3510 PR.01 Faculty & Staff Relocation Expense Payments & Reimbursements

Contents

1.     Overview

2.     Arranging Relocations through Yale Relocation & Logistics Management

3.     Arranging Relocations and Submitting Reimbursement Requests

4.     Allowable Relocation Expenses

5.     Household Moves v. Business Office and Laboratory Moves

6.     Tax Implications

As one of many tools for recruiting the best possible talent for faculty and staff (collectively, “employees”) positions, the University may offer to cover some or all of the expenses associated with relocation.  Expense limitations should be negotiated at the time a position is offered and included in the offer letter.  The University will only pay for substantiated expenses within the negotiated limitation.

Relocation expenses may be either paid directly by the University to Yale-approved suppliers or reimbursed to the employee as out-of-pocket expenses.  In either case, payment of relocation expenses is generally considered taxable income to the employee.  This procedure details the process for both options to ensure that relocation expenses are appropriately submitted and processed.

Once an employee accepts terms of employment that include an offer to cover full or partial relocation expenses, the employee may opt to make moving arrangements through Yale Relocation & Logistics Management (“YR&LM”).   Working with YR&LM gives employees access to expert advice, liaison services, and Yale-negotiated rates.  To make arrangements through YR&LM, employees should contact the YR&LM Manager at 203-432-9961 or diane.brown@yale.edu.

Once involved, YR&LM works with the employee to obtain basic information and connect the employee with an appropriate moving company (and other moving-related services that may be applicable).  The employee is responsible for setting dates and directing the moving company during the move.

YR&LM is responsible for communicating the cost of the relocation to the employee and coordinating payment directly with the company.  YR&LM is also responsible for reporting payments to the Payroll Department for tax purposes.

Note: for employees offered relocation expenses up to a specified dollar limitation, YR&LM will process direct payments to contracted movers up to the dollar limitation prior to processing any out-of-pocket reimbursement requests.  The lead administrator (or delegate) is responsible for determining whether any offered funds remain prior to the submission of any out-of-pocket reimbursement requests.  For example: an employee receives a $10,000 relocation expenses limitation; YR&LM contracts a mover for $8,000; the employee spends $2,500 out-of-pocket on other relocation expenses; only after YR&LM finalizes payment of $8,000 to the contracted mover will YR&LM process the out-of-pocket expenses; in this case, with the $10,000 limitation, YR&LM will only approve a reimbursement of $2,000. 

Once an employee accepts terms of employment that include an offer to cover full or partial relocation expenses, the employee may opt to make moving arrangements individually.  In such instances, the University will reimburse appropriate and substantiated relocation expenses up to the negotiated limitation.

All requested reimbursements must be substantiated with receipts and submitted no later than 120 days after they are incurred.

To request reimbursements, the employee should obtain and complete Form 3510 FR.01 Relocation Reimbursement Form.  The employee should then submit the completed form, with all supporting receipts, to the employee’s lead administrator (or delegate) for approval. 

If more information is required, or if there are any inappropriate expenses, the lead administrator (or delegate) should work with the employee to correct any issues.  If the form and supporting documentation are complete and acceptable, the lead administrator (or delegate) should sign and date the form to indicate departmental approval.

Upon department approval, the employee or lead administrator (or delegate) should submit the completed form, with all supporting receipts, to YR&LM for approval. 

If more information is required, or if there are any inappropriate expenses, YR&LM should work with the employee or lead administrator (or delegate) to correct any issues.  If the form and supporting documentation are complete and acceptable, the appropriate YR&LM approver should sign and date the form to indicate approval.

Upon YR&LM approval, YR&LM submits the reimbursement information to the Payroll Department for processing.

The University will only pay for appropriate relocation expenses.  In general, the University considers the following to be appropriate, allowable relocation expenses:

• expenses for moving household goods and personal effects (including packing expenses);
• transportation expenses (e.g., airfare, mileage) for employee and family during move from former residence to new residence*;
• lodging expenses for employee and family during move from former to new residence*;
• meal expenses for employee and family during move from former to new residence*; and
• storage of household goods and personal effects for up to 6 months.

* new residence means arrival in the new area of residence (e.g., New Haven).  It is not intended to include time spent in the new area of residence prior to actually taking residence in the new residence (e.g., if delays in closing go beyond arrival in the new area of residence).

Individual units may choose to cover a narrower grouping of relocation expenses.  Individual units may also choose to cover other categories of expenses on a case-by-case basis.  All such additional expenses, however, must be processed as “additional taxable income” rather than relocation expenses.

When relevant, the University also permits relocations of business offices and laboratories.  Such relocations are distinct from household moves and are discussed in more detail in Section 5. 

Specific questions of allowability should be addressed to YR&LM at 203-432-9961 or diane.brown@yale.edu.

Employee relocations often involve more than one location.  A move may require the relocation of a business office or laboratory in addition to the relocation of an employee’s residence.  Unlike expenses associated with the relocation of households and personal belongings, expenses associated with the relocation of business offices and laboratories are generally considered business expenses and are non-taxable.  If a relocation includes a business office or laboratory, it is important to separately track these expenses for tax purposes.

When arranging for the relocation of multiple locations, the employee should obtain a single invoice for all locations.  Each expense, however, should be specifically broken down and allocated to one location’s move.  If such a breakdown is not done, or is not feasible, YR&LM will estimate the reasonable percentage allocable to each location and process the payments accordingly.

Relocation expenses covered by the University are considered taxable income to the employee (subject to the distinction discussed in Section 5).  Depending on the manner in which the expenses are paid, the taxation functions in practice as follows:

• Relocation Expenses Reimbursed as Out-of-Pocket Expenses: If an employee chooses to pay for relocation expenses out-of-pocket and then submit receipts for reimbursement, the appropriate taxes are calculated and withheld prior to issuance of the reimbursement.  The employee will receive reimbursement net of tax withholding (gross reimbursement request – withheld taxes = net reimbursement amount).
• Relocation Expenses Paid Directly by the University: If an employee chooses to make arrangements through YR&LM and the University pays suppliers directly for relocation expenses, the amount is imputed as taxable income and appropriate taxes are deducted from the employee’s next regular paycheck.  Please note: this method may result in a paycheck amount substantially lower than the employee’s average paycheck amount.