Introduction
Purpose
The University of North Carolina at Chapel Hill Policy on Employee Relocation Compensation governs the payment made to a new employee to offset the personal costs of relocating to work at the University. This policy has been revised and simplified based on legislation changes in the 2017 Tax Cuts and Jobs Act which reinstated personal moving expense reimbursements as taxable wages.
Scope
This policy applies to departments who are engaging in the recruitment of highly qualified and/or highly recruited individuals and the payment made to relocate the individual for employment.
Policy Statement
A department or college may, within existing resources, authorize lump sum relocation compensation when it determines it is necessary to successfully recruit and retain a qualified candidate who will have to make a domiciliary move in order to accept the position. A domicile is defined as a person's fixed, permanent, and principal home for legal purposes.
Due to legislation changes in the 2017 Tax Cuts and Jobs Act which reinstated personal moving expense payments as taxable wages, the University is no longer issuing direct payments to vendors for moving expenses.
The employee’s move to the new residence must be 50 miles or more from their existing residence, per Section 6.8 of the State of North Carolina Budget Manual.
The University will no longer require moving receipts since this will be considered compensation to cover all relocation related expenses as stated in the offer letter or contract. Domiciliary moves that are ‘in process’ at the time of policy effective date will fall under the policy in effect as of the earlier of the offer letter or start date.
The lump sum relocation compensation is intended to be used for and should encompass house-hunting, packing and transporting goods, temporary housing, storage and all travel expenses associated with the employee’s relocation. The employee should not expect additional payments or reimbursements related to their move after receiving the lump sum relocation compensation unless specifically outlined in their offer letter or contract.
Taxation
All payments issued by employers for relocation of household goods are taxable income to employees, in accordance with federal law (P.L. 115-97). Relocation compensation payments are included as compensation on employees’ W-2 forms.
Per IRS regulation, appropriate taxes (federal withholding, Social Security, Medicare etc.) are deducted from the relocation compensation amount stated in the offer letter. The employee will receive a ‘net amount’ which is less than the gross amount stated in the offer letter.
Source of Funding
Relocation compensation may be supported by the following Fund types:
- Appropriated State Funds and Receipts-Supported State Funds.
- F&A funds:
- Allowed for Faculty and Research staff.
- Sponsored Research funds:
- Not allowed, unless specified in contract or grant award. Relocation compensation should be specifically itemized in the approved budget.
- Institutional Trust Funds (excluding Internal Service Funds or Recharge Centers)
- Allowed when consistent with fund source authority.
- Internal Service Funds or Recharge Centers
- Student and Institutional Auxiliaries and Health Care Clinics
- Allowed when consistent with fund source authority.
Restrictions
Relocation payments in excess of 10 percent of the employee’s first year annual salary or the maximums set forth in the OHR Non-Salary & Deferred Compensation Policy must be approved in advance by the dean, chancellor, or appointing authority for faculty and academic appointees, or the appropriate vice chancellor or appointing authority for staff. Departments are encouraged to benchmark with peers and industry standards when considering a lump sum relocation payment.
If relocation compensation is funded by federal sponsored research contracts or grant, any amount that exceeds 10 percent must be covered by other nonfederal or discretionary funds.
Total Compensation and Deductions
Income taxes, Social Security, Medicare and other applicable taxes are deducted from the total amount stated in the offer letter and provided to the employee. The payment that the employee will receive will be net of applicable taxes. These payments are not subject to retirement.
Authorization
A dean, chancellor, vice chancellor, appointing authority, or equivalent administrator approves the lump sum relocation payment via the signed offer letter.
Related Requirements
External Regulations and Consequences
University Standards and Procedures
Exception Requests
Clarifications on the policy should be directed to the University Controller or Payroll Services.
Procedures
Additional Information
Frequently Asked Questions
Q: May the department provide an SHRA or EHRA - Non Faculty employee with a relocation compensation payment?
A: Yes, if the employee has a specialized skill that is necessary to the department's function and it is agreed to in writing in an offer letter.
Q: Does the employee have to submit receipts?
A: No receipts need to be submitted since the relocation compensation is a lump sum payment that is intended to cover some or all of the employee’s moving expenses.
Q: Is this relocation compensation payment taxed?
A: Yes, all appropriate payroll taxes will be withheld from this payment.
Q: Can the payment be made to the employee prior to the move?
A: The payment cannot be made prior to the employee’s first day of official employment. Ideally, departments will process the payment in the employee's first month of employment.
Q: May any fund source be used to pay for relocation compensation?
A: Not all fund sources may be used to pay for moving expenses as indicated in the policy above.
Q: Is travel for an accompanying spouse permissible use of the relocation compensation?
A: Yes. The lump sum relocation compensation is intended to be used for and should encompass all expenses associated with the employee’s relocation. The employee should not expect additional payments or reimbursements related to their move after receiving the lump sum relocation compensation unless specifically outlined in their offer letter or contract.
Q: Should business related moves, such as moving a research lab, follow this process?
A: This policy only covers employee household moves. Please use campus vouchers to process business related moves. Contact Accounts Payable at accountspayable@unc.edu with questions about this move. Concurrent business and personal moves should be handled via separate contracts since the personal move is fully taxable and the business move is not considered taxable income.
Q: Is relocation compensation available to both permanent and temporary employees?
A: No relocation stipends are limited to permanent employees.
Contacts
History
Revised:
- June 18, 2020: Update Policy to a lump sum stipend and update owner to University Controller
- May 24, 2018: Policy updated due to 2017 Tax Cuts and Jobs Act.
- April 20, 2018: Updated Disbursement Services to Accounts Payable and updated email.
- September 27, 2017: Added question to FAQs re: denial of payments to temporary employees for moving expenses.
- March 19, 2013: Revised response in Frequently Asked Questions regarding moving mileage.
- December 10, 2010