[Federal Register Volume 84, Number 227 (Monday, November 25, 2019)]
[Rules and Regulations]
[Pages 64779-64783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25411]


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GENERAL SERVICES ADMINISTRATION

41 CFR Parts 302-1, 302-2, 302-4, and 302-17

[FTR Amendment 2020-02; FTR Case 2019-302; Docket No. 2019-0011, 
Sequence 1]
RIN 3090-AK00


Federal Travel Regulation; Taxes on Relocation Expenses, 
Relocation Expense Reimbursement

AGENCY: Office of Government-wide Policy (OGP), General Services 
Administration (GSA).

ACTION: Direct final rule; request for comments.

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SUMMARY: The General Services Administration (GSA), in consultation 
with the Secretary of the Treasury, is issuing a direct final rule to 
amend the Federal Travel Regulation (FTR) to authorize relocation 
reimbursement for a number of expenditures. This amendment is necessary 
because the Tax Cuts and Jobs Act of 2017 suspended both the moving 
expenses income tax deduction and the exclusion from income for 
qualified moving expense reimbursements for tax years 2018 through 
2025.

DATES: Effective date: This rule is effective on January 9, 2020 
without further action, unless GSA receives adverse comments by 
December 26, 2019. GSA will consider whether these comments are 
significant enough to publish a timely withdrawal in the Federal 
Register informing the public that this direct final rule will not take 
effect. Please see SUPPLEMENTARY INFORMATION for more information on 
significant adverse comments.
    Applicability date: This direct final rule is applicable to 
employees who are authorized reimbursement for relocation expenses 
under the FTR and who receive some or all reimbursements, direct 
payments, or indirect payments on or after January 1, 2018, and on or 
before December 31, 2025.
    Comment Date: Interested parties should submit written comments to 
the Regulatory Secretariat Division at one of the addresses shown below 
on or before December 26, 2019 to be considered in the formation of the 
final rule.

[[Page 64780]]


ADDRESSES: Submit comments identified by FTR Case 2019-302 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by entering ``FTR Case 
2019-302'' under the heading ``Enter Keyword or ID'' and selecting 
``Search.'' Select the link ``Submit a Comment'' that corresponds with 
``FTR Case 2019-302'' and follow the instructions provided on the 
screen. Please include your name, company name (if any), and ``FTR Case 
2019-302'' on your attached document.
     Mail: General Services Administration, Regulatory 
Secretariat Division (MVCB), Attn: Lois Mandell, 1800 F Street NW, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite ``FTR Case 2019-
302'' in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal and/or business confidential information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Mr. Rick Miller, Program Analyst, Office of Government-wide Policy, at 
202-501-3822 or [email protected]. Contact the Regulatory 
Secretariat Division (MVCB), 1800 F Street NW, Washington, DC 20405, 
202-501-4755, for information pertaining to status or publication 
schedules; please cite ``FTR Case 2019-302.''

SUPPLEMENTARY INFORMATION: 

A. Public Participation

    GSA is publishing this direct final rule without a prior proposed 
rule because this is a non-controversial action resulting from changes 
to the Internal Revenue Code made by Public Law (Pub. L.) 115-97, known 
as the ``Tax Cuts and Jobs Act of 2017'' (December 22, 2017), and GSA 
anticipates no significant adverse comments. A significant adverse 
comment is defined as one where the comment explains why the rule would 
be inappropriate, including challenges to the rule's underlying premise 
or approach, or would be ineffective or unacceptable without a change. 
In determining whether a significant adverse comment is sufficient to 
terminate a direct final rulemaking, GSA will consider whether the 
comment raises an issue serious enough to warrant a substantive 
response in a notice-and-comment process. GSA notes that comments that 
are frivolous, insubstantial, or outside the scope of the rule will not 
be considered adverse under this procedure. A comment recommending a 
rule change in addition to the rule will not be considered a 
significant adverse comment, unless the comment states why the rule 
would be ineffective without the additional change. In addition, if a 
significant adverse comment applies to a part of a rule and that part 
can be severed from remainder of the rule (e.g., where a rule deletes 
several unrelated regulations), GSA may adopt as final those parts of 
the rule that are not the subject of a significant adverse comment.
    For detailed instructions on sending comments and additional 
information on the rulemaking process, see the ADDRESSES section of 
this document.

