| FSS/PPS No. 03.05.04
Issue No. 1
Reviewer: Director of Accounting
Effective Date: 12/03/07 (E2Y)
Review Date: 12/09 01. POLICY STATEMENTS
| 01.01 | This PPS describes the policy and procedure to use when reimbursing moving expenses for a new employee. | | 01.02 | Payment for moving expenses and relocation expenses may be authorized only for full-time faculty, principal investigators, technical employees and administrative and professional staff employees at the director level and above. Cabinet Officer approval is required for moving expenses awarded to employees below the director level. | | 01.03 | An authorization form must be completed for the payment of qualified moving expenses and approval obtained from the Vice President of the new employee's department and the Vice President of Finance and Support Services prior to making any offer or commitment. (Attachment I) | | 01.04 | The moving distance must be in excess of 100 miles from Texas State University-San Marcos, or its regional location in Round Rock. Moving distance is measured from the city of prior residence to the new residence, as contained in the State's Travel Allowance Guide. Authorization of expenses for any individual not meeting this definition requires the prior approval of the appropriate senior level vice president. | | 01.05 | Payment of moving/relocation expenses may be made from designated funds or auxiliary funds available to the hiring department or college. Gift funds may be used only when their use is authorized by or consistent with donor intent. Payment of moving or relocation expenses from sponsored project accounts requires the prior approval of the sponsor; this approval must be coordinated with the Office of Sponsored Programs. | | 01.06 | State appropriated funds may be used for payment of moving and relocation expenses only for state employees who transfer from another state agency or institution of higher education to Texas State without a break in service. State guidelines apply to moving state employees a distance in excess of 25 miles. | | 01.07 | Regardless of fund source, the maximum total of university funds that may be authorized for moving and relocation expenses shall not exceed an amount equal to one-tenth of the individual's annual salary or $7,500, whichever is greater. For full-time faculty, "annual salary" is the 9-month salary amount. Deans and vice presidents may choose to set lower limits based on the college budgeting policies. | | 01.08 | If an employee for whom moving expenses was paid by the university leaves the university within 12 months of appointment date for reasons within his or her control, the individual is required to reimburse the university for the amount of the relocation expenses. Such amounts will be deducted from the employee's final paycheck, if the check is sufficient. If not, payment in full must be made within 90 days of termination. In this situation, it is the responsibility of the hiring department to collect moving expenses from the terminating employee. The original fund that was used to pay the moving expenses would be reimbursed. Expenses not reimbursed will be reported as taxable income. | | 01.09 | Returning employees with a break in Texas State service of more than five years may qualify for the payment of moving expenses. | | 01.10 | Reimbursement of moving expenses for a new employee will be paid within terms specified under the Internal Revenue Code, Section 1.217-2. Qualified expense reimbursements, as defined below, will not be reported as income to the recipient. Any expense reimbursement that does not meet the qualified tests will be reported as income to the recipient. | | 01.11 | Moving Allowance. Authorized payment of a pre-determined moving allowance may be made without receipts. However, the total amount will be reported as taxable income to the recipient, and Federal withholding, FICA and Medicare taxes will be deducted on the recipient's subsequent payroll check. Taxes and matching employer contributions will be paid using the same funds that were used for the moving expense payment, unless an alternative account is provided by the Account Manager of the employee's department. | | 01.12 | Reimbursement of moving expenses must be in accordance with State of Texas per diem, lodging and mileage allowances. The current State of Texas Travel Allowance Guide is used to determine current rates. Any amount paid in excess of State of Texas Travel Allowance guidelines must be approved by the Vice President of Finance and Support Services. | 02. DEFINITIONS | 02.01 | Reasonable expenses: Generally, expenses for moving household goods and personal effects or for travel in connection with the move are reasonable only to the extent that the move or travel is by the shortest and most direct route available from the former residence to the new residence, is by a conventional mode of transportation, and takes the shortest period of time commonly required to travel the distance involved. | | 02.02 | Qualified moving expense reimbursement: Reasonable expenses for moving a new employee and household members must be submitted with receipts to be considered qualified expenses under the accountable plan. In addition, the expenses must meet the time and distance test as defined below, and must be submitted within one year of the start date. Qualified moving expense reimbursements will not be considered taxable income to the recipient. Qualified moving expenses, if approved, are restricted to the qualified expenses outlined in IRS Publication 521. Meals are not considered qualified expenses. If meals are reimbursed, they are reported as income to the recipient. Amounts paid will be subject to State of Texas travel guidelines. The following are qualified expenses according to IRS Publication 521, although the university has the discretion to approve or not approve the following moving expenses:
