Pay & Benefits Watch

Erich Wagner | May 16, 2018 | 0 Comments

A Fix for the Relocation Tax Snafu, an Unsuccessful Push for TRICARE Expansion, and More

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The General Services Administration on Monday took steps to correct a situation where federal employees found themselves on the hook for sizeable tax bills related to government-paid relocation expenses after agencies made them move for work.

Officials at the Senior Executives Association had lodged complaints that federal employees who recently were relocated saw one-time paycheck cuts of up to $7,000 as a result of the tax reform law enacted last year. That law removed a deduction for government reimbursements for moving costs related to household goods.  

Sens. Mark Warner and Tim Kaine, D-Va., crafted a letter last month to GSA asking officials to move swiftly to tweak rules on the relocation income tax allowance and withholding tax allowance to protect feds from future tax-related sticker shock.

In a bulletin to agency heads this week, Jessica Salmoiraghi, GSA associate administrator in the Office of Government-wide Policy, announced a temporary fix to the problem, until a formal amendment to federal travel regulations can be issued.

“Agencies are authorized to pay WTA and RITA to cover ‘substantially all’ of the increased tax liability resulting from receipt of the relocation expense reimbursements either paid directly or indirectly,” she wrote.

GSA’s memo clarifies that the temporary change applies retroactively to relocations that occurred as early as Jan. 1, 2018, meaning all federal employees who received major tax bills related to a relocation as a result of the tax law change should be reimbursed.

Meanwhile on Capitol Hill, some lawmakers attempted unsuccessfully last week to expand access to the military’s health insurance program to federal employees who serve as reservists. During the mark-up for the fiscal 2019 National Defense Authorization Act by the House Armed Services Committee, lawmakers considered attaching the provisions of the Health Coverage for Reservists and Guardsmen Act (H.R. 5121), but ultimately withdrew the amendment.

First introduced in March by Reps. Trent Kelly, R-Miss., and Jacky Rosen, D-Nev., the bill would provide reservists who are federal employees access to the military’s TRICARE Reserve Select health insurance program. Under current law, federal employees who are reservists can receive government health coverage only through the Federal Employees Health Benefits Program. Reservists who work in the private sector, however, are not barred from enrolling in TRICARE Reserve Select, which advocates say is often more affordable than the plans offered through FEHBP.

Since the bill’s introduction, it has attracted 33 cosponsors, although it has not yet received a committee hearing.

Elsewhere in Congress, Rep. Dutch Ruppersberger, D-Md., and Del. Eleanor Holmes Norton, D-D.C., introduced a bill that would extend for life existing credit monitoring and identity theft protection services available to victims of the 2015 Office of Personnel Management data breach.

Under current law, OPM will offer identity protection services up to $5 million through 2026 to current and former federal employees, contractors and job candidates whose Social Security numbers were compromised in the hack. But the sponsors of the Reducing the Effects of the Cyberattack on OPM Victims Emergency Response Act (H.R. 5765) argued that there should be no time limit, since there is no expiration date on Social Security numbers.

“The personal records stolen by hackers have no shelf life—so the identity theft protection offered to the victims shouldn’t, either,” Ruppersberger said in a statement. “[Providing] these dedicated and hard-working men and women with a little well-deserved peace of mind is the least we can do.”

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