B. Background

    The Tax Cuts and Jobs Act of 2017 suspended moving expense 
deductions along with the exclusion for employer reimbursements and 
payments of qualified moving expenses effective January 1, 2018, for 
tax years 2018 through 2025. Pursuant to 5 U.S.C. 5738, the 
Administrator of General Services is mandated to prescribe necessary 
regulations regarding Federal employees who relocate in the interest of 
the Government. The overall implementing authority is the FTR, codified 
in Title 41 of the Code of Federal Regulations, Chapters 300-304 (41 
CFR Chapters 300-304).

C. Discussion of Changes and Expected Impact of This Rule

    The direct final rule amends the FTR in accordance with the new tax 
changes impacting relocation expense entitlements for those employees 
identified in FTR section 302-1.1 who are authorized relocation 
reimbursements under the FTR and who receive some or all 
reimbursements, direct payments, or indirect payments on or after 
January 1, 2018 and on or before December 31, 2025. This direct final 
rule amends the FTR sections pertaining to the supplemental wage rate, 
taxable and nontaxable relocation entitlements, Withholding Tax 
Allowance (WTA), Relocation Income Tax Allowance (RITA), and employee 
eligibility for WTA and RITA. This direct final rule also clarifies the 
50-mile distance test definition for purposes of relocation expense 
allowances, where to find relocation mileage reimbursement rates when 
using a privately owned vehicle (POV) to travel from the old duty 
station to the new duty station, and other provisions of FTR Chapter 
302 impacted by the new tax changes. In addition, this direct final 
rule removes certain examples and tables from FTR part 302-17 and 
directs readers to updated examples and tables published in an FTR 
bulletin on the GSA website.
    Accordingly, the direct final rule amends the FTR by:
    1. Section 302-1.1(b)--Revising language regarding application of 
the 50-mile distance test.
    2. Section 302-2.6(b)--Removing the second sentence and its 
unnecessary reference to the Internal Revenue Code (IRC) and adding a 
sentence with factors for agencies to consider when authorizing an 
exception to the 50-mile distance test.
    3. Part 302-4--Revising the authority citation to correct a 
typographical error.
    4. Section 302-4.300--Revising the last sentence to replace a 
defunct website link.
    5. Section 302-17.1--Revising the term ``Marginal tax rate (MTR)'' 
to remove the example and notify the reader that examples of how to 
determine the MTR are published in an FTR bulletin.
    6. Section 302-17.5--Revising the second sentence to clarify that 
eligibility for WTA and RITA includes employees transferring in the 
interest of the Government from one official station or agency to 
another for permanent or temporary change of station (TCS).
    7. Section 302-17.6--Revising paragraphs (b) and (c) and adding 
paragraph (d) to include Senior Executive Service (SES) employees 
making last moves home for the purpose of separating from Government 
service as not eligible for the WTA and RITA.
    8. Section 302-17.8--Revising paragraph (a) to effectuate the new 
tax changes that render certain expenses non-deductible, and revising 
paragraph (b) to note that the table accompanying this section 
summarizing the FTR allowances, limitations, and tax treatment of each 
reimbursement, allowance, or direct payment to a service provider or 
vendor has been removed from the FTR and placed in an FTR Bulletin. 
Removing paragraph (c) because its reference to the table to Sec.  302-
17.8 is now obsolete.
    9. Table to Sec.  302-17.8. FTR Allowances and Federal Income Tax 
Treatments--Removing the Table because it is published in an FTR 
bulletin.
    10. Section 302-17.12--Removing reference to ``IRS Publication 521, 
Moving Expenses'' as it does not

