Senate Amendment Seeks to Fix Relocation Tax Change Impacting Feds

Senators Mark Warner (D-VA) and Tim Kaine (D-VA) “have introduced an amendment to the defense authorization act, which would help make a specific population of federal employees — who have or will relocate for their jobs — whole,” according to Federal News Radio’s Nicole Ogrysko.

 Under a change pursuant to last year’s tax reform bill, federal employees who were relocated for work were asked to pay unexpected bills normally covered by their employing agencies, due to the elimination of a tax exemption covering their relocation expenses.

The issue reportedly requires both regulatory and statutory fixes. The U.S. General Services Administration sought to address one of those components when, Ogrysko writes, the agency “issued a bulletin last month after some prompting from Kaine and Warner. The bulletin authorized agencies to pay the Withholding Tax Allowance and Relocation Tax Income Allowance to cover the taxes on these expenses that impacted employees had been forced to pay on their own.”

The amendment introduced by Kaine and Warner would seek to ensure the fix extends to all impacted federal employees. Most of the more than 14,000 federal employees who relocated in the past year have been affected by the tax reform change.

“The relocation issue first came to the attention of the Senior Executives Association in April, which had heard from some impacted employees who had received bills for $3,500 and $6,000 from their agencies,” Ogrysko writes. The organization led efforts, along with organizations including the Federal Law Enforcement Officers Association (FLEOA), to undo the unintended change.

According to Jason Briefel, the Senior Executives Association’s Executive Director, “The end goal is ensuring the government can best compete in the war for talent and that employees who geographically relocate in the name of public service are not significantly taxed for doing so.”

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