Two senators have asked GSA to address what is being called an unintended consequence of the late-2017 tax policy changes resulting in a tax hit in the hundreds or thousands of dollars for federal employees who receive relocation expenses.
The letter follows a one from a number of employee organizations making a similar argument. The impact results from elimination of the tax deduction for job-related moving costs as well as the exclusion for reimbursements by employers to defray the costs of moving. The result is that employer reimbursements for moving costs are now being taxed as ordinary income.
Tax policy changes enacted late last year have had the unintended impact of penalizing many federal employees who receive relocation benefits, a group of employee organizations has said. In a letter they asked GSA and the Treasury Department to provide relief from an additional tax hit that they called potentially “ruinous to affected employees.”
“The government already has policies in place to make these federal employees whole—the relocation income tax allowance and withholding tax allowance—yet these policies have not yet been adjusted to take into account changes from the tax bill,” wrote Sens. Mark Warner, R-Va., and Tim Kaine, D-Va.
The letter indicates that GSA is consulting with the Treasury Department about the issue and urges a quick resolution because “federal employees are being left on the hook for extra tax bills, and some have had their duty station changes delayed and even canceled.”