NEW TAX LAW/CONNEXXUS/DIRECT

BILL

Jim Corkill, Controller

Steve Kriz, Assistant Director

WELCOME to BFS Mini Tune-upsOBJECTIVE:

Online meetings to provide campus staff with a high level perspective and

information on both topics of interest and new/upcoming initiatives and policy

updates. PRINCIPLES:

• Sessions are conducted via Zoom and will last no longer than 30 minutes

• Participants will be muted during the session

• Chat questions can be submitted but priority will be given to questions

submitted ahead of time at www.bfs.ucsb.edu/coaching

• The Mini Tune-up website will be updated with session details and

information

TWO CHANGES WITH UCSB

IMPACTS

New Tax Law

Taxability of Certain Employee Achievement

Awards

Prior to the new tax act, the IRS Code allowed employers to provide different

types of employee achievement awards on a tax-free basis.

The requirement was for the award to be non-cash (i.e., “tangible personal

property”).

The rules applied to awards given to an employee for either length of service or

safety achievement.

Tangible Personal PropertyThe new tax act retains the income exclusion and defines what is considered “tangible

personal property”. The IRS has provided the following guidance regarding items that are

not considered “tangible personal property”:

• Cash

• Cash Equivalents

• Gift Certificates

• Vacations

• Meals

• Lodging

• Tickets to theater or sporting events

• Stocks, Bonds and other securities

Gift Cards

Because Gift cards are excluded from the definition of “tangible personal

property”, the value of gift cards provided by the University to an employee for

an employee achievement are considered taxable wage income on or after

January 1, 2018.

This applies to ALL gift cards, whether they be for a specific company (e.g.,

Amazon) or VISA type gift cards.

Employee Achievement

The Office of the President has confirmed that the following G-41 Award

Types are considered Employee Achievement Awards:

Length of Service

One-Month parking permit

One-Month transit pass

Taxability of Moving Expense

Reimbursements

Prior to the new tax act, the IRS Code provided favorable tax treatment

for employer reimbursements of certain employee moving expenses.

Reimbursements Excluded

From Income

Reimbursement of Certain expenditures were excluded from income,

including:

• Transportation of household goods

• House-hunting

• Travel

Taxable/Reimburseable

Expenditures

There were also other expenditures that the University paid for that were

included in an employee’s income and subject to tax withholding. These

expenditures included:

• Temporary lodging

• Temporary Meals of Groceries

ALL Moving Reimbursements are now

Taxable

With the new tax act, ALL moving expenditures, whether reimbursed to

the employee or paid by the University, are subject to income and

employment taxes.

This will increase the cost of moving because it removes the deduction

and it increases the employment tax payable by the University.

If a Department choses to gross-up reimbursements to cover tax

withholding, this in turns increases the cost to the University.

Connexxus and Direct

Billing

Why Use Connexxus

Connexxus is a secure online booking tool that offers discounts and benefits that

other popular travel web sites can't match.

Connexxus allows travelers take advantage of university-negotiated rates to save

money on airfare, hotels and car rentals.

Q: How can the travel program offer a better value than other travel sites?

A: Leverage. Since Connexxus handles the travel needs for the entire UC system,

the program has tremendous buying power.

Connexxus Automated Benefits

• Traveler Insurance as approved by UC Risk Services (if booked with an

agency)

• Airfare price protection (BCD Travel)

• Preferred boarding (Delta Airlines)

• Priority stand-by (Delta Airlines)

• Early access to seating maps (British Airways)

• Free internet access (Marriott – travelers must have a Marriott account)

• Access to competitively priced and policy approved intermediate sized cars

(Hertz, National, Enterprise)

Connexxus Benefits by Request or Availability

• Pre-paid airfare (Direct Bill/TripID)

• American Airlines preferred seating

• Club Quarters weekend rates

https://travel.ucop.edu/connexxus/why-connexxus/travel-agencies

Direct Bill Airfare in Connexxus

Direct Bill/TripID

1. Request TripID

2. Login to Connexxus and Select a Flight

3. Enter TripID in Campus Paid Air Fare box

Connexxus Trip Booking Information

BCD Travel Airfare Price Drop Protection

Airfare Price Drop Protection, an automated system programmed to check for

lower fares during the first 24 hours after ticketing when no airline change fees

apply (see the short video on how it works)

Questions & Answers

Q: Is it true that pre-paying hotels, as in some hotels require a deposit, is

against policy? Mission Inn in Riverside does this and most folks stay

there. Will it be reimbursed?

