CRP Relocation Cost Management and Budgeting 1 — Questions and Answers
Question 1: Which method of cost tracking assigns all relocation expenses to a single corporate cost center rather than the hiring business unit?
- Centralized billing (Correct answer)
- Distributed charge-back
- Direct billing
- Lump sum allocation
Correct answer: Centralized billing
Centralized billing consolidates all relocation costs to one corporate cost center, simplifying administration and allowing for volume negotiating leverage.
Question 2: What is the primary purpose of a relocation cost estimate (RCE) prepared before an employee transfer is authorized?
- To reimburse the employee upfront
- To allow management to make an informed approval decision based on projected costs (Correct answer)
- To calculate the employee's tax gross-up
- To determine the vendor's service fee
Correct answer: To allow management to make an informed approval decision based on projected costs
The RCE gives management a projected total cost so they can weigh the expense against business need before authorizing the move.
Question 3: A company uses a 'capped lump sum' for relocation. What does this mean?
- The employee receives a fixed payment with no maximum limit
- The employee receives a flexible payment up to a defined maximum amount (Correct answer)
- The company reimburses only actual receipted expenses
- The company pays vendors directly with no employee involvement
Correct answer: The employee receives a flexible payment up to a defined maximum amount
A capped lump sum provides the employee flexibility to spend up to a set maximum, after which the company bears no further liability.
Question 4: When benchmarking relocation program costs, which metric is most commonly used to compare spending across companies?
- Total program budget per fiscal year
- Average cost per relocating employee (Correct answer)
- Number of vendors under contract
- Percentage of employees who decline offers
Correct answer: Average cost per relocating employee
Average cost per relocating employee normalizes spending regardless of company size, making it the standard benchmarking metric across the industry.
Question 5: Which type of relocation assignment typically results in the HIGHEST total cost to the employer?
- Local hire with no benefits
- Domestic renter moving to a renter
- International long-term assignment (1-3 years) (Correct answer)
- Intern summer transfer
Correct answer: International long-term assignment (1-3 years)
International long-term assignments carry the highest cost due to housing allowances, COLA adjustments, tax equalization, schooling, and repatriation expenses.
Question 6: What is 'tax gross-up' in the context of relocation cost management?
- A fee paid to the IRS for filing relocation returns
- Additional compensation paid to cover the employee's income tax liability on taxable relocation benefits (Correct answer)
- A penalty for exceeding the relocation budget
- A surcharge added to vendor invoices
Correct answer: Additional compensation paid to cover the employee's income tax liability on taxable relocation benefits
Tax gross-up is an additional payment the employer makes so the employee's net take-home pay is not reduced by taxes owed on relocation reimbursements.
Question 7: Which relocation benefit is generally NOT taxable to the employee under current U.S. IRS rules (post-2017 Tax Cuts and Jobs Act)?
- Moving expense reimbursements for non-military employees
- Qualified moving expense deductions for civilian employees
- Employer-paid temporary housing allowances
- None — all relocation benefits became taxable after TCJA for non-military (Correct answer)
Correct answer: None — all relocation benefits became taxable after TCJA for non-military
The TCJA suspended the exclusion for qualified moving expenses for all civilian employees, making virtually all employer-paid relocation benefits taxable income.
CRP Relocation Cost Management and Budgeting 1
Which method of cost tracking assigns all relocation expenses to a single corporate cost center rather than the hiring business unit?