WITHHOLDING FEDERAL INCOME TAX ON REIMBURSEMENTS FOR MOVING EXPENSES UNDER THE TAX REFORM ACT OF 1969

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP72-00310R000100480010-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 16, 2016
• Document Release Date: October 2, 2004
• Sequence Number: 10
• Publication Date: July 13, 1970
• Content Type: MF

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3 July 1979
'MEMORANDUM FOR: Chief, Policy and Planning Staff/OF
Withholding Federal Income Tax on
Reimbursements for Moving Expenses
under the Tax Reform Act of 1969
REFERENCES: a. Treasury Fiscal Requirements Manual
for Guidance of Departments and Agencies,
Transmittal Letter No. 42, dtd 9 Mar 70
Office of Finance Instruction Sheet No. 39,
dtd 6 April 1970
I. As you know the Tax Reform Act of 1969 broadens the
definition of inoving expenses and makes them deductible from gross
income in determining adjusted gross. You have asked whether
reimbursement by the Agency for these expenses must be included
in whole or in part in Agency withholding tax computations. More-
over, you have submitted the referent Instructions and with respect
to the second document, have asked our opinion as to its accuracy.
2. The Internal Revenue Service has not issued 1970 regula-
tre on treatment of reimbursement of moving expanses for withholding
pose. it has rescinded that section of the regulations applicable
last year and reserved the numbered section. However, for our
a the Treasury Department "Fiscal Requirements Manual"
may be relied upon for the computations you require. If then at a
date IRS issues its regulation, the Treasury manual will
OcC Has Reviewed
brought into conformance.
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3. Subsection 3080. 10 of the Treasury Fiscal Requirements
Manual states.
TAX WITHHOLDING. An allowance or reimburse-
ut to an employee for moving expenses paid by the
employee is not subject to tax withholding if (and to the
extent that) the employee may, for income tax ,purposes,
deduct the moving expenses from his gross income. Those
moving expenses which may be deducted by the employee
(subject to certain conditions), and for which the correspond
ing allowance or reimbursement is not subject to tax with-
holding, are the reasonable expenses of traveling (including
.seals and lodging), and of moving household goods and
personal effects, from the former residence to the new
residenc.; of traveling (including meats and lodging) for the
purpose of searching for a now residence; of meals and
lodging while occupying temporary quarters; or constituting
qualified residence sale, purchase, or lease expenses.
The aggregate amount allowable as a deduction for the
houseehunting trip and temporary quarters is $1, 001. The
aggregate amount allowable as a deduction for the residence
sale, purchase, or least expenses is $2, 500, reduced by the
aggregate amount allowable for the househunting trip and
temporary quarters. Allowances or reimbursements to
employees which exceed the above aggregate amounts
allowable an deductions, along with reimbursements for
any other moving expenses, are subject to tax withholding.
4. It is my understanding from our conversations on this
subject that you have ordered taxes to be withheld on all moving
expenses reim rsebment, which do not clearly fall within the above
listing or are in excess of the amounts allowed. Moreover, you are
tiug employees who have received such reimbursements that
they will have to include them in their income tax calculations.
S. We perceive no legal objection to the Office of Finance
and your treatment of the reimbursement of moving
affect* withholding tax is correct. If IRS does
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publish a regulation which in any way is in coa#lict with the Treasury-
instruction the Treasury instruction a course will be amended at
that aarne time.
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cc: OGCA
OGC:JBU:bg
Distribution:
Orig & 1 - Addressee
L-1'- Subject - FEDERAL TAXES
1 - JBU Signer
1 - Chrono
SECRET
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THE DEPARTMENT OF THE TREASUR
FISCAL SERVICE
BUREAU OF ACCOUNTS
WASHINGTON, D.C. 20226
TREASURY FISCAL REQUIREMENTS MANUAL FOR
GUIDANCE OF DEPARTMENTS AND AGENCIES
M4R 2 1970
TRANSMITTAL LETTER NO. 42
TO HEADS OF GOVERNMENT DEPARTMENTS AND AGENCIES AND OTHERS CONCERNED:
1. MATERIAL TRANSMITTED
Revision of Part III, Section 3080 (Moving Expenses).
2. PROCEDURAL REVISIONS
Section 3080 has been revised to give effect to the provisions
relating to moving expenses as amended by the Tax Reform Act of 1969
(P.L. 91-172, approved December 30, 1969). The Act broadened the scope
of moving expenses which may, for income tax purposes, be deducted by
an employee from his gross income, and for which the related reimburse-
ment or allowance is not subject to tax withholding. However, the
requirements for tax withholding set forth in Paragraph 3080.10 are
applicable only to reimbursements or allowances for moving expenses
paid by an employee after December 31, 1969. There is no change in
the treatment of a reimbursement or allowance for moving expenses paid
by an employee on or before December 31, 1969; only the expenses of
traveling and of moving household goods and personal effects from the
former residence to the new residence may be deducted by the employee
and, thus, only the corresponding reimbursements are not subject to tax
withholding. The requirement in Paragraph 3080.20 for including the
aggregate amount of the reimbursement or allowance in an employee's
gross income is applicable without regard to the date of payment of the
moving expenses by the employee.
3. PAGE CHANGE
Remove Page Insert Page
3-3070.30/3-3080 February 1967 3-3070.30/3-3080.20 March 1970
4. PEN AND INK CHANGES
In the Table of Contents of Part III, change Section 3080 to read
"MOVING EXPENSE REIMBURSEMENTS," and add Paragraphs "3080.10 Tax With-
holding" and "3080.20 Inclusion in Gross Income."
