Every year around this time we come up against the dreaded cutoff date for payment of relocation expenses. This means that providers and transferees have until a certain date in 2016 to send in their unpaid/reimbursed relocation expenses/invoices in order to be processed this year. Any expenses sent in after the cutoff date can only be reimbursed after 1/1/17.
As you can imagine this causes tremendous hardship for transferees that are moving this time of year. Having to wait up to six weeks for funds to be reimbursed around holiday time is a huge source of stress. With that said is it possible and/or legal to continue to pay transferee expenses after the established cutoff date and simply roll them into 2017 reporting? To try and get an expert answer to my question we went to the relocation industry’s foremost expert on taxation and gross up, David Oltman with Ineo Technologies. Below is what David had to say on the subject:
What you describe above is a relocation industry best and most common practice – keeping in mind the tremendous hardship for employees and service providers, etc…. However, in order to be compliant with Federal and State tax withholding laws, the relocation industry’s most common practice is the way to go. Now with that said, I know many companies both Fortune 500 and much smaller that have a December 1st cut-off – taking one month of pain out of the equation. Believe it or not, I even know a few company’s who have no cut-off they just keep paying and reimbursing right up until 12/31 – that is their corporate culture and their Payroll Dept. does not start their W-2 process until later in January.
So the bottom line is – a company that has a cut-off can pick any date they want, but as long as payments are being made, they must be reported to payroll. Rolling payments made in November or December into the following’s years January payroll is 100% NON COMPLIANT.
About Relocation America International
Relocation America International is a full service relocation management company headquartered in Southfield, Michigan dedicated to providing innovative relocation services, value added support, and superior customer service to clients relocating families domestically and internationally. Visit http://www.rainternational.com for more information about our services or contact us at firstname.lastname@example.org.