S. 1879 - REIMBURSEMENT OF FEDERAL EMPLOYEE'S RELOCATION EXPENSES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85B01152R001001350019-0
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 2
• Document Creation Date: December 21, 2016
• Document Release Date: May 14, 2008
• Sequence Number: 19
• Publication Date: October 28, 1983
• Content Type: MEMO

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ADPP 246-83
29, OCT 1'
Legislation Division, OLL
VIA: Deputy Director for Administration
Director of Finance
S. 1879 - Reimbursement of Federal Employee's
Relocation Expenses
REFERENCE: OLL 83-2377 Same Subject
1. The Office of Finance is pleased to see legislative initiatives which
seek to correct the existing inequities associated with domestic relocations
of federal employees. There are, however, serious problems inherent in the
administration of S. 1879.
2. Under present law, reimbursed costs of domestic transfers constitute
taxable income to employees involved in such transfers. The Warner-Trible
bill would eliminate this tax cost by authorizing agencies to reimburse the
employee for the tax paid on this excess taxable income. Such reimbursement
is also taxable and the bill allows that tax to be reimbursed to the .
employee. This second payment is taxable but there is apparently no intent to
extend reimbursement beyond the second tier of the tax. In order to compute
the reimbursements for the tax paid, it will be necessary to obtain a copy of
each Federal, State, and local tax return for every employee affected,
recompute the tax by eliminating excess reimbursements, and make payment to
the employee. The process will also require ready access to the tax
regulations of all jurisdictions to which taxes were paid in order to consider
the effect of carrybacks, carryforwards, tax credits, itemized deductions,
etc. Because two tax reimbursements can occur and represent taxable income,
the employee will be required to submit the following year's tax return for
recomputation and another taxable payment.
3. In addition to the foregoing, there is a major compliance problem
involving adjustments to a return that has been reconciled for purposes of tax
reimbursements. Taxpayers are entitled to amend their returns for a number of
years subsequent to original filing and the IRS can propose changes to tax
liabilities for a variety of reasons. There is no practical way to assure
that the reimbursement made is not later invalidated by a subsequent
adjustment to the tax for a particular year.
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A. In sum, financial administration of this proposed bill would be
extremely difficult and costly. An obvious alternative is to amend the tax
code and exclude these reimbursements from gross income. There are probably
political sensitivities attached to the granting of special tax treatment for
government employees but it would appear to be an easier and more cost
effective solution to the problem than S. 1879.
5. The Office of Finance fully endorses the intent of S. 1879 and its
companion H.R. 3852 but recommends that Legislation Division explore the
possibility of amending the tax code rather than making reimbursements which
are taxable income.
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