Board of Contract Appeals

                 General Services Administration

                      Washington, D.C. 20405











                                                            



                         January 11, 2005

                                                            





                         GSBCA 16506-RELO





                 In the Matter of PAULA M. STEAD





     Paula M. Stead, Fort Belvoir, VA, Claimant.



     Judy Fincher, Supervisor, Travel Section, Defense Finance and Accounting Service,

Indianapolis Center, Texarkana, TX, appearing for Defense Logistics Agency.



PARKER, Board Judge.



     Paula M. Stead believes that her employer, the Department of Defense (DoD),

miscalculated the amount of the relocation income tax allowance (RITA) she was due in

connection with her March 2004 transfer from Wuerzburg, Germany, to Ft. Belvoir,

Virginia.  According to Ms. Stead, although the $4377 in taxable moving expenses paid by

the Government resulted in her incurring about $1488 in additional taxes, she was

reimbursed only $174.86.  As discussed below, DoD correctly calculated the allowance.



     Statute and regulation require agencies to pay various relocation benefits and

allowances to employees who are transferred in the interest of the Government from one

permanent duty station to another.  See 5 U.S.C. ch. 57, subch. II (2000); 41 CFR ch. 302

(2003).  These payments are, for the most part, considered taxable income to the recipients. 

We have previously discussed in some detail the provisions of law, 5 U.S.C.   5724b and 41

CFR pt. 302-17, which require agencies to pay these employees additional money to

effectively compensate them for the taxes they incur consequent to their receipt of these

benefits and allowances.  Robert J. Dusek, GSBCA 14325-RELO, 98-1 BCA   29,440

(1997).



     The regulation establishes a two-step process for accomplishing this goal.  In the year

in which the agency pays the employee relocation benefits and allowances, it also pays a

withholding tax allowance (WTA), which is intended to cover the increase in the employee's

federal income tax withholding liability that results from receipt of the benefits and

allowances.  41 CFR 302-17.5(e), (n), -17.7(a).  The WTA is calculated at a flat rate based

on a marginal tax rate of 28%, regardless of the employee's tax bracket.  Id. 302-17.7(c).  In

the following year, the agency calculates a relocation income tax allowance, which makes

further adjustments in payment, to reimburse the employee for any added tax liability that

was not reimbursed by payment of the WTA, or to cause the employee to repay any

excessive amount of WTA, based on the employee's actual tax situation for the year in which

the relocation benefits and allowances were received.  Id. 302-17.5(f)(2), (m), -17.8.



     It is true, as Ms. Stead states, that she received a RITA payment of only $174.86.  The

record shows, however, that Ms. Stead also received a WTA payment in the amount of

$1159.98 on her voucher of March 31, 2003.  As it turns out, the total amount received,

$1334.84, is very close to the amount Ms. Stead believes she should have received.  Because

there is no evidence that the agency miscalculated either the WTA or the RITA, the claim

is denied.







                                   __________________________

                                   ROBERT W. PARKER

                                   Board Judge