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5. EFFECTIVE DATE
Effective upon receipt.
6. OTHER
Any questions on this subject should be directed to the Internal
Revenue Service, Washington, D. C., or to any District Director of
Internal Revenue.
Commissioner of Accounts
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TREASURY FISCAL REQUIREMENTS MANUAL 3-3070.30
FISCAL SERVICE - ?UREAU OF ACCOUNTS March 1970
PART III - PAYROLLS, DEDUCTIONS, AND WITHHOLDINGS
3070.30 - LEVY EXCEEDING "TAKE HOME, PAY." If the amount shown
in the notice of levy exceeds the "take home pay," the employing
agency shall place the following legend on the face of the
employee's pay check below the payee's name.
"Not negotiable by payee. For deposit by District
Director of Internal Revenue pursuant to levy under
the Internal Revenue Code."
3070.40 - LEVY LESS THAN "TAKE HOME PAY." If the amount of
levy is less than the "take home pay" a check will be drawn to the
payee for the excess of the levy; the balance (amount appearing in
the notice of levy) will be remitted to the District Director of
Internal Revenue.
3070.50 - LIQUIDATION THROUGH PAYROLL DEDUCTIONS. An employee
may arrange with the Internal Revenue Service to liquidate his tax
liability by payroll deduction. Internal Revenue Service Form
No. 2159, "Agreement for Liquidation of Federal Tax through Pay-
roll Deductions," signed by the Collection Officer of the Internal
Revenue Service and by the employee will be the authorization for
payroll deductions. The original will be sent to the payroll
office. The employing agency will deduct the amount agreed upon
from each salary payment until the total tax liability has been
liquidated.
3070.60 - PAYMENT TO INTERNAL REVENUE SERVICE. One check each
pay period to the Internal Revenue Service will cover amounts
deducted from employees' pay (either by agreement or because the
notice of levy is less than "take home pay"). A list of each
employee involved, the amount, the employee's tax account number,
and the taxable year will accompany the check to the place specified
by the Internal Revenue Collection Officer.
Section 3080 - MOVING EXPENSE REIMBURSEMENTS. Federal agencies are
authorized by Public Law 89-516, approved July 21, 1966, (80 Stat.
323) to reimburse employees for certain moving expenses incident to
transfers made primarily in the interest of the Federal agency.
Regulations governing these payments appear in Bureau of the Budget
Circular No. A-56, Revised, dated October 12, 1966.
3080.10 - TAX WITHHOLDING. An allowance or reimbursement to an
employee for moving expenses paid by the employee is not subject to
tax withholding if (and to the extent that) the employee may, for
TRANSMITTAL LETTER No. 42
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3-3080.20 TREASURY FISCAL REQUIREMENTS MANUAL
I March 1970
PART III - PAYROLLS, DEDUCTIONS, AND WITHHOLDINGS
Section 3080 - MOVING EXPENSE REIMBURSEMENTS (continued)
income tax purposes, deduct the moving expenses from his gross
income. Those moving expenses which may be deducted by the employee
(subject to certain conditions), and for which the corresponding
allowance or reimbursement is not subject to tax withholding, are
the reasonable expenses of traveling (including meals and lodging),
and of moving household goods and personal effects, from the
former residence to the new residence; of traveling (including
meals and lodging) for the purpose of searching for a new residence;
of meals and lodging while occupying temporary quarters; or consti-
tuting qualified residence sale, purchase, or lease expenses.
The aggregate amount allowable as a deduction for the househunting
trip and temporary quarters is $1,000. The aggregate amount
allowable as a deduction for the residence sale, purchase, or lease
expenses is $2,500, reduced by the aggregate amount allowable for
the househunting trip and temporary quarters. Allowances or
reimbursements to employees which exceed the above aggregate amounts
allowable as deductions, along with reimbursements for any other
moving expenses, are subject to tax withholding.
3080.20 - INCLUSION IN GROSS INCOME. All amounts paid as
reimbursement or allowance for moving expenses should be included
in the gross income of each employee involved and should be reported
on Form W-2, Wage and Tax Statement. The amounts paid which were
not subject to tax withholding should be reported on Form W-2 as
"other compensation paid." The amounts paid which were subject to
tax withholding should be reported on Form W-2 as "wages paid
subject to withholding." The aggregate amount of all "wages paid
subject to withholding" and "other compensation paid" should be
shown on line 1 of Form 941, Employer's Quarterly Federal Tax
Return.
TRANSMITTAL LETTER No. 42
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 S-E-C-R-E-T
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OFFICE OF FINANCE INSTRUCTION SHEET NO.
(This Instruction Sheet is for information only and may be destroyed)
INSERT
ISSUANCE PAGE
NOS. NOS.
OFI 125, All
Revised pages
Figure
1&2 1
principal changes are to (a)
require that reimbursements
for travel expenses and for
transportation of household
goods and personal effects
(Sections 2,1, 202, 2,3, 5,2
and 6.4) be reported as gros
income and (b) provide for
exemption from tax with-
holding of payments within
specified limits for move ing
expenses which may be
deducted from gross income
under the provisions of the
Tax Reform Act of 1969,
Distribution: Regular
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S-E-C-R-E-T
6 Apr 70 This revised instruction
prescribes changes in pro-
cedures for reporting as
gross income and for with-
holding taxes on reimburse-
ments to personnel for
25X1A m expense claims under
Attachment 3. The
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