Relocation expenses for employees may be paid via stipend, dependent upon availability of funding. The approving authority and the following policy provisions will determine the total amount provided for relocation.
- Taxable Reimbursement. Taxable Reimbursement. In accordance with IRS regulations, effective January 1, 2018, the payment of any relocation costs under this policy are considered taxable income and subject to applicable income and employment taxes.
- Eligibility. At the discretion of each unit, relocation stipends may be authorized for new or presently employed personnel assigned to new locations by transfer or promotion. Relocation stipends or reimbursement is not authorized for employees appointed as University Staff Temporary (formerly limited term employees).
- Payment of relocation stipend is mandatory when the appointing authority requires the employee to change residence location because the employee is ordered to relocate or is promoted to a different position within the University of Wisconsin-Madison, and the appointing authority determines the relocation or promotion requires the employee to change residence.
- Payment of a relocation stipend is on a permissive basis at the discretion of the new approving authority for an employee who requests a transfer or demotion and relocates as a result.
- Payment of a relocation stipend is on a permissive basis at the discretion of the approving authority for an employee reporting to their first place of employment at the University of Wisconsin- Madison or reporting upon reemployment after leaving the University of Wisconsin- Madison.
- Payment of a relocation stipend is on a permissive basis, at the discretion of the approving authority, provided that:
- the distance between the new place of employment and the old residence is at least 35 miles farther than the distance between the former place of employment and the former residence; and
- the distance between the new and former residence is at least 35 miles
Note: If the approving authority determines a relocation is a mandatory condition of employment, the minimum distance requirements are not applicable.
- No more than two standard relocation stipends may be paid to an employee in a calendar year.
- Unless otherwise authorized by the approving authority, to be eligible for a relocation stipend, the employee must move no later than one year from the effective date of the appointment or the end of probation, whichever is later.
- It should be determined whether it is in the best interest of the university to provide a standard and/or supplemental relocation stipend. The following factors should be considered:
- Are the individual’s skills in critically short supply? If yes, is payment usually available from competing employers?
- Is the labor market tight for this position?
- Does the individual rank above all other candidates in a combination of training, experience, and personal qualities?
- Will the best qualified individual for the position be unable to accept the unit’s offer for financial reasons unless relocation expenses are paid?
- Reimbursement or Payment of Relocation Costs. The university may provide an employee a relocation stipend for costs associated with a relocation, whether using a commercial moving service or choosing to self-move. A relocation stipend is made not more than 30 days in advance of the employee’s relocation date. The advance payment of a relocation stipend does not require receipts but requires the authorization letter be attached to the stipend payment request.
- Temporary or Indefinite Work Assignment. Reimbursements of expenses for “temporary” assignments away from the tax home are generally not taxable to the employee as this is considered business travel. If the assignment is “indefinite,” the employee is considered to have moved his/her tax home to the new headquarter location. Reimbursements of expenses for “indefinite” travel are taxable (Rev. Rul. 93-86; Rev. Rule. 99-7). The Internal Revenue Service looks at all facts to determine whether the travel assignment was intended to be temporary or indefinite (Rev. Rul. 93-86; Rev. Rule. 99-7). The table below provides a summary of temporary and indefinite travel assignments. Examples provided within the IRS regulations can be found in the document titled When “Temporary” Travel Assignments Become “Indefinite.”
Table 1. IRS Travel Assignment
| |
Temporary |
Indefinite |
| Duration (Note the assignment changes from temporary to indefinite at the point which university knows the assignment will exceed one year.) |
Expected to last one year or less |
Expected to last longer than one year |
| Tax Home |
Permanent work site |
New work assignment location |
| Meals and lodging |
Excludable from income |
Taxable |
| Transportation - Expense Mileage and Parking |
Excludable from income |
Taxable |
| Transportation - Commuting Mileage |
Taxable |
Taxable |
| Expenses related to events not located at the permanent work site or the new word assignment, such as conference travel |
Subject to University Travel Policy |
Subject to University Travel Policy |
Units should contact their Human Resources Offices to ensure appropriate approvals, accounting and tax related issues are addressed and in place prior to the starting date of the temporary assignment.
Units should account for each temporary assignment as a separate contract and use appropriate processing procedures (e.g., requisitions, billing).
UW-Madison employees on assignment to another agency or institution may be eligible to receive supplemental compensation in lieu of reimbursement to employees for meals, lodging, and transportation expenses, which may be paid directly to the employee with required deductions made or transferred for payment to UW-Madison.
Supplemental compensation for periods exceeding a one-year period will become taxable to the recipient at the time the university knows the agreement will exceed one year.
In the event that assignments change from temporary to indefinite, or indefinite to temporary, triggering a change in tax-ability to the employee, the Office of Human Resources must work with the UW System Service Center to ensure proper coding and tax treatment.
Responsibilities
- Approving Authority: Prior to the move, the approving authority must authorize in writing the payment of an employee relocation stipend. Written approval is required prior to authorizing payments to the employee. When approving relocation expenses, the approving authority must review and approve the following information on an authorization letter or equivalent form using university letterhead:
- Name of relocating employee
- Reason for the move
- Position
- Specific amount of the standard relocation stipend and if the employee/ new hire is eligible for a supplemental stipend.
When approval for a relocation stipend is granted, the approving authority must provide the relocating employee a copy of the authorization letter or equivalent form. The authorization letter or equivalent form must be attached to any relocation-related payment request.
If the unit determines that the relocation expenses of the impacted employee or new hire will be unusually high, and that a failure to grant a supplemental stipend would create a hardship for the impacted employee or new hire, a supplemental stipend may be granted to the impacted employee or new hire. The Chancellor or President of the institution must approve the award of any supplemental stipend.
- Employee/Recipient: Employees are responsible for completing the following tasks, as applicable, to be eligible for relocation stipend:
- Obtain the “Authorization Letter” from the hiring department. The letter outlines the amount of funding for the stipend(s). This documentation must be submitted to support the payment of a standard and/or supplemental stipend to the impacted employee or new hire.
- Work with the hiring department on the timing of the payment of the relocation stipend.
- Discuss the payment of a stipend for moving costs early with the hiring department. This stipend can be paid in advance of the move, but it is preferable to have the stipend paid along with the employee’s first payroll cycle. If the stipend is paid in advance of the employee’s start date, the employee agrees to pay back any stipend payments in the event the employee does not commence work at UW-Madison.
- The UW System has contract commercial carriers that employees may utilize for the move. Contracted commercial carriers serve local, domestic, and international move needs. Employees that are relocating should contact the commercial carriers far in advance to obtain quotes and schedule a move date. The UW System is not a party to the contract between the employee and the contract commercial carrier.
Consequences for Noncompliance
Failure to comply with UW-Madison policy or procedures may result in disciplinary steps, up to and including dismissal.
