CRP Legal Compliance in Relocation 2 — Questions and Answers
Question 1: Under IRS Revenue Ruling 2005-74, what is required for an employer-assisted home sale to be treated as two separate sales, so home-sale costs are not taxable to the employee?
- The employer must pay the employee's closing costs directly to the title company
- The home must sell within 30 days of the employee's acceptance
- The employer must take on the benefits and burdens of ownership, and the employee must be fully released from the property (Correct answer)
- The employee must have owned the home for at least five years
Correct answer: The employer must take on the benefits and burdens of ownership, and the employee must be fully released from the property
Two-sale (non-taxable) treatment depends on the employer or RMC taking real ownership risk and releasing the employee from all liability on the property.
Question 2: Under the Tax Cuts and Jobs Act, which group could still exclude qualified moving expense reimbursements from income for 2018–2025?
- Members of the U.S. Armed Forces on active duty moving under a military order (Correct answer)
- Employees relocated by Fortune 500 companies
- Employees moving more than 50 miles
- Employees relocating internationally
Correct answer: Members of the U.S. Armed Forces on active duty moving under a military order
The TCJA suspended the moving expense exclusion and deduction for everyone except active-duty military moving under a permanent change of station order.
Question 3: An employer uses the optional flat-rate method to withhold federal income tax on a $40,000 relocation payment, and the employee's supplemental wages for the year are under $1 million. What rate applies?
- 37%
- 25%
- 28%
- 22% (Correct answer)
Correct answer: 22%
The optional flat rate for supplemental wages up to $1 million is 22%; amounts over $1 million require 37% mandatory withholding.
Question 4: Which feature is required for an expense allowance plan to be treated as an IRS accountable plan?
- Payments are made as a lump sum
- Expenses have a business connection, are substantiated, and any excess is returned (Correct answer)
- The employee may keep any amount not spent
- Payments are capped at the federal per diem rate
Correct answer: Expenses have a business connection, are substantiated, and any excess is returned
An accountable plan needs all three: a business connection, adequate substantiation, and return of any excess within a reasonable period.
Question 5: An H-1B worker is relocated to a worksite outside the metropolitan statistical area (MSA) covered by the original Labor Condition Application. What is generally required?
- Nothing, as long as the job duties stay the same
- Only a notice to the Department of Labor within 90 days
- A new LCA and an amended H-1B petition before the move (Correct answer)
- A new I-9 form completed on the first day at the new site
Correct answer: A new LCA and an amended H-1B petition before the move
Under Matter of Simeio Solutions, a move outside the LCA's MSA is a material change that requires a new LCA and an amended petition.
Question 6: An interstate household goods mover gives a binding estimate. What is the shipper generally required to pay at delivery?
- The estimate amount, plus charges for any extra services the shipper requested (Correct answer)
- The estimated amount plus up to 25% more
- The actual weight multiplied by the tariff rate
- Whatever the carrier finds on reweigh
Correct answer: The estimate amount, plus charges for any extra services the shipper requested
A binding estimate fixes the price for the services listed in it; only extra services that are added or requested can increase the charges.
Question 7: Which law sets the liability of interstate motor carriers for loss of or damage to household goods?
- Fair Housing Act
- Federal Arbitration Act
- Real Estate Settlement Procedures Act
- Carmack Amendment (Correct answer)
Correct answer: Carmack Amendment
The Carmack Amendment to the Interstate Commerce Act governs carrier liability for goods damaged in interstate shipment.
