Federal Regulatory Changes for Relocation/Moving Expenses
In support of the new regulatory requirements for relocation/moving expenses, Duke University and Health System will be implementing business process changes to ensure compliance with the recent legislation. Any coverage of relocation-related costs by Duke for new faculty and staff should be issued as a supplemental payment to the individual, rather than as direct payments to related vendors.
Prior to this regulatory change, payments were initiated by purchase order, corporate card transactions, employee expense reimbursements, and/or relocation allowances with employee’s pay. Examples include airfare, lodging, mileage, payments to moving companies, etc.
This legislative change was effective January 1, 2018. All payments should be transitioned to the use of supplemental payments issued directly to employees in conjunction with their regular salary payments. Individual departments will be contacted related to any transactions that were already submitted through Accounts Payable, Procurement Services, or Employee Travel & Reimbursement to coordinate the taxable income.
Updates regarding the process changes to support the new regulatory requirements are included below.
What should my department do differently to support this change?
- Discontinue use of corporate cards and purchase orders for payments related to relocation/moving expenses.
- All payments processed previously through Employee Travel & Reimbursement will transition to supplemental payments with employees’ regular salaries.
- This includes both qualified and nonqualified moving/relocation expenses.
- For exempt employees, process a Supplement iForm.
- Select Relocation Expenses under the Reason for Payment field.
- For nonexempt (biweekly) employees, use the Biweekly Award/Lump Sum Payment form.
- Choose the Relocation Allowance option for the Type of Payment field.
- Update offer letters and/or employment agreements to reflect taxable relocation payments. If your department prefers to simplify business processes and avoid collecting receipts, you can package the payments as relocation allowances. Sample verbiage for both options is included below.
- Example for collecting receipts:
Duke will reimburse your documented moving expenses to an amount up to (amount defined by department). The expense will be paid as a supplemental payment through payroll which, in accordance with new IRS regulations, will be taxable.
- Example for relocation allowance:
Duke will issue a relocation allowance in the amount of $XXXX.XX (amount defined by department). The payment will be included with your regular payroll and will be taxed at the time of the payment.
- Example for collecting receipts:
- To minimize the impact on the new faculty or staff member, the hiring department may initiate the hire process with the faculty or staff member at a zero rate of pay and issue supplemental payments in advance of the official hire date.
What processes will remain unchanged?
- The regulatory change does not impact the treatment of travel and lodging expenses during the recruitment process. As a result, those expenses will continue to be nontaxable and will be paid through Employee Travel & Reimbursement for employees and Corporate Accounts Payable for non-employees.
- The relocation of labs from one institution to another is deemed a business expense and should remain nontaxable.
Please note that a number of departments will be revising business processes. Please consult with your business manager to confirm your departmental strategy. If you have general questions related to the new process, please feel free to contact:
- Employee Travel and Reimbursement team at firstname.lastname@example.org for questions related to the types of relocation/moving expenses.
- Corporate Payroll Services team at email@example.com for questions related to processing the payments.
We appreciate your partnership and support with the business process changes.