[[Page 64781]]

provide additional information and guidance on WTA and RITA.
    11. Section 302-17.21--Revising and adding paragraphs on which 
relocation expenses the WTA covers based upon the new tax changes and 
updating a reference regarding situations where the employee or an 
immediate family member does not hold full title to the home being 
bought or sold.
    12. Section 302-17.22--Revising paragraph (a) to reflect which 
relocation expenses the WTA does not cover based upon the new tax 
changes. Removing paragraph (e) and redesignating paragraphs (f), (g), 
and (h) as paragraphs (e), (f), and (g), respectively.
    13. Section 302-17.24--Revising to update the supplemental wage 
rate from ``25 percent'' to the applicable supplemental wage rate 
generally. Removing Example 1 to part 302-17 and adding a sentence 
notifying the reader that examples of how to calculate the WTA are 
published in an FTR bulletin.
    14. Note to Section 302-17.24--Revising to include Medicare in the 
parenthetical because both Social Security and Medicare payroll taxes 
are collected together under the Federal Insurance Contributions Act 
(FICA) tax.
    15. Section 302-17.30(a)--Revising to update the percentage rate 
from ``25 percent'' to the income tax withholding rate applicable to 
supplemental wages generally.
    16. Section 302-17.40--Adding a sentence to paragraph (b) notifying 
the reader that examples of how to calculate the combined marginal tax 
rate are published in an FTR bulletin and removing Example 2 to part 
302-17 from paragraph (c).
    17. Section 302-17.60(d)--Removing paragraph (d) and its 
accompanying table as unnecessary.
    18. Section 302-17.61(b)--Revising paragraphs (b)(1) and (b)(2) to 
update the supplemental wage rate from ``25 percent'' to the applicable 
supplemental wage rate generally, and removing from paragraph (b)(1) 
Example 3 to part 302-17 and references thereto in paragraphs (b)(1) 
and (b)(2). Adding paragraph (b)(3) to notify the reader that examples 
of relocation expense allowances paid by accepting or declining the WTA 
are published in an FTR bulletin.
    19. Section 302-17.62(b)--Removing the last sentence as it refers 
to Example 3 to part 302-17 which is now published in an FTR Bulletin.

D. Executive Orders 12866 and 13563

    Executive Orders (E.O.) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives, and if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
GSA has determined that this direct final rule is a significant 
regulatory action and is subject to review under section 6(b) of E.O. 
12866, Regulatory Planning and Review, dated September 30, 1993. GSA 
has further determined that this direct final rule is not a major rule 
under 5 U.S.C. 804.

E. Executive Order 13771

    This direct final rule is not subject to the requirements of E.O. 
13771 because it is related to agency organization, management, or 
personnel.

F. Regulatory Flexibility Act

    This direct final rule will not have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. This direct final 
rule is also exempt from the Administrative Procedure Act pursuant to 5 
U.S.C. 553(a)(2) because it applies to agency management or personnel.

G. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FTR do not impose recordkeeping or information collection 
requirements, or the collection of information from offerors, 
contractors, or members of the public that require the approval of the 
Office of Management and Budget (OMB) under 44 U.S.C. 3501, et seq.

H. Small Business Regulatory Enforcement Fairness Act

    This direct final rule is also exempt from Congressional review 
prescribed under 5 U.S.C. 801. This direct final rule is not a major 
rule under 5 U.S.C. 804.

List of Subjects in 41 CFR Parts 302-1, 302-2, 302-4, and 302-17

    Government employees, Income taxes, Travel and transportation 
expenses.

    Dated: November 18, 2019.
Emily W. Murphy,
Administrator, General Services Administration.

