Important policy updates: relocation expenses and gift cards to employees

February 8, 2018

Dear Faculty and Staff:

As a result of the Tax Cuts and Jobs Act (P.L. 115-97) that was signed into law on December 22, 2017, please be aware of the below updates to university policies on paying for relocation expenses and on giving gifts to employees.

Relocation Expenses Must Be Reported as Taxable Income

  • Charge relocation and moving expenses to general ledger account 57232

Effective January 1, 2018, relocation and moving expenses reimbursed to employees or paid directly to a third-party (e.g., a moving company) must be included in wage income subject to income tax and FICA withholding. To ensure compliance with the new tax reporting requirements, applicable expenses must be charged to general ledger account 57232.

Some Gifts to Employees Must be Reported as Taxable Income

  • Report gift cards, parking permits for one month or more, and transit passes given as gifts to recognize length of service as taxable income

Effective January 1, 2018, certain types of achievement awards given to employees must be treated as wage income subject to income tax and FICA withholding. Specifically, this applies to gift cards, one month parking permits, and transit passes given in recognition of length of service or safety achievement awards. In these instances, these gifts are now considered cash equivalents. Tax reporting is required on these types of gifts in any amount, superseding previous policy thresholds.

  • How to report taxable gifts to the Central Payroll Office

Instructions on reporting gifts as taxable income and guidelines for gift giving are available on the Payroll Office’s website. To avoid the administratively burdensome process of tax reporting, the issuance of gift cards, parking permits, and transit passes in the cases described above is strongly discouraged.

  • Gift cards with minimal value excluded from income tax reporting
    At this time, in accordance with UCOP guidance, gift cards of minimal value ($10-$75) may be presented to employees in recognition of a noteworthy work-related accomplishment. These gift cards must comply with all policy limitations and requirements and may be excluded from income tax reporting.

Additional Policy Updates

  • Further revisions to UC policies related to the tax reform legislation are pending guidance from the IRS and the California Franchise Tax Board.

  • Unrelated to the tax reform act, UCOP revised the Policy and Regulations Governing Moving and Relocation (BFB-G13 - for MSP/PSS positions) effective October 15, 2017 to allow the university to reimburse a new appointee for costs associated with selling a former residence or settling an unexpired lease. The policy defines limits and eligibility criteria. Reimbursement of these new expense categories will require Chancellor’s approval. Policy revisions also include the elimination of relocation allowances and a requirement to submit reimbursement requests within 60 days of payment.

Links to policies:

Questions

Please direct questions to the Controller’s Office Accounts Payable Team (disburse@berkeley.edu).

Thank you,

Delphine Regalia

Assistant Vice Chancellor and Controller

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Office of the Vice Chancellor of Finance

via Calmessages