- By Milt x_Zall
- May 07, 2001
Leave it to the federal government to complicate something that's simple. I'm talking about the reimbursement of federal employees for expenses incurred when moving to different work locations last year.
Every year, the General Services Administration publishes the Relocation Income Tax Allowance. The RIT Allowance is designed to reimburse federal employees for federal, state and local income taxes incurred while relocating. When federal employees file reimbursement vouchers for moving costs, taxes are withheld because the Internal Revenue Service treats the money as income. Then the employees must file for reimbursement of these taxes in accordance with the RIT Allowance. The reimbursement isn't taxable income and shouldn't have been taxed in the first place.
For starters, I don't understand why taxes are withheld when feds are reimbursed for moving expenses. Basically, if a federal employee moves to a new location because he's been reassigned and the new location is "at least 50 miles more than the distance from your old job location to your former home," the fed's moving expenses can be deducted from his taxable income. That means that if a fed lays out money for such a move and is then reimbursed by the government, the reimbursement isn't taxable.
There's an additional requirement — you must work full-time for at least 39 weeks during the first 12 months after you move. So if a fed or a private- sector employee deducts moving expenses on his tax return but then fails to meet the "time" requirement, then that individual has to report the moving expenses that were deducted as income on the following year's tax return.
This rule applies to everyone — feds and private-sector employees — who moves because an employer requires it. If your employer reimburses you for moving expenses — he makes you lay out the money — there's really no reason for the IRS to require the employer to withhold taxes.
The employer should determine whether the employee meets the IRS criteria for tax deductibility, and if he does, no taxes should be withheld. But that would be too easy. Instead, you've got to pay the moving expenses, file for reimbursement, have taxes withheld and then file for reimbursement of these taxes using the RIT Allowance table published by GSA in the Federal Register.
My next beef is with the RIT Allowance table that agencies use to calculate the tax allowance — it's really a refund — that feds who've relocated are entitled to. GSA simply posts the current year tax tables that are on the IRS Web site. But President Bush has placed a hold on regulations, and the RIT Allowance table is part of the Federal Travel Regulation. So feds seeking reimbursement for expenses incurred in connection with moves to different work locations last year will have to wait for their money.
What a way to treat employees! It's a wonder the government can get anyone to sign on for a federal career.
Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at [email protected]