    For the reasons set forth in the preamble, GSA amends 41 CFR parts 
302-1, 302-2, 302-4, and 302-17 as set forth below:

PART 302-1--GENERAL RULES

0
1. The authority citation for 41 CFR part 302-1 continues to read as 
follows:

    Authority: 5 U.S.C. 5738; 20 U.S.C. 905(a).


Sec.  302-1.1  [Amended]

0
2. Amend Sec.  302-1.1 by removing from paragraph (b) ``is at least 50 
miles distant from your old duty station'' and adding ``meets the 50-
mile distance test'' in its place.

PART 302-2--EMPLOYEE ELIGIBILITY REQUIREMENTS

0
3. The authority citation for 41 CFR part 302-2 continues to read as 
follows:

    Authority: 5 U.S.C. 5738; 20 U.S.C. 905(a).


0
4. Amend Sec.  302-2.6 by revising paragraph (b) to read as follows:


Sec.  302-2.6  May I be reimbursed for relocation expenses if I 
relocate to a new official station that does not meet the 50-mile 
distance test?

* * * * *
    (b) The head of your agency or designee may authorize an exception 
to the 50-mile threshold on a case-by-case basis when the authorized 
official determines that it is in the best interest of the Government. 
The determination must take into consideration such factors as 
commuting time and distance between the employee's residence at the 
time of notification of transfer and the new official station.
* * * * *

PART 302-4--ALLOWANCES FOR SUBSISTENCE AND TRANSPORTATION

0
5. The authority citation for 41 CFR part 302-4 is revised to read as 
follows:

    Authority: 5 U.S.C. 5738; 20 U.S.C. 905(a); E.O 11609, 36 FR 
13747, 3 CFR, 1971-1975 Comp., p. 586.


Sec.  302-4.300  [Amended]

0
6. Amend Sec.  302-4.300 by removing ``www.gsa.gov/relo'' from the last 
sentence and adding ``https://gsa.gov/ftrbulletins'' in its place.

PART 302-17--TAXES ON RELOCATION EXPENSES

0
7. The authority citation for 41 CFR part 302-17 continues to read as 
follows:

    Authority: 5 U.S.C. 5724b; 5 U.S.C. 5738; E.O. 11609, as 
amended, 3 CFR, 1971-1975 Comp., p. 586.


0
8. Amend Sec.  302-17.1 by revising the definition of ``Marginal tax 
rate (MTR)'' to read as follows:

[[Page 64782]]

Sec.  302-17.1  What special terms apply to this part?

* * * * *
    Marginal tax rate (MTR) means the tax rate that applies to the last 
increment of taxable income after taxable relocation benefits have been 
added to the employee's income. Examples of how to determine the 
marginal tax rate using the IRS Tax Rate Schedules are published in an 
FTR bulletin at https://gsa.gov/ftrbulletins.
* * * * *


Sec.  302-17.5  [Amended]

0
9. Amend Sec.  302-17.5 by removing ``from one permanent duty station 
to another, in the interest of the Government'' and adding ``in the 
interest of the Government from one official station or agency to 
another'' in its place.

0
10. Amend Sec.  302-17.6 by revising paragraphs (b) and (c) and adding 
paragraph (d) to read as follows:


Sec.  302-17.6  Who is not eligible for the WTA and the RITA?

* * * * *
    (b) Assigned under the Government Employees Training Act;
    (c) Returning from an overseas assignment for the purpose of 
separation from Government service; or
    (d) A Senior Executive Service (SES) employee making their last 
move home for the purpose of separation from Government service.

0
11. Revise Sec.  302-17.8 to read as follows:


Sec.  302-17.8  What limitations and Federal income tax treatments 
apply to various relocation reimbursements?

