Administrative Practice Letter IV-H

Subject: Moving Expenses

Effective 1/1/2026

Introduction and Purpose

The University of Maine System may authorize moving and relocation payments when such payments are necessary and appropriate to support hiring or other approved business needs. Because these payments are made for the benefit of an employee or prospective employee, they must be properly authorized, documented, processed, reported, and taxed in accordance with applicable University requirements and federal and state tax rules.

Prior versions of this APL addressed the distinction between qualified and nonqualified moving expenses under federal tax guidance. Because employer-paid moving and relocation payments are now generally taxable, that distinction no longer drives day-to-day practice. The revised APL shifts its focus to five things:

Appropriate use of University funds
Consistent approval and documentation
Proper payroll processing
Accurate tax reporting
Assignment of expenses to the correct ChartFields

This APL applies to moving and relocation reimbursements, allowances, lump-sum payments, and any approved payments made to or on behalf of an employee or prospective employee.

Tax Treatment of Moving and Relocation Payments

Under current federal tax law, employer-paid moving and relocation expenses are generally taxable to the employee. This includes amounts reimbursed directly to the employee, allowances or lump-sum amounts paid to the employee, and amounts paid to a third-party vendor on behalf of the employee.

The Tax Cuts and Jobs Act of 2017 suspended the exclusion from income for qualified moving expense reimbursements for most employees beginning January 1, 2018. Subsequent federal legislation made that treatment permanent for most employees. As a result, moving and relocation payments made by the University of Maine System are generally treated as taxable wages and are subject to applicable federal, state, Social Security, and Medicare tax withholding and reporting.

Limited exceptions under federal law include certain active-duty members of the U.S. Armed Forces moving pursuant to military orders and certain intelligence community employees. Any request to treat a moving or relocation payment as non-taxable must be reviewed and approved by the University Services Payroll Office before payment is made.

Scope

This Administrative Practice Letter applies to all University of Maine System campuses, Governance and University Services, and any department or unit that authorizes, reimburses, or pays moving or relocation expenses for an employee or prospective employee.

For purposes of this APL, “moving and relocation expenses” include appropriate and reasonable expenses that may include:

Transportation of household goods and personal effects;
Packing, crating, shipping, storage, and delivery charges;
Travel, lodging, mileage, or transportation costs related to relocation;
Temporary housing or house-hunting expenses; and
Relocation allowances or lump-sum payments.

Reporting of Moving and Relocation Expenses

All requests for moving and relocation expense reimbursements must be submitted to the University Services Payroll Office in accordance with the following process and requirements.

Requests must be submitted using the form included with this APL and only after all required approvals have been obtained. Each request must be accompanied by the employee’s contractual Moving and Relocation Expense agreement and any other documentation required by the department.
Third-party vendor payments related to employee moving and relocation expenses must be paid directly by the employee and may not be processed through Procurement.
Approved moving and relocation expense reimbursements will be processed through the regular payroll cycle in a timely manner. This process ensures proper tax reporting of reimbursements and assignment of expenses to the appropriate ChartFields.

Reimbursement vs. Allowance

Hiring departments may authorize either reimbursement of actual moving and relocation expenses or an allowance to assist with moving and relocation costs, provided the payment is reasonable and approved in accordance with applicable University requirements.

Requests for reimbursements of actual expenses and allowances must be submitted to Payroll using an approved Moving/Relocation Reimbursement and Allowance Request form along with any required supporting documentation. Such payments are taxable wages and are subject to applicable withholding and reporting.