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Section 8: Payroll and Fringe Benefits

Relocation Expense Reimbursement

Effective Date:

03/25/2016

Approved By:

Lenora Chapman, Associate Vice President for Financial Affairs

Last Revised On:

N/A

For Assistance Contact:

Director of Payroll Managment Services

PURPOSE/SCOPE

To provide guidance to departments regarding the requirements for processing new employee relocation expense reimbursements.

AUTHORITY

•   IRS Publication 521 - Moving Expenses
•   UT System Board of Regents’ Rules and Regulations Rule 20203 – Compensation for Key Executives


UNIVERSITY GUIDELINES

Table of Contents

A. Overview

Subject to the requirements of this guideline, the University of Texas at San Antonio (UTSA) may reimburse eligible relocation expenses for new employees.  Reimbursement is at the discretion of the hiring department, and must be stipulated in the UTSA Offer of Employment letter (or the Source of Funds (SOF) form for tenure/tenure-track faculty). 

B. Approving Authority

The Approving Authority for relocation reimbursement is the new employee's supervisor and respective Vice President, Provost or President.

The Approving Authority may delegate this authority in writing to a Dean, Vice Provost, Associate Vice President, or an administrator at a comparable organizational level. A copy of the Delegation of Authority must be sent to Payroll Services to document the delegation. 

C.  Requirements

1.  Time and Distance Tests
The following two initial tests must both be met before relocation expenses are considered for reimbursement.
 
    a.  Time Test: The employee must be hired for a full-time position (100% appointment - 40 hours per week) for a minimum of 39 weeks (9.75 months) during the first 12 months of employment; and

    b.  Distance Test: The employee's new work place must be at least 50 miles farther from the old residence than the old work place was from the old residence.  Additional information can be found in IRS Publication 521.

2.   Accountable Plan Requirements
UTSA follows Internal Revenue Service (IRS) accountable plan requirements for reimbursement of relocation expenses.  Under this plan, all three of the following requirements must be met.

    a. The expenses must have a business connection: the employee must have paid or incurred the expenses while performing services as an employee of UTSA (for example, the reasonable expenses of moving possessions from the employee’s former home to the new home);  and

    b. The employee must adequately account to UTSA for these expenses within a reasonable period of time; and

    c. The employee must return any excess reimbursement or allowance to UTSA within a reasonable period of time.

3. Other Requirements

•   All expenses submitted for reimbursement must be actual, reasonable, necessary and within established guidelines.

•  Relocation expense reimbursement must not exceed 10% of the new employee’s annualized salary (monthly salary x 12). Exceptions to the reimbursement limit are based on the position's job market availability and/or the employee's specialized skills. Reimbursement amounts in excess of the 10% limitation require pre-approval by the Vice President of Business Affairs or President. 

•  Reimbursement must be paid with local funds (appropriated state funds may not be used).

 

D. Hiring Department Responsibilities

The hiring department ensures all items listed below are completed when offering relocation expense reimbursement to new employees:

  • The employee meets the Time and Distance tests (see Requirements).
  • Approval is obtained from the Approving Authority.
  • State appropriated funds are not used.
  • Reimbursement limits are not exceeded.
  • Reimbursement is stipulated in the Offer of Employment letter or SOF form (for tenure/tenure-track faculty).
  • If a moving company is used, the decision is made to either pay moving company directly or reimburse employee.
  • Completed Relocation Reimbursement Form (RRF) with all required documentation is submitted to Payroll Services.
Note:  Inclusion of the relocation reimbursement amount in the Offer of Employment letter is handled by the hiring department and Human Resources.

 

E. Employee Responsibilities

An employee eligible for relocation reimbursement is responsible for:

  • Completing or assisting the hiring department with the RRF.
  • Obtaining and submitting original receipts necessary to support all claims for reimbursement within 60 days after paid or incurred.  All expenses which are being submitted should occur  within 12 months following the first day of employment at UTSA.
  • Adhering to the requirements of this guideline.
  • If the employee does not stay for the minimum time required by the IRS Time test, the employee may be required to return to UTSA all amounts paid or reimbursed as relocation expenses.  If the reimbursement is not returned, UTSA will report the total amount to the IRS as taxable income.
  • Whether a moving company charge is paid directly by UTSA or reimbursed to the employee, the company that performs the move must be the lowest and best of at least two moving company estimates. Lowest and best is defined as the lowest price while meeting the employee's requirements for service, quality, and timeliness.

 

F. Eligible (Reimbursable) Expenses

The following relocation expenses are reimbursable by UTSA subject to the requirements of this guideline.

