain Canadian citizenship before qualifying for TN
- TN holders with non-North American degrees require an additional labor market test
Correct answer: Whether the foreign degree is evaluated as substantially equivalent to a US or Canadian degree for the qualifying TN profession
For TN eligibility, a foreign degree must be assessed as equivalent to a qualifying North American degree for the applicable profession listed in the USMCA.
CGMP Migration Risk Assessment & Management 4
A company is expanding operations to a country with which the US has no bilateral social security totalization agreement.
What is the primary risk for US employees assigned there?