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Bipartisan Group of Senators Proposes Fix to Tax on Moving Allowances

TO: FEA Members Worldwide
FROM: FEA Washington DC Office
RE: Bipartisan Proposal To Ease Moving Tax Burden on Feds
DATE: July 19, 2018

A bipartisan group of Senators has put forth proposed legislation that would make incoming and separating federal employees eligible for reimbursement of taxes they are now required to pay on moving allowances and assistance they receive from the federal government.

Senators Mark Warner, Tim Kaine, Susan Collins, Chris Van Hollen and Mazie Hirono introduced the Relocation Expense Parity Act this week. The legislation was proposed after the enactment of the tax cut bill last year resulted in federal employees (except active military) now being liable for taxes on allowances and assistance they receive from the government for relocating to a new duty station, including travel provided by the government and shipments of personal goods to a new location.

Following an outcry from feds and efforts from employee representatives such as FEA/NEA and other unions, the General Service Administration this spring issued a clarification to its rules, allowing agencies to reimburse most affected employees for the taxes they would be liable for. However, those reimbursements did not include new employees first entering federal service and moving to their initial location, nor did it include employees who were separating from federal service due to retirement or other reasons. This new legislation proposed by the five bipartisan Senators seeks to fix that omission by making those incoming and exiting employees eligible for reimbursement as well.

FEA/NEA was one of a number of employee representatives that bought the issue to the attention of those on Capital Hill and we are extremely grateful to Senators Warner, Kaine, Collins, Van Hollen, and Hirono for their work to introduce this fix. It is hoped the full Senate and, eventually, the House will adopt the legislation. The legislation is written to be retroactive to the beginning of 2018, meaning if it were adopted, it would allow reimbursement for any employees who have already retired or separated from federal service this calendar year.

FEA/NEA will be monitoring this legislation as it moves through the process and will update members as things develop.

Learn more about the tax issue affecting civilian federal employees and the GSA's guidance allowing agencies to reimburse feds for those taxes