FIACCT 05-03_03 Payments – Employee reimbursements – relocation reimbursement

Effective: January 1, 2018
Revised: January 11, 2024
Reviewed: January 11, 2024

Purpose

This policy defines the Division of Finance policies and procedures for relocation reimbursements.

NOTICE: Federal Bill, H.R. 1 of the 115th Congress, Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act of 2017, eliminated the exclusion of qualified moving expense reimbursements from an employee’s taxable income for 2018 through 2025. Therefore, all reimbursements to employees for moving expenses, or payments to vendors for moving expenses on behalf of an employee, are taxable as of January 1, 2018.

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Policy

A. The State of Utah must be competitive in the employment market in order to attract and retain a competent work force. Consequently, it may be necessary to defray normal intra- and inter-state moving expenses when hiring new employees or when relocating current state employees.

B. Approval -All relocation reimbursements require prior written approval by the department executive director or agency head and will be in the best interest of the State.

C. Maximum Reimbursement – The combined maximum reimbursement for all relocation costs will not exceed $10,000. Approval of case-by-case exceptions for situations in which the $10,000 reimbursement is not adequate must be made in advance in writing by the Director of the Division of Finance.

D. The distance between the employee’s old residence and new job site must increase at least 50 miles
over the distance between the old residence and the old job site.

E. Current Employees – Reimbursement costs may be granted at the discretion of the department head to state employees who move to accept an advancement or another position within the State.

F. New Employees – Relocation costs identified in this policy may be paid to new employees who are required to move to accept employment with the State. The amount of reimbursement will be a matter of negotiation between the department and the employee but will not exceed those costs identified as reimbursable by this policy.

G. As required by Administrative Rule R477-8-18: If an employee is required to commute or relocate 50 miles or more, one way beyond his current one-way commute due to an involuntary change in work location, an agency shall either pay to move the employee consistent with this policy or reimburse commuting expenses up to the cost of a move.

H. The employee must agree in writing to repay any relocation expense if, within one year following the
relocation, the employee terminates employment with the state or transfers to another department.

I. Payment – The employee has three options for reimbursement:
Option 1: The employee makes ALL payments and then requests reimbursement using an Employee Reimbursement/Earnings Request, Form FI 48.

Option 2: To reduce the hardship on the employee, the employee may submit Employee Reimbursement/Earnings Requests, forms FI 48, as he/she makes payments.

Option 3: The employee may receive an advance of up to 90 percent of the estimated cost of the moving company, the storage of goods, and/or the real estate fees (not to exceed the guidelines of this policy).

J. Advance – Request the advance using an Employee Reimbursement/ Earnings Request, Form FI 48. Attach a list of the items included in the advance and the actual or estimated dollar amount for each item. Give a copy of Form FI 48 requesting the advance to the Division of Finance.

At times, an advance may be needed before a new employee’s record can be sent from the Department of Human Resource Management to the Payroll Section in Finance, thus preventing the advance from being processed in Payroll. This record is sent to Finance on the starting date of the new employee. When this situation occurs, the agency should process the advance using all the other FINET policies and procedures regarding relocation reimbursement except that the advance may be processed through FINET. The agency should then follow up with Finance to process a journal entry to properly record the advance in Payroll.

After the move, the employee should prepare and submit to the agency an Employee Reimbursement/Earnings Request, FI 48, and the supporting documentation. The Advance will be reconciled with the actual reimbursement.

If the amount of the advance exceeds the reimbursement, the employee must reimburse the State for the overpayment. Recovering the overpayment of the advance is the employing department’s responsibility. Submit the employee’s repayment check to the Division of Finance to adjust the payroll records.

If the amount of the advance is less than the reimbursement, the employee will be reimbursed for the
difference.

K. Documentation – Each Employee Reimbursement/Earnings Request, FI 48, must include:
• Employee name and Employee Number
• Address the employee is moving from and the address he is moving to
• Detailed list of costs to be reimbursed, supported by the original receipts, mileage calculations if claiming mileage, and bids for moving household goods, if applicable
• Signed copy of the agreement to reimburse the State
• Signed copy of the pre-authorization letter from department director/agency head
• Employee Relocation Worksheet

If an employee relocation reimbursement is submitted to Finance without all proper documentation, the agency may be required to send a letter or memo to the Director of Finance requesting a waiver to the applicable requirement(s) and explaining why processing the reimbursement is in the best interest of the State.

L. Use of State Equipment –The use of state equipment to move an employee or to pull a privately owned trailer or trailer house is expressly prohibited unless approved by the Director of Finance and the State Risk Manager.

M. Taxability – As of January 1, 2018, the IRS Regulations state that all employee reimbursements for moving expenses are taxable. All reimbursements for moving expenses must be recorded in the state payroll system as taxable earnings of the employee. The taxable costs will be reported to the IRS as compensation on the employee’s W-2.
N. Transportation Expense
All airline and car rental reservations for travel to the new location for both house-hunting and the actual move must be made through the State Travel Office.