| a) | Cost of one trip from the former home to the new home for the new employee and members of the household. However they do not have to travel together or at the same time. | | b) | Costs for travel by car from the former home to the new home for either mileage or actual expenses are used, but not both. | | c) | Moving and transportation expenses paid to move the new employee and members of the household;from the former home to the new home. A member of the household includes only those who consider both the former home and new home as home. This does not include a tenant or employee unless that person is a dependant. This includes expenses for the day of arrival. | | d) | Costs for packing and moving household possessions by an approved moving company. | | e) | Costs of moving household possessions from a place other than the former home, but is limited to the amount it would have cost to move them from the former home. | | f) | Costs of connecting or disconnecting utilities required because of moving household possessions. | | g) | Costs of shipping car and household pets to the new home. | | h) | Storage and insurance expenses within any period of 30 consecutive days after the days the things are moved from the former home and before they are delivered to the new home. | | i) | Lodging expenses the employee had in the area of the former home within one day after the employee could no longer live in the former home because the furniture had been moved. | | | 02.03 | Distance Test - A new employee will meet the distance test if the new workplace is at least 50 miles further from the former home than the previous workplace was from that home. For example, if the old job was 5 miles from the former home, the new job location must be at least 55 miles from the former home. In addition, university policy is that the move must exceed 100 miles from the old home to the new home. | | 02.04 | Time Test - For qualified moving expenses, the IRS requires that the new employee work at least 39 weeks during the first twelve months after they arrive in the new location. The employee does not have to work 39 weeks in a row, and must work full time within the same general commuting area for all 39 weeks. | | 02.05 | Closely related to the start of work - Moving expenses must have incurred within one year of start date of employment to be considered qualified expenses by the IRS. If moving expenses occur after one year from start date of employment, the reimbursement may be made if approved by the Department Head; but the reimbursement will be reported as taxable income to the recipient. | | 02.06 | Home - A qualified home for moving expense purposes does not include other homes owned or kept by you or other members of your family. It does not include a seasonal home. | | 02.07 | Non-qualified moving expenses. The following moving costs are not reimbursable:
a) Any part of the purchase price of your new home
b) Car tags
c) Driver's license
d) Expenses of buying or selling a home (including closing costs, mortgage fees or points)
e) Expenses of entering into or breaking a lease
f) Home improvements to help sell your home
g) Loss on the sale of your home
h) Losses from disposing of memberships in clubs
i) Mortgage penalties
j) Real estate taxes
k) Refitting of carpet and draperies
l) Return trips to your former residence
m) Security deposits
n) Storage charges, except those incurred in transit | | 02.08 | The expenses of one pre-move house hunting trip may be reimbursed, but are not tax deductible moving expenses per IRS publication 521, therefore do not meet the definition of qualified moving expenses and will be reported as taxable income to the recipient. | 03. PROCEDURE FOR OFFERING MOVING EXPENSES TO NEW EMPLOYEE | 03.01 | In every case, payment of moving expenses and relocation expenses from university funds for a prospective university employee must be authorized as per Section 01.03 of this PPS. | | 03.02 | Upon receipt of the letter of acceptance of employment from the new employee, and if moving expenses are to be paid by Texas State, the responsible Account Manager shall provide a copy of this PPS to the employee. | | 03.03 | The commitment and dollar amount of expenses authorized shall be specified in the offer letter to the prospective employee. The source of funds for paying moving expenses is to be provided from within the employing division and is to be specified on the written authorization. | | 03.04 | If the prospective employee will be purchasing their own move, the Account Manager must ask him/her to obtain a minimum of two bids for moving household goods. Bids may be informal telephone bids. The prospective employee is not required to use the lower bid, but must document the reason for selection of the moving company chosen. | 04. PROCEDURE FOR PROCESSING PAYMENT REQUEST | 04.01 | The department's Account Manager is responsible for initiating the reimbursement or payment of moving expenses for a new employee for his or her department. | | 04.02 | If the moving expenses are paid directly by the university, the Account Manager is responsible for obtaining bids. In this case, written bids are required. If the move takes place within the state of Texas, the Account Manager must attempt to contract with a HUB vendor, and if not chosen, document why a HUB vendor is not chosen. | | 04.03 | If the university is expected to be directly billed for travel expenses, the Account Manager is responsible for creating an SAP Purchase Requisition according to university purchasing requirements. The General Ledger account number for State Employee Relocation is 707100. | | 04.04 | In order to be reimbursed for moving expenses, reimbursement requests must be submitted by the new employee on a Payment Voucher Form AP-1, with approval signatures of the new employee and the Account Manager. Official estimates, receipts and invoices must be attached to the payment voucher. Mileage will be reimbursed at the state-mandated rate at the time of the move. For mileage reimbursement, the payment voucher must have a mileage document attached which includes the name of the traveler, the purpose of the travel, the distance traveled, the dates, the mileage rate and the total. Only qualified mileage, as per Section 02.02 will be approved. The General Ledger account number for Moving Expense Reimbursement is 710001. | 05. PROCEDURE FOR PROCESSING TAXABLE MOVING EXPENSE PAYMENTS | 05.01 | The Tax Specialist will receive a copy of the payment voucher related to moving expenses from the Accounts Payable office and will report any taxable amounts to the Payroll department. See Section 02.02 and Section 02.07 for examples of taxable vs. non-taxable moving expenses. A moving allowance will be reported as taxable income to the recipient. Upon receipt of the information, the Payroll department will include any taxable amounts on the employee's subsequent payroll check, and payroll taxes, including Federal withholding, FICA and Medicare with be deducted from the recipient's next paycheck with matching employer contributions. | 06. EXPENDITURES FOR MOVING STATE EMPLOYEES PAID WITH LOCAL FUNDS | 06.01 | Moving expenses for new employees cannot be paid with state appropriated funds according to the State Comptroller's rules, but must be paid with local funds. | 07. LINKS |