  1. Non-Taxable
  2. The following reimbursable expenses, if reasonable, are not taxable and therefore not subject to withholding:

    a. Commercial moving company:  If the moving company is an approved relocation company, the department may choose to pay the moving company directly rather than reimbursing the employee. The department submits a requisition in UTShare/PeopleSoft, and on approval, a purchase order is issued to the moving company. On receiving the moving company invoice, Disbursements and Travel Services (DTS) adds the Payroll Director or Assistant Director as an ad hoc approver for the invoice.  Payroll Services determines the taxable portion (if any) that will be added to the employee’s W-2 as income, and DTS processes the payment.   

    b. Charges for packing, crating, mailing and/or shipping household goods; and other miscellaneous packing supplies (includes specialized movers for pianos and overseas shippers).

    c. Insurance on items such as furniture, clothing and utensils.

    d. Rental moving truck.

    e. In-transit storage of household goods for up to 30 consecutive days after being moved from the old residence, and before delivery to new residence.

    f. Shipment of car(s), if not used in the move.

    g. Travel and lodging costs for one trip (employee and family) from the old residence to the new residence, which may include:

    1. Actual gas cost:  based on receipts or IRS current rate for personal or rental vehicles as indicated on the RRF
    2. Lodging in transit:  follow current federal per diem rates for the cities involved
    3. Airfare (coach)
    4. Rental car (economy): in certain circumstances a larger vehicle may be rented with documented advance department approval
    5. Tolls, taxi, or parking
    6. Household pet shipping charges

     

  3. Taxable
  4. The following expenses, while reimbursable subject to the requirements of this guideline, are reported as taxable income to the employee and are subject to withholding.

    a. Cost of meals and incidental expenses (M&IE) during the relocation process:  follow current federal M&IE per diem rates (meal receipts are not required).

    b. House hunting expenses (one trip, not to exceed five days) may include:

      1. Actual gas cost, based on receipts or IRS current rate for personal or rental vehicles
      2. Lodging:  follow current federal per diem rates for the cities involved
      3. Airfare (coach)
      4. Rental car (economy):  in certain circumstances a larger vehicle may be rented with documented advance department approval
      5. Tolls, taxi, or parking
      6. Temporary housing

    NOTE:  UTSA cannot determine the specific impact of taxable payments/reimbursements on the employee’s tax liabilities. Employees should consult with their personal tax advisor as necessary.

 

G. Ineligible (Non-Reimburseable) Expenses

The following expenses are not eligible for reimbursement:

  • Any part of the purchase price of the new home
  • Vehicle registration (tags)
  • Driver’s license fee
  • Expenses of buying or selling a home, including improvements to help sell a home
  • Loss on the sale of a home
  • Mortgage penalties
  • Real estate taxes
  • Real estate agent/broker expenses
  • Cost of cleaning a new or former residence
  • Payments to non-professional movers (e.g., friends or family members) who assist with a move
  • Refitting of carpet and draperies
  • Return trips to former residence
  • Security deposits or loss of security deposits
  • Storage (excluding 30 days in transit)
  • Travel expenses for side trips or extended stays during relocation travel or house hunting
  • House hunting travel expenses beyond one (maximum five-day) trip
  • Meals and travel costs incurred by laborers
  • Expenses incurred by persons not considered to be dependents for tax purposes
  • Visa and/or U.S. immigration fees
  • Utility, cable or telephone installation charges
  • Postage costs for realty and mortgage documents
  • Personal telephone calls, tips, and entertainment
  • Extraordinary items requiring special handling (e.g., boats, automobiles, animals)
  • Bank fee for cashier’s checks or wires

 

H. Reimbursement Procedure

Upon completion of the employee's move to the new residence, the employee’s department submits a completed RRF to Payroll Services. The following documentation must be attached to the RRF:

      1. A copy of the employee's Offer of Employment letter or, for tenure/tenure track faculty, a completed SOF form specifying the relocation amount offered.
      2. Original receipts in the name of the employee (if receipts are not in the employee’s name, an explanation is required).
      3. Employee's signature (on RRF).
      4. Budgetary Approval Authority signature (on RRF).
      5. Proof of Vice President/Provost approval of relocation amount (on RRF or SOF form).

After reviewing the RRF to determine reasonableness and taxability, Payroll Services issues payment.

 


DEFINITIONS

Term

Description

House Hunting

Any trip made for the purpose of securing a residence in the new location with the exception of the final move.


Household

Includes members of the employee’s household or dependents residing in the household and/or moving to the new location.


Household Goods

Personal property which may be transported legally in interstate commerce and which belongs to an employee and his/her immediate family at the time shipment begins. The term includes household furnishings, equipment and appliances, furniture, clothing, books, and similar property. It does not include property which is for resale or disposal rather than for use by the employee or members of his/her immediate family; nor does it include property intended for use in conducting a business or any other commercial enterprise.


Relocation

The process of assigning, establishing, and/or settling in a particular place for employment purposes.


Temporary Housing

Hotel charges or short-term lease agreement for temporary lodging. Must be approved by the department and within reimbursement limits. Reimbursement requires a brief explanation stating the purpose for temporary housing.

 

REFERENCES/LINKS

RELATED FORMS/WORKSHEETS

  1. Relocation Reimbursement Form


REVISION HISTORY

Date Description

03/25/2016

FMOG Created.


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