1. House-Hunting Expenses -The State of Utah will reimburse an employee for the cost of one round
trip for the employee and spouse to the new location for house-hunting. Motel and meal rates should be
based on current travel policy.

2. Transportation Expense in Moving- The State will reimburse the cost to move the employee and family
from the old location to the new location. If the employee elects to use either airlines, train, or bus in the
move, the State will reimburse for the actual cost of the airline, train, or bus fare. If the individual elects
to drive his/her own automobile(s), the State will reimburse at either the current mileage rate as
determined by the Director of Finance or the actual cost of fuel (receipts required). The current mileage
rate is 21 cents per mile, in compliance with IRS guidelines. The amount is calculated using the shortest,
most commonly traveled route between the two points.

O. Meal and Lodging Expense –The employee will be reimbursed for actual lodging costs during the move, not to exceed $85.00 per day unless travel is arranged through the State Travel Office. Meal expense will be reimbursed based on current per diem rates for the employee and up to three dependents. The lodging and meal costs for the family are not to be reimbursed for a period exceeding 10 days during the move. Time spent on a trip for house-hunting will be subtracted from the 10 days allowed.

P. Household Goods Expense – The maximum total reimbursed for movement of household goods shall
include only normal household and personal belongings. Expenses for moving animals, camper trailers, boats, motor scooters, and other non-household items will not be paid by the State of Utah.

The total amount reimbursed will be the lowest bid obtained from at least three moving companies. If a moving company on statewide contract is used, no bids are required. The employee will submit the bid estimates from all solicited companies as support to their relocation reimbursement claim. Reimbursement will be paid for actual expenses incurred for packing, appliance service, and transportation of household goods by the carrier.

Insurance -The State will not reimburse for personal liability insurance or for personal property insurance in excess of that provided by the moving company.

Storage of Goods – The State will reimburse charges by the moving company contracted for the move to store household goods for up to thirty days at the new location.

If the employee chooses to move their own belongings, the State will reimburse the actual expense incurred to rent a vehicle or trailer plus either mileage for the rented vehicle used in the move or the actual cost of fuel (receipts required). In addition, up to $1,000 will be reimbursed for packing costs including supplies and equipment but excluding labor (receipts required).

Q. Mobile Home Moves– Allowable moving expense may be paid for a mobile home which is the
primary residence of the employee, provided the move is not within the same metropolitan area. The State will pay the cost of relocation to the newly-assigned location, not to exceed $1.50 per mile. In addition, actual charges for unblocking and blocking; service disconnects and hookups for electrical, sewer, water, gas, etc.; and for skirting are reimbursable only if the work is performed by a licensed contractor. Skirting and blocking expenses are reimbursable for labor costs only and not for any new materials that might be required.

R. Real Estate Expenses
1. Sale of Home – Allowable Costs

• Relocations that necessitate the sale of a home or mobile home, certain costs incurred in connection with selling the original home may be reimbursed, up to a total amount of $6,000. The reimbursement is subject to approval by the Department Director and shall apply only during the period in which the employee is actively advertising the home for sale. Homes retained by the employee twelve months after the move shall be considered rental or investment property of the employee. Reimbursable costs are limited to:

a. Realtor’s commission fees – 6 percent of the sale price.
b. Title insurance fees – actual amount.
c. Two appraisal fees – actual amount.
d. Loan origination fee – actual amount.
e. Actual and necessary selling costs may be reimbursed for that portion of the dwelling the employee actually occupies if the employee owns or resides in a multi-family dwelling.
f. If an attorney is employed rather than a realtor, the reasonable allowable fee will be 1.5 percent of the sale price.
g. When a realtor is not used, only the actual amount of the seller’s portion of the title company’s closing fees is allowed.
• The State will not reimburse selling points, survey fees, recording fees, escrow fees, or any other costs not expressly included in this policy. However, exceptions that appear to be in the best interest of the State may be approved by the Director of State Finance.

2. Rental Homes
• If the employee resides in rented quarters at the old location, the State may pay reasonable expenses incurred by the employee in terminating a lease agreement, up to one month’s lease.
• The State will not reimburse rental or security deposits because they are refundable to the renter and are not considered expenses.

S. The department/agency must accumulate all moving/relocation costs incurred under these rules by the employee and be prepared to submit those to the Division of Finance before each calendar yearend. For ease of accounting for costs, the expenditure object 6277 has been established. Use this for all payments and reimbursements for moving/relocation costs. Use Wage Type 1145, Taxable Relocation/Moving Expense, on the Employee Reimbursement/ Earnings Request, Form FI 48, to record reimbursements to FINET expenditure object 6277.

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Procedures

After All Payments Are Made