New Tax Law Creates Problems for Federal Employees

Chad Silver

Chad Silver

Managing Partner of Silver Tax Group, author of the book "Stop the IRS". Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

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On behalf of Silver Tax Group posted in Back Taxes on Monday, April 16, 2018.

Even federal employees have problems with the tax code. This includes experiencing difficulties concerning reimbursement for transportation, travel and relocation.

The problem concerns the need for updating of regulations pertaining to the newly passed Tax Cuts and Jobs Act. Becoming effective on January 1, the Treasury Department and General Services Administration (GSA) have not yet updated applicable polices and regulations. As a result, federal agencies are holding off on reimbursement for employees without further guidance.

The lack of clarity has consequences for employers and employees alike

Due to the hardship federal employees face, they may choose to decline positions that require them to move. They may also choose to leave federal employment behind.

Approximately 25,000 federal employees go through a relocation process every year. In past years, relocating employees would deduct expenses for moving and travel on their tax returns. Yet their circumstances become all the more difficult because of the inability to know if reimbursement will be coming.

Right now, the GSA is withholding travel and moving expenses directly from the federal employee’s paycheck. These expenses can range from as much as $3,500 to $6,000. Yet it appears it is the GSA that needs to consult with the Treasury Department regarding updating of the tax code. Also, it is unclear whether federal employees who already paid moving and travel charges will receive reimbursements.

What would happen next?

Michigan residences in the federal workforce will face these same issues. A lack of clarity regarding tax laws often results in a number of problems concerning compliance with the code.

As the above issues demonstrate, such lack of clarity can prove extremely expensive for taxpayers. It’s for this reason that attorney advocates play such an important role in helping taxpayers out.

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