Tax Change Related to Relocation/Moving Expenses

TO:  Vice Presidents, Vice Provosts, Deans, Directors, Department Heads, and Managers
FROM:  Tallman Trask III, Executive Vice President
RE:  Tax Change Related to Relocation/Moving Expenses

The federal government recently enacted a series of changes to the tax laws, including new regulations covering relocation/moving expenses.  I write to advise of the related implications so that any new employment agreements that include coverage of relocation expenses by Duke are managed accordingly.

Under the new regulations, all expenses related to relocation/moving are considered taxable income to the individual employee.  Therefore, any payment by Duke University or Duke University Health System to cover relocation/moving costs for new faculty and staff should now be issued as a supplemental payroll payment to the new faculty or staff member, rather than as direct payments to related vendors.  Typical expense categories covered include:  airfare, lodging, mileage, payments to moving companies, etc. (note that the new regulations do not impact travel or lodging expenses incurred as part of the recruitment process).  To minimize the impact on the new faculty or staff member, the hiring department may issue the supplemental payment(s) in advance of the official hire date by initiating the hire process with the new faculty or staff member at a zero rate of pay.

In the coming weeks and months, Congress will likely take up some form of a technical corrections bill (which happens often following the passage of major legislation) and the IRS and a number of other agencies will issue related rules and guidance.  The university will provide updates regarding associated impacts on Duke faculty and staff as appropriate.

Please feel free to share this communication within your departments.  Disbursement Services will soon follow with a separate communication to a broader audience of departmental business managers and human resource representatives with more detailed guidance on this business process change.