Board of Contract Appeals

                    General Services Administration

                         Washington, D.C. 20405

 

 

                         _____________________

 

                            January 11, 2000

                         _____________________

 

 

                            GSBCA 15073-RELO

 

 

                  In the Matter of MICHAEL R. PLANITZ

 

 

        Michael R. Planitz, Ardmore, AL, Claimant.

 

        Col. G.L. Hill,  Commanding, Defense Finance  and Accounting

   Service, St. Louis  Operating Location, St. Louis,  MO, appearing

   for Department of Defense.

 

   PARKER, Board Judge.

 

        Michael  R. Planitz,  an employee of  the Department  of the

   Army who was transferred  to Huntsville, Alabama, asks the  Board

   to review  the Army s  calculation of  his Relocation  Income Tax

   (RIT)  allowance.   The  RIT allowance  is intended  to reimburse

   transferred employees for substantially all of the additional tax

   liability  incurred as a result of moving expense reimbursements.

   According  to Mr.  Planitz, although  his 1998  earned  income of

   $58,421 put him in the 28 percent Federal income tax bracket,  he

   was reimbursed at a rate  of 15 percent because the  marginal tax

   rate table used for calculating  the RIT allowance does not reach

   the 28 percent rate until a  gross income of $61,069 is achieved.

   Mr. Planitz believes that the RIT allowance tax  rate table is in

   error and that he should have been reimbursed based on the higher

   rate.  As discussed below, we find no error in the tax rate table

   and thus deny Mr. Planitz s claim.

 

        The marginal tax  rate table, which is published  as part of

   the  Federal Travel  Regulation,  establishes  the  gross  earned

   income levels  at which various  tax rates apply for  purposes of

   calculating the  RIT allowance.   41 CFR  302-11, App.  A (1998).

   The  table necessarily  does  not match  the  Federal income  tax

   tables because the amounts listed  in the marginal tax rate table

   are  gross earned  income amounts,  not  taxable income  amounts.

   Federal  income taxes  are paid  based  on taxable  income, which

   takes into  account such  things as  deductions, exemptions,  and

   credits.  The income levels in the marginal tax rate table, which

   result from extensive research by the Department of the Treasury,

   are based on  average amounts of taxable income  at various gross

   income levels.   For 1998, Treasury s research determined that an

 

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    average  married  taxpayer filing a  joint return would  reach a

   taxable income which would put him in the  28 percent tax bracket

   when  his gross  earned income  reached $61,069.    Mr. Planitz s

   reimbursement  did not match exactly his additional tax liability

   because he did not have exactly the  same deductions, exemptions,

   and credits as the  average  taxpayer.

 

        As we explained  recently in Herman S.  Ransom, GSBCA 15151-

   RELO  (Dec.  28,  1999),  the  statute and  the  regulations  are

   designed  to reimburse  employees for  substantially  all of  the

   taxes they incur  as a result of reimbursed  relocation expenses.

   The procedures contained  in the regulations for  calculating the

   amount of an allowance are  not designed to reimburse an employee

   for the exact  amount of the employee's tax  liability and cannot

   be  adjusted  to  take  into  account  an  individual  employee's

   particular circumstances.  41 CFR 302-11.8(b); accord Sol Gilman,

   GSBCA 14938-RELO,  99-2 BCA    30, 506;  William A.  Lewis, GSBCA

   14367-RELO, 98-1 BCA    29,532.   Thus, even though Mr. Planitz's

   circumstances caused  him to incur  a tax liability that  was not

   fully satisfied by the allowance he received, the Army cannot pay

   him an allowance in excess of that permitted by the regulations.

 

 

 

                                      __________________________

                                      ROBERT W. PARKER

                                      Board Judge