Mobility Compliance: 8 Tips to Simplify Your Data

Mobility compliance for equity compensation is notoriously complex; there are several steps involved including gathering data, performing the tax allocations, payroll reporting and tax remittance. While we cannot individually change tax laws, we can streamline the broader compliance process; for example, by managing mobility data more effectively and engaging proactively with payroll. This blog focuses on the former: managing mobility data more effectively.

The following tips can significantly improve mobility compliance—reducing your workload and potentially lowering vendor costs. We’ve grouped them into three categories: Employees, Locations and Other. Whether you track mobility on a spreadsheet or through a third‑party vendor, these may help simplify your process.

Employees

Mobility compliance requires continuous updates to work‑location and movement data. As employees relocate, they are added to the list, but once they have remained in a location long enough, they may be eligible for removal. This is especially important if calculations are done manually or if you regularly send employee lists to your vendor. Employees may be removed from the active mobility list if they meet one or more of the following criteria:

1. No outstanding awards from a prior location.

If all an employee’s outstanding awards were granted in the current location and the employee has not worked elsewhere since the earliest grant date (of the outstanding awards), no further allocations are required until another move occurs. Be sure to review both stock options and RSUs. Employees who moved three to four years ago may have no remaining RSUs from their prior location but may have outstanding stock options with a trailing tax liability.

2. Moves so long ago that prior‑location income would fall under a de minimis threshold.

Use caution: thresholds based on income depend on the stock price at the taxable event; a sudden increase in stock price may result in an award previously deemed de minimis to have significant value.

3. Moves from a non‑taxable to a taxable location.

Most jurisdictions apply worldwide taxes to current residents. Someone moving to a taxing jurisdiction from a non-taxing jurisdiction, for example, an employee moving from Florida to New York, will generally be taxed only in the new location and may not require mobility tracking.

4. Employees who are not truly mobile.

Some companies flag any movement as mobility, but not all moves generate a trailing tax liability. For example, a move from San Francisco, California, to San Jose, California, does not trigger mobility taxation When such non‑taxable moves are included in mobility data, they create unnecessary noise that personnel or vendors must sift through and dismiss, slowing down the entire compliance process.

Locations

Although location data is often imported from the HRIS system, standardizing location identifiers across the company can greatly improve accuracy and efficiency.

5. Classify locations consistently.

Use uniform identifiers (e.g., IL for Illinois, TX for Texas). Inconsistent entries—such as “Chicago to Texas,” “Wacker Drive to Austin,” or “Illinois to Braker Center”—make sorting and filtering unnecessarily difficult adding time spent on cleaning data and additional fees from third-party consultants.

6. Use three‑letter country codes and two‑letter state/province codes.

This prevents confusion such as whether “AR” refers to Arkansas or Argentina. Since states and provinces typically use two‑letter codes, three‑letter codes (e.g., ARG for Argentina) are best for countries. One memorable example: a client once reported an employee moving from “CA to NE.” CA could be California or Canada; NE could be Nebraska or Niger. The employee was actually moving from California to the Netherlands (NL or NLD) — highlighting the importance of accurate, and consistent coding.

Other Considerations

7. Stay current with legislative changes.

Conduct at least an annual review of your company’s allocation positions. Special attention should be paid to U.S. domestic mobility as many U.S. states have recently tightened reporting requirements for mobile and remote employees. Recent state tax guidance includes clearer guidance on income reporting and the application of state credits at the withholding level.

8. Periodically evaluate your mobility processes.

About a year after implementing mobility compliance procedures, evaluate what is working well and what is not. Gather feedback from payroll, HR, and tax stakeholders. Areas to review include:

• Data inflows, especially how mobility data is received
• Data outflows, including income allocation and withholding information for payroll reporting and remittance.

Mobility compliance is an evolving process and cannot be treated as a one-and-done implementation.

The long‑term goal is to reach a point where mobility can be managed proactively. Ideally, HR and mobility partners would notify the equity team of upcoming moves in advance, and employees would be informed early about the tax implications of potential relocations.