A Plea for Tax Help for Relocating Feds, Locality Pay on Track for 2019

Two Democratic senators last week asked the General Services Administration to do more to help federal workers navigate the new tax code when they are forced to relocate to a new duty station.

Earlier this year, Sens. Tim Kaine and Mark Warner, both Virginia Democrats, pushed GSA to resolve a consequence of the 2017 tax overhaul bill that put federal employees on the hook for thousands of dollars in tax bills related to government-paid relocation expenses after agencies required them to move for work.

In May, GSA announced that it would authorize agencies to pay increased relocation income tax allowances (RITA) and withholding tax allowances (WTA) to cover “substantially all” of the increased tax bills associated with a provision of the tax law that removed the deduction for government reimbursements related to household goods. But Kaine and Warner last week urged GSA Administrator Emily Murphy to do more to ensure federal employees are properly informed of their options.

The crux of the issue is that some federal employees reportedly have only been informed of the changes to RITA, a program that can take an extended period of time to be reimbursed, but not WTA, whose turnaround is much faster.

“RITA reimbursements can only be issued in the year following the additional taxes, meaning workers could be waiting months, or over a year, to get reimbursed,” the senators wrote. “The WTA provides funds much earlier than RITA, and can assist those federal employees who are unable to bear the delay of RITA reimbursements. Unfortunately, it appears that at least some federal agencies are not proactively informing their workers about the option to use the WTA.”

The senators asked Murphy to stress to agencies that as employees are asked to relocate, officials need to do more to inform employees about both assistance programs, as well as help them understand which program best fits their needs.

Upcoming Locality Pay Changes

Officials at the Office of Personnel Management confirmed last week that they are on track to implement a number of previously approved new locality pay areas in time for the 2019 pay cycle.

In July, then-OPM Director Jeff Pon issued proposed regulations in the Federal Register to add four regions to the government’s list of areas where federal employees receive a greater salary to keep up with private-sector compensation beginning in 2019: Birmingham-Hoover-Talledega, Ala.; Burlington-South Burlington, Vt.; San Antonio-New Braunfels-Pearsall, Texas; and Virginia Beach, Va.

All four of those regions had been previously recommended for increased pay by the Federal Salary Council and approved by the President’s Pay Agent last December. At a meeting of the Federal Salary Council last week, Mark Allen of OPM’s pay systems office said those regulations should be finalized by the end of the year.

“It’s still in the clearance process, but we have developed a final regulation, and the target date for that is January 2019,” Allen said. He added that OPM expects to have the new regulations in place in time for the first full pay period of the year.