Senate bill would provide financial relief to federal employees relocating for work
U.S. Sens. Mark Warner and Tim Kaine (both D-VA) along with Sens. Susan Collins (R-ME), Chris Van Hollen (D-MD) and Mazie Hirono (D-HI) reintroduced bipartisan legislation to provide financial relief to certain civilian federal employees who have to relocate for work.
The Relocation Expense Parity Act will ensure that all federal employees who qualify to have their moving costs reimbursed by the government are also repaid for the taxes owed on relocation reimbursements.
“Straddling our loyal public employees with part of the cost of their employment-related relocation is not just wrong, it’s also a disservice to our workforce,” said Sen. Warner. “This legislation will make sure that the government does not push these costs onto workers or inadvertently deter talented individuals from accepting positions that may force them to relocate.”
“The cost of moving is high. When public servants relocate in order to serve our nation, we should offer our support to alleviate that financial burden. This bill is an effort to ensure we’re giving talented workers the resources they need to work in our government,” Sen. Kaine said.
“When federal employees are required to relocate to continue their public service in a different part of the country or the world, they should not have to worry about paying additional federal taxes on their reimbursement for moving costs,” said Sen. Collins. “Although the vast majority of federal workers are fully reimbursed for this additional cost, this bipartisan legislation would ensure that the remaining five percent of affected workers are fairly compensated for their moving expenses.”
“Federal civilian workers – from FBI agents to teachers on our military bases – work tirelessly to provide crucial services to Americans around the world. However, these men and women can face significant cost burdens when moving to their duty stations or returning home,” said Sen. Van Hollen. “This bill makes an important fix to address that issue. I am proud to join my colleagues in introducing this bipartisan legislation, and I will continue working to support our federal workforce.”
“Moving to Hawaii is expensive, but our country is better off when our Federal workers are able to relocate to serve our veterans, keep our country safe, protect the environment, and provide other forms of public service. This legislation helps to ensure that the cost of moving does not impede the important work civilian federal employees do in Hawaii and across the country every day,” said Sen. Hirono.
“The FBIAA supports the Relocation Expense Parity Act because it would authorize agencies to offset new tax burdens on employees who receive moving reimbursements. It is important to close the gap in current law and help protect FBI Special Agents facing new financial burdens. As part of our work to protect the Nation, Special Agents sign mobility agreements that subject them to transfer to meet the needs of the FBI. These moves are often expensive for Special Agents and their families. The Tax Cuts and Jobs Act eliminates the moving expense deduction, which historically offset this financial burden. Now, Special Agents who relocate to serve the FBI can face thousands of dollars of additional tax liability because moving reimbursement is considered ordinary income. Agencies like the Federal Bureau of Investigation are attempting to offset these new financial burdens, but their options are limited under the law. We urge Congress to act quickly because Special Agents make sacrifices for the nation every day and should not confront financial penalties as result of being willing to serve anywhere they are needed,” said Thomas O’Connor, President of the FBI Agents Association.
“The Federal Law Enforcement Officers Association strongly supports the Relocation Expense Parity Act. Federal agents and law enforcement officers are subject to mobility agreements and frequently relocate to new duty stations throughout their career to protect and serve the American public. Such moves are stressful and costly enough for federal agents and their families – they do not need the additional burden of significant tax bills because they were required to relocate for their job. Agencies are also facing challenges hiring and deploying law enforcement officers, especially to border areas, and those barriers would be lowered with passage of this legislation. I commend Senators Warner, Kaine, Collins, Van Hollen, and Hirono for their leadership on this issue and for their support of federal law enforcement,” said Nathan Catura, National President of the Federal Law Enforcement Officers Association.
“Changes to how a federal employee is reimbursed for expenses related to their relocation have caused federal employees – many of them in law enforcement – to pay unexpected and unfair taxes. Fortunately, the Relocation Expense Parity Act, introduced by Senators Mark Warner, Tim Kaine, Susan Collins, Mazie Hirono, and Chris Van Hollen, helps to address this issue. NTEU commends the senators for their commitment to making sure our nation’s civil servants are treated fairly, especially those whose job requires them to uproot their families and relocate,” said Tony Reardon, National President of the National Treasury Employees Union.
“Federal employees who relocate to new duty stations or return home following completion of their service should not be thanked for their service with a huge tax invoice from the government. Especially as the government is competing for talent in a tight labor market – including in critical fields like law enforcement, cybersecurity, STEM – removing barriers to agencies hiring the talent they need and placing the employee where most needed is more essential than ever. SEA strongly supports the Relocation Expense Parity Act and commends Senator Warner and his colleagues for their continued focus on this issue,” said Bill Valdez, President of the Senior Executives Association.
“I worked for DoDEA schools for decades, ensuring military dependents received a great education, and it was always with the understanding that the government would pay to move my family and our possessions back home when my DoDEA career ended. Suddenly, just months before I was set to retire, I learned the new tax law would make such moving assistance taxable, causing my tax liability for this year to increase by thousands of dollars. Being saddled with this tax debt is a huge unforeseen cost to retirees like myself. It deals a severe blow to my financial situation for retirement and I believe it will cause other current employees to delay their retirements because they cannot afford the tax bill they would incur by moving back home. We’ve been told throughout our careers that the government would pay to ship our stuff home when we left DoDEA. To suddenly make those moving services taxable to us is unfair and hurtful!” said Alex Veto, recently retired teacher from Vilseck High School in Germany, a Department of Defense Education Activity (DoDEA) school.
“Taxing moving allowances and benefits for new hires into the Department of Defense Education Activity will create a huge financial burden for these individuals and make the task of recruiting and hiring qualified employees for overseas locations much harder. Why would anyone agree to uproot themselves – and, in many cases, their families – in order to move halfway around the world if doing so will cause them to incur thousands of dollars in tax liability? And that’s on top of the enormous expenses and stresses anyone agreeing to relocate overseas for government work already faces. The fact is, DoDEA will find it increasingly difficult to find top-tier educators to come work in its schools and the military dependents who have come to rely on such excellent educators staffing DoDEA schools will the ones who suffer as a result,” said H.T. Nguyen, Executive Director of the Federal Education Association.
Currently, some federal workers who have to relocate for work are eligible to have their moving expenses paid by the government, which allows them to relocate without worrying about whether they will be able to afford it. However, the 2017 tax bill eliminated the deduction for job-related moving costs, as well as the exclusion for reimbursements or in-kind contributions made by employers to defray the cost of moving. As a result, almost all moving cost reimbursements became recognized as taxable income. This situation is causing a particular burden for civilian federal employees who, after being assigned to a new duty station, have discovered that hundreds or even thousands of dollars have been withheld from their paychecks, often with little advance notice, in order to cover the cost of taxes associated with moving reimbursements from the federal government.
Following a letter sent by Sens. Warner and Kaine, the General Services Administration (GSA) clarified its rules, allowing about 95 percent of federal workers to be repaid for these taxes. Unfortunately, the remaining five percent of eligible workers remain responsible for covering thousands of dollars in taxes out of pocket.
The Relocation Expense Parity Act would close the gap for these five percent of workers, benefiting agencies who are likely to have recruitment problems if they do not refund employees for their relocation reimbursement taxes. The Department of Defense, for example, hires thousands of teachers for schools on military bases across the globe, and moving cost reimbursements can artificially inflate teachers’ salaries, burdening them with steep taxes. Departments like the Federal Bureau of Investigation (FBI) would also benefit from this legislation, as they have a high number of transfers upon hire.
Rep. Elaine Luria (D-VA) plans to introduce companion legislation in the House of Representatives in the coming weeks.