A: We understand that in some limited cases a hotel will require payment

of a deposit. We discourage travelers from paying non-refundable

deposits for hotel rooms. If a deposit is required, we recommend that the

traveler use their US Bank Corporate Card or request a Travel Advance.

It is our understanding that University of California is currently in the

process of negotiating better terms with the Mission Inn.

Questions & Answers

Q: With the new tax regulations, it is like losing 25% of moving fees. As I

was counting on it, would it be ok to ask for the difference?

A: The change is due to new provisions in the Federal tax law. The

decision to pay or cover the income tax cost associated with taxable

moving expenses should be made by the responsible party within your

department in coordination with the Office of Academic Affairs.

Questions & Answers

Q: What is the effective date of the new tax law?

A: The effective date of the new tax law is 1/1/2018.

Questions & Answers

Q: What are your recommendations to push forward Connexus in our

departments?

A: We recommend providing department travelers with information

regarding the advantages of booking travel through Connexxus (e.g.,

direct bill airfare, travel insurance, competitively priced hotels, and

discounted rental cars). In addition, we believe positive word-of-mouth

recommendations from staff and faculty that use Connexxus on a

regular basis.

Questions & Answers

Q: Can we use Connexxis for personal travel?

A: Yes, Connexxus can be used from personal travel. However, direct

billing of airfare should only be used for University travel.

Questions & Answers

Q: Is the price drop guarantee automatic for all bookings or do you have to

check a box to get it?

A: The price drop guarantee is available for all flights booked through

BCD Travel. The price adjustment is automatic for the 24 hour period

following the booking of the trip.

Questions & Answers

Q: Is there a preference to using UCLA Travel or BCD? I always use UCLA

Travel. What would be best for rental car?

A: Both UCLA and BCD offer travelers a similar level of service. As for

Rental Cars, the same pricing should be available through UCLA or

BCD.

Questions & Answers

Q: Is the new tax laws going to affect retirement gifts?

A: Good question. We are awaiting further clarification from UC Office of

the President. The information we have currently suggests that

prohibition of gift cards is limited to Length of Service and Safety Awards

only.

Questions & Answers

Q: Can you clarify the employee-only tax impact on moving

reimbursements (%)?

A: All moving reimbursements are subject to income and payroll taxes

similar to the payment of compensation. Specifically, most employees

are subject to the following tax withholdings: Federal Tax , FICA, OSDI,

State Tax. In addition to these taxes that are paid by the employee, the

University is required to pay FICA tax equal to the amount withheld from

the employee's payment. That being said, the new tax provision making

100% of employee moving expenditures subject to tax will have a

significant impact on the employee and the University.

Questions & AnswersQ: I am aware that there are exceptions to upgrading to first class or car rentals, if there is a

disability involved. Recently, one of our traveler’s in our department submitted a doctor’s diagnosis

report and a doctor’s note in 2013, is this an acceptable exception to booking full sized car rental or

first class seat for travel?

A: University Travel Policy (G-28) authorizes the use of Business or first-class under certain

circumstances. One of those circumstances is when the use of business or first-class travel is

necessary to accommodate a disability or medical need of a traveler. Travelers requesting

reimbursement of business or first-class under these circumstances should include a doctor's

note that identifies the need for a travel accommodation. While the policy does not specifically

call out exceptions for car rentals, travelers requesting reimbursement for vehicles that fall

outside the up to an intermediate-size model, should provide a written explanation and a copy of

the a doctor's note that identifies the need for a larger vehicle due to a disability of medical need.

Questions & Answers

Q: If we are booking our flights ourselves rather than going through an

agency, do we still get the 24 hour lower fare option?

A: It is our understanding that the 24 hour price adjustments are

available when booking flights through BCD travel online or agent

booking.

Questions & Answers

Q: Wasn’t UCLA travel recently hacked? UCOP training recently

recommended BCD.

A: We are not aware of any formal recommendation of BCD over UCLA.

CLOSING - BFS Mini Tune-ups

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www.bfs.ucsb.edu/coaching

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Thank You!