Two U.S. Senators Urge Relief for Relocated Government Employees

U.S. Senators Mark Warner (D. VA) and Tim Kaine (D. VA) sent a letter to the Administrator of GSA on April 24, 2018, urging her to accelerate changes to federal gross-up rules that are currently causing federal agencies to withhold federal taxes on newly-taxable moving expenses rather than grossing-them up.

The delay is currently costing relocated federal employees thousands of dollars, and delaying needed relocations. 

The Tax Cuts and Jobs Act suspended the deduction/exclusion for moving expenses from 2018 through 2025. Accordingly, reimbursements/payments of moving expenses by federal agencies are now taxable to employees.

Under federal travel regulations, agencies must tax protect for taxable relocation costs. And under the federal system, there is a Withholding Tax Allowance issued contemporaneously with the expenditures, and then a Relocation Income Tax Allowance computation at the completion of the move to adjust the WTA allowances. However, the regulations have been held by the GSA’s Office of Government-wide Policy to require amendment to allow reimbursement for taxes on formerly nontaxable moving expenses. Amendment requires consultation between GSA and the U.S. Treasury Department.

That consultation is ongoing, but has not yet resulted in any decision to begin allowing WTA for these costs. A number of employee organizations have also urged that GSA and Treasury act promptly to resolve the problem.

In the meantime, however, relocating federal employees are facing very large withholding obligations on moving expenses, and the organizations say many are refusing to move until the problem is resolved.

Read More