[Title 41 CFR 302-17.7]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 41 - PUBLIC CONTRACTS AND PROPERTY MANAGEMENT]
[Subtitle F - Federal Travel Regulation System]
[Chapter 302 - RELOCATION ALLOWANCES]
[Subchapter F - MISCELLANEOUS ALLOWANCES]
[Part 302 - 17--RELOCATION INCOME TAX (RIT) ALLOWANCE]
[Sec. 302-17.7 - Procedures for determining the WTA in Year 1.]
[From the U.S. Government Printing Office]


41PUBLIC CONTRACTS AND PROPERTY MANAGEMENT42002-07-012002-07-01false302-17.7Sec. 302-17.7PUBLIC CONTRACTS AND PROPERTY MANAGEMENTFederal Travel Regulation SystemRELOCATION ALLOWANCESMISCELLANEOUS ALLOWANCES17--RELOCATION INCOME TAX (RIT) ALLOWANCE
Sec. 302-17.7  Procedures for determining the WTA in Year 1.

    (a) General rules. The WTA is designed to cover only the employee's 
withholding tax obligation for Federal income taxes on income resulting 
from covered moving expense reimbursements. (See definition in Sec. 302-
17.5(c).) Other withholding tax obligations, if any, such as for social 
security taxes or for State and/or local income taxes on income 
resulting from moving expense reimbursements shall not be included in 
the calculation of the WTA payment. The amount of the WTA is equal to 
the Federal income tax withholding obligation incurred by the employee 
on covered moving expense reimbursements (which are not offset by 
deductible moving expenses) and on the WTA itself. Each time covered 
moving expense reimbursements are paid to or on behalf of the employee, 
the WTA shall be calculated, accounted for, and reported as provided in 
paragraphs (b) through (g) of this section.
    (b) Determination of amount of reimbursement subject to withholding. 
Under IRS regulations, income resulting from reimbursements for 
nondeductible moving expenses is subject to withholding of Federal 
income taxes. (See

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IRS Publication 521, ``Moving Expenses.'') There are some moving 
expenses which may be reimbursed but are not covered taxable 
reimbursements (see definition in Sec. 302-17.5(d)) for purposes of the 
WTA and RIT allowance calculations, such as extended storage of 
household goods. (See exclusions in Sec. 302-17.4.) Therefore, the 
actual amount of the covered taxable reimbursements may be different 
than the amount of nondeductible moving expenses subject to Federal 
income tax withholding. The difference in these amounts should not be 
substantial; therefore, the amount of nondeductible moving expenses 
subject to Federal income tax withholding, as determined by the agency 
pursuant to IRS regulations, may be used in calculating the WTA. (Note 
that the RIT calculation procedure in Sec. 302-17.8 requires 
determination of covered taxable reimbursements.)
    (c) Determination of Federal withholding tax rate (FWTR). Moving 
expense reimbursements constitute supplemental wages for Federal income 
tax purposes. Therefore, an agency must withhold at the withholding rate 
applicable to supplemental wages. Currently, the supplemental wages 
withholding rate is 28 percent. The supplemental wages withholding rate 
should be used in calculating the WTA unless under an agency's 
withholding procedures a different withholding rate is used pursuant to 
IRS tax regulations. In such cases, the applicable withholding rate 
shall be substituted for the supplemental wages withholding rate in the 
calculation shown in paragraph (d) of this section.
    (d) Calculation of the WTA. The WTA is calculated by substituting 
the amounts determined in paragraphs (b) and (c) of this section into 
the following WTA gross-up formula:

Formula:
[GRAPHIC] [TIFF OMITTED] TR20NO01.000

Where:

Y = WTA
X = FWTR (generally, 28 percent)
N = nondeductible moving expenses/covered taxable reimbursements

Example:
If:

X = 28 percent
N = $20,000

Then:
[GRAPHIC] [TIFF OMITTED] TR20NO01.001

Y = .3889 ($20,000)
Y = $7778.00

    (e) WTA payment and employee agreement for repayment. (1) The WTA 
may be calculated several times within Year 1 if reimbursements for 
moving expenses are made on more than one travel voucher. Each time an 
employee is reimbursed for moving expenses which are subject to Federal 
tax withholding in accordance with the IRS regulations, the WTA will be 
calculated and paid unless the employee fails to comply with the 
requirements in paragraph (e)(2) of this section.
    (2) The employee shall be required to agree in writing to repay any 
excess amount paid to him/her in Year 1 (see Secs. 302-17.8(f)(5) and 
302-17.9(b)(3)), and submit the required certified tax information and 
claim for his/her RIT allowance within a reasonable length of time (as 
determined by the agency) after the close of Year 1. Failure of the 
employee to comply with this requirement will preclude the agency's 
payment of the WTA. The entire WTA will be considered an excess payment 
if the RIT allowance claim is not submitted in a timely manner to settle 
the RIT allowance account.
    (f) Determination of employee's withholding tax on WTA. Since the 
amount of the WTA is considered income to the employee, it is subject to 
the same tax withholding requirements as all other moving expense 
reimbursements. (See Treasury Financial Manual, Section 4080, Moving 
Expense Reimbursements, for withholding requirements.)
    (g) End of year reporting. At the end of the year, agencies 
generally are required to issue IRS Form(s) W-2 for each employee 
showing total gross compensation (including moving expense 
reimbursements) and the applicable amount of Federal taxes withheld. For 
tax reporting purposes, the WTA is to be treated as a moving expense 
reimbursement. The total amount of the employee's WTA's paid

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during the year as well as the amount of moving expense reimbursements 
should be included as income on the employee's Form W-2. The Federal tax 
withholding amount applicable to the moving expense reimbursements and 
the WTA should also be included on the employee's Form W-2. The amount 
of the WTA's also will be furnished to the employee along with the 
amount of moving expense reimbursements on IRS Form 4782 or another 
itemized listing provided for the employee's use in preparing his/her 
tax return (see IRS regulations for further guidance) and in claiming 
the RIT allowance as provided in Sec. 302-17.8.