Senators Concerned About Unexpected Tax Bills for Some Federal Employees

A change in the new tax law is leaving some federal employees who move for work with unexpected tax bills. Two Senators are asking the GSA to fix the problem.

Two Senators recently sent a letter to the General Services Administration expressing concern about a change in the new tax law that is leaving some federal employees who relocate for work with unexpected and potentially large tax bills.

The letter, sent by Senators Mark Warner (D-VA) and Tim Kaine (D-VA), notes that the recently passed tax reform law “eliminated the deduction for job-related moving costs, as well as the exclusion for reimbursements or in-kind contributions made by employers to defray the cost of moving.”

The Senators added that employer reimbursements for moving costs were previously excluded but are now taxed at the same rate as ordinary income.

“This situation is causing a particular burden for federal employees who, after being assigned to a new duty station, have discovered that hundreds or even thousands of dollars have been withheld from their paychecks,” wrote Warner and Kaine.

They noted that the government already has provisions in place to reimburse federal employees facing this situation under the relocation income tax allowance (RITA) and withholding tax allowance (WTA) but that the polices have not yet been adjusted by GSA.

The GSA is working on the situation but they asked the agency to speed things up and also provide them a list of impacted federal workers.

The Senior Executives Association has been publicizing the situation as well and sent a letter earlier this month to the GSA to bring the problem to the agency’s attention.

“We appreciate the leadership of Senators Warner and Kaine in ensuring this error — which has the potential to cause considerable personal damage to thousands of federal employees – is swiftly remedied,” said Senior Executives President Bill Valdez.

A copy of the Senators’ letter is included below.

Letter to GSA on Tax Withholding by FedSmith Inc. on Scribd

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.