COMPTROLLER'S MEMORANDUM NO. 01 (1998-99)
SUBJECT: PAYMENTS OR REIMBURSEMENTS FOR EMPLOYEE MOVING EXPENSES
The Omnibus Budget Reconciliation Act of 1993 (OBRA'93) changed the requirements applicable to payments and reimbursements for employee moving expenses. Internal Revenue Service Announcement 97-77, 1997-33 I.R.B. (8/18/97) changed the employer reporting of moving expenses with the elimination of Form 4782 and changes to Form W-2 reporting effective for tax year 1998. The purpose of this memorandum is to consolidate those changes that became effective January 1, 1994 with those changes affecting calendar year 1998 and to explain the changes in our procedures for withholding taxes and for reporting reimbursements and payments made after January 1, 1998.
QUALIFIED MOVING EXPENSES
Payments to vendors or reimbursements to employees for certain moving expenses incurred after December 31, 1993, are "qualified moving expenses", and will not be reported as wages on Form W-2 if such expenses and the move itself meet the following conditions:
The above are Internal Revenue Code (IRC) criteria for determining qualified moving expenses. Refer to Section 132, IRC for additional information.Section 60L-9, Florida Administrative Code, (F.A.C.), establishes moving expense expenditures' eligibility for payment by the agencies as defined in Section 216.011(1)(kk), Florida Statutes. Moving expenses for the entities of the Judicial Branch as defined in Section 216.011(r), Florida Statutes, are governed by Section 10 of the Florida State Courts System Personnel Regulations Manual.
NONQUALIFIED MOVING EXPENSE
Payments and reimbursements that are nonqualified and therefore taxable include the following:
FORM 4782, EMPLOYEE MOVING EXPENSE INFORMATION
Effective for tax year 1998, the Internal Revenue Service has eliminated Form 4782, Employee Moving Expense Information. The Bureau of State Payrolls will discontinue this form beginning with tax year 1998 and instead will include payment and reimbursement information by earning code on the annual Employee Payroll Information Statement distributed with Forms W-2 that employees will receive in 1999. Employing agencies may provide similar information to employees in any format they wish if they deem it helpful to employees.
FORM W-2, EMPLOYEE WAGE AND TAX STATEMENT
With the elimination of Form 4782, the IRS has simplified the reporting of qualified moving expenses on Form W-2. Reporting for tax year 1998 will reflect the following:
Prior to incurring or allowing an employee to incur moving expenses, universities and other agencies should review the requirements for payment.Section 60L-9, F.A.C., establishes moving expense expenditures' eligibility for payment by the agencies as defined in Section 216.011(1)(kk), Florida Statutes. Moving expenses for entities of the Judicial Branch as defined in Section 216.011(1)( r), Florida Statutes, are governed by Section 10, of the Florida State Courts System Personnel Regulations Manual.
Vouchers requesting payment for moving expenses must contain sufficient information for the agency to make a determination of the proper coding of the payment for taxation and reporting. This should include the locations of the former and new principal places of work and residence, and the distances between them. If the employing agency does not reasonably believe, at the time of submission of the payment request, that during the 12-month period immediately following the employee's arrival in the general location of his new principal place of work, the employee will be a full-time employee, in such general location, during at least 39 weeks, the voucher request should include a statement regarding this determination.
Currently object code 2800 - Employee Moving Expenses, is used for payments for moving expenses. Effective immediately, universities and other agencies should discontinue using this code and begin using the following new object codes. Object code 2800 has been inactivated and may not be used for processing payments. This change will not affect the recording or reporting of payments already made.
The payment of moving expenses to vendors, object codes 2810 and 2830, must include the employee as the sub-vendor. This is essential for the reporting of moving expense information to the IRS and employee and for the taxation of non-qualified moving expense payments.
These new object codes have been established to work in conjunction with the following payroll earnings codes to facilitate the reporting and taxation of employee moving expenses.
The reimbursement or payment for moving expenses that are not "qualified moving expenses", object codes 2830 and 2840, will be reported as wages on Form W-2 and will be subject to employment taxes. These taxable values will be obtained from the vendor payment system and included with the employees' earnings through the employee records adjustment process.
Due to payroll systems limitations the Comptroller's Office cannot include these taxable values with the employees' regular salary payment and therefore cannot withhold income and FICA taxes programmatically. This process collects the FICA taxes on the next regular payroll after the employee record update but does not collect income taxes. Agencies should notify employees having nonqualified moving expenses of this additional tax liability so that they may adjust their Form W-4, Employee's Withholding Allowance Certificate, as needed.
Employing agencies and universities making employee moving expense payments through local funds and foundations are responsible for correctly reporting and taxing these payments using their federal employer identification number.
If you have any questions or need additional information, please contact the Bureau of State Payrolls at 410-9416, Suncom 210-9416.