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New Proposal Made on Relocation Tax Issue

Dec 19, 2018
In The News

Legislation (HR-7254) newly introduced in the House aims to fix a tax liability for federal employees who relocate that was caused by last year’s tax law changes.

That law made employer-paid relocation expenses taxable as ordinary income effective with calendar year 2018, ending a previous general exclusion from taxes that now applies only to military personnel. Under urging from several members of Congress, the GSA told agencies to essentially make employees whole for the added tax liability for transfers within the U.S.

However, the GSA instruction does not protect employees relocating from overseas, meaning that they may “owe thousands of more dollars in taxes,” sponsor Rep. Denny Heck, D-Wash., said in introducing the bill. The measure, which would apply retroactively to the beginning of this year, would make civilian federal employees returning from overseas eligible for a tax exclusion like that applying to military personnel. It also would make newly hired and retiring employees eligible for the reimbursement.

This close to the adjournment of Congress, the best chance for enactment likely would be to try attaching the proposal to some other measure set to pass.