41 C.F.R. Subpart E—Income Tax Reimbursement Allowance (ITRA), Tax Years 1993 and 1994
Title 41 - Public Contracts and Property Management
Source: 64 FR 32813, June 18, 1999, unless otherwise noted.
The ITRA is an allowance designed to reimburse Federal, State and local income taxes incurred incident to an extended TDY assignment at one location. An employee (and spouse, if filing jointly) who was in a TDY status for an extended period at one location, and who incurred Federal, State, or local income taxes on amounts received as reimbursement for official travel expenses. No. Reimbursement is limited to income taxes.
Title 41: Public Contracts and Property Management
PART 301–11—PER DIEM EXPENSES
Subpart E—Income Tax Reimbursement Allowance (ITRA), Tax Years 1993 and 1994
General
§ 301-11.501 What is the Income Tax Reimbursement Allowance (ITRA)?
§ 301-11.502 Who is eligible to receive the ITRA?
§ 301-11.503 Are Federal Insurance Contribution Act (FICA) and Medicare deductions included in any reimbursement under this part?
Employee Responsibilities
§ 301-11.521 Must I file a claim to be reimbursed for the additional income taxes incurred?
Yes. A claim must be submitted in accordance with your agency's policy.
§ 301-11.522 If I was assessed an income tax penalty and/or interest payment due to incorrect income tax withholdings, are those payments reimbursable?
Yes, for the total amount of the income tax penalty and/or interest assessed by the IRS for tax years 1993 and 1994 only.
§ 301-11.523 What documentation must I submit to substantiate my claim?
Your agency will determine what documentation is sufficient. (See §301–11.531.)
§ 301-11.524 What steps must my agency take to determine my ITRA?
Your agency should:
(a) Determine Federal, State and local marginal tax rates by using the procedures and the marginal tax tables established for the relocation income tax allowance in §302–11.7, §302–11.8, and Appendices A, B, C and D to part 302–11 of this title; or
(b) Determine reimbursement as calculated in the illustration shown in §301–11.535.
§ 301-11.525 Is the ITRA I receive taxable income?
Yes. The amount received must be reported as taxable income in the year in which received, but you are eligible to receive an allowance to cover the taxes assessed on the ITRA under §301-11.528.
§ 301-11.526 May I receive a lump sum payment of the additional tax liability on the covered ITRA in lieu of submitting another claim?
Yes, if agreed to in writing by your agency and with the understanding that you will be responsible for any income taxes due without further reimbursement.
§ 301-11.527 If I elect a lump sum payment, how is the ITRA paid?
(a