    (a) Some relocation expenses reimbursed to you or paid directly by 
the Government on or after January 1, 2018, and on or before December 
31, 2025, must be reported as income and you cannot claim them as 
deductible expenses on your Federal tax return.
    (b) A table summarizing the FTR allowances, limitations, and tax 
treatment of each reimbursement, allowance, or direct payment to a 
service provider or vendor is published at https://gsa.gov/ftrbulletins. The table also cites relevant FTR paragraphs for details. 
GSA will revise the table to reflect any changes as quickly as 
possible; however, users of this part may wish to consult with a tax 
advisor to determine what limitations and Federal income tax treatments 
apply to your relocation reimbursement(s).

0
12. Revise Sec.  302-17.12 to read as follows:


Sec.  302-17.12  Where can I find additional information and guidance 
on WTA and RITA?

    GSA has published additional information on WTA and RITA, including 
the illustrations and examples of various RITA computations, in FTR 
Bulletins which are updated as necessary. GSA FTR Bulletins may be 
found at https://gsa.gov/ftrbulletins.

0
13. Revise Sec.  302-17.21 to read as follows:


Sec.  302-17.21  What relocation expenses does the WTA cover?

    The WTA covers certain allowances, reimbursements, and/or direct 
payments to vendors, to the extent that each of them is taxable income. 
In particular, the WTA covers:
    (a) En route lodging, meals and incidental expenses--Reimbursements 
for lodging, meals and incidental expenses while en route to the new 
official station for you and your immediate family member(s). (See part 
302-4 of this chapter).
    (b) Transportation--Transportation expenses, to include commercial 
air or privately owned vehicle, for you and your immediate family 
member(s) transferred between official stations. (See part 302-4 of 
this chapter).
    (c) Househunting trip--Travel (including per diem and 
transportation) expenses for you and/or your spouse for a round trip to 
the new official station to seek permanent residence quarters. 
Househunting is covered regardless of whether reimbursed under the per 
diem allowance or lump sum method. (See part 302-5 of this chapter).
    (d) Temporary quarters--Subsistence expenses for you and your 
immediate family during occupancy of temporary quarters at the old or 
new official station. Temporary quarters are covered regardless of 
whether reimbursed under the actual expense or lump sum method. (See 
part 302-6 of this chapter).
    (e) Transportation and temporary storage of personal property--
Transportation and temporary storage of household goods (HHG) and at 
Government expense for employees who transferred between official 
stations. (See part 302-7 of this chapter).
    (f) Extended storage--Extended storage of household goods for a 
temporary change of station in CONUS or assignment to an isolated duty 
station in CONUS. (See part 302-8 of this chapter).
    (g) Transportation of privately owned vehicle--Transportation of a 
privately owned vehicle at Government expense for employees who 
transferred between official stations in CONUS. (See part 302-9 of this 
chapter).
    (h) Transportation of mobile homes and boats used as a primary 
residence--Expenses for transportation of a mobile home or boat in lieu 
of transportation of household goods to the new official station. (See 
part 302-10 of this chapter).
    (i) Real estate--Expenses for the sale of the residence at your old 
official station and/or purchase of a home at your new official 
station, when reimbursement is made directly to you. This can also 
include expenses for settling an unexpired lease (``breaking'' a lease) 
at your old official station. (See part 302-11 of this chapter. If you 
or a member of your immediate family do not hold full title to the home 
you are selling or buying, see Sec.  302-11.103 of this chapter).
    (j) Relocation services company--Expenses paid by a relocation 
services company to the extent such payments constitute taxable income 
to the employee. The extent to which such payments constitute taxable 
income varies according to the individual circumstances of your 
relocation, and by the state and locality in which you reside. (See 
appropriate state and local tax authorities for additional 
information). (See also part 302-12 of this chapter).
    (k) Property Management Services--Payment for the services of a 
property manager for renting rather than selling a residence at your 
old official station. (See part 302-15 of this chapter).
    (l) Miscellaneous expense allowance--Miscellaneous expenses for 
defraying certain relocation expenses not covered by other relocation 
benefits. (See part 302-16 of this chapter).

0
14. Amend Sec.  302-17.22 by:
0
a. Revising paragraph (a);
0
b. Removing paragraph (e); and
0
c. Redesignating paragraphs (f) through (h) as paragraphs (e) through 
(g).
    The revision reads as follows:


Sec.  302-17.22  What relocation expenses does the WTA not cover?

* * * * *
    (a) Any reimbursement, allowance, or direct payment to a vendor 
that should not be reported as taxable income when you file your 
Federal tax return; this includes but is not limited to expenses for 
transportation of POVs for OCONUS assignments.
* * * * *

0
15. Revise Sec.  302-17.24 to read as follows:


Sec.  302-17.24  How does my agency compute my WTA?

    Each time your agency pays a covered, taxable relocation expense,

[[Page 64783]]

regardless of whether it is a reimbursement, allowance, or direct 
payment to a vendor, it is considered ``supplemental wages'' as defined 
in 26 CFR 31.3402(g)-1(a) (see also IRS Publication 15, Employer's Tax 
Guide). You owe taxes on the WTA itself because, like most other 
relocation allowances, it is taxable income. To reimburse you for the 
taxes on the WTA itself, your agency computes the WTA by using the 
grossed-up withholding formula below and the appropriate supplemental 
wage rate, as specified in IRS Publication 15. This rate, along with 
examples of how to calculate the WTA, is published in an FTR bulletin 
available at https://gsa.gov/ftrbulletins. The formula for calculating 
the WTA is:

WTA = R/(1 - R) x Expense

    Where R is the withholding rate for supplemental wages.

    Note to Sec.  302-17.24: Your agency must deduct withholding for 
FICA (Medicare and Social Security), as the WTA does not cover such 
expenses.

Sec.  302-17.30  [Amended]

0
16. Amend Sec.  302-17.30 by removing from paragraph (a) ``25 
percent''.

0
17. Amend Sec.  302-17.40 by adding a sentence to the end of paragraph 
(b) and revising paragraph (c) to read as follows:


Sec.  302-17.40  How does my agency calculate my CMTR?

* * * * *
    (b) * * * Examples of how to calculate the CMTR are published in an 
FTR bulletin available at https://gsa.gov/ftrbulletins.
    (c) The formula for calculating the CMTR is:

CMTR = F + (1 - F)S + (1 - F)L

Where:

F = Your Federal marginal tax rate
S = Your state marginal tax rate, if any
L = Your local marginal tax rate, if any
* * * * *


Sec.  302-17.60  [Amended]

0
18. Amend Sec.  302-17.60 by removing paragraph (d) and its 
accompanying table.

0
19. Amend Sec.  302-17.61 by revising paragraph (b) to read as follows:


Sec.  302-17.61  Is the WTA optional under the two-year process?

* * * * *
    (b) When deciding whether or not to receive the WTA, you should 
consider the following:
    (1) If you expect that your marginal Federal tax rate will be equal 
to or higher than the supplemental wage rate for the calendar year in 
which you received the majority of your relocation reimbursements, you 
may want to elect to receive the WTA.
    (2) If you expect that your marginal Federal tax rate will be less 
than the supplemental wage rate for the calendar year in which you 
received the majority of your relocation reimbursements, you may want 
to decline receiving the WTA to avoid or limit possible overpayment of 
the WTA, the so-called ``negative RITA'' situation. In a ``negative 
RITA'' situation, you must repay some of the WTA in Year 2. However, 
even if your marginal Federal tax rate will be less than the 
supplemental wage rate, you may want to accept the WTA so that your 
initial reimbursement is larger.
    (3) Examples showing relocation allowances paid by accepting or 
declining the WTA are published in an FTR bulletin available at https://gsa.gov/ftrbulletins.


Sec.  302-17.62  [Amended]

0
20. Amend Sec.  302-17.62 by removing the last sentence from paragraph 
(b).

[FR Doc. 2019-25411 Filed 11-22-19; 8:45 am]
BILLING CODE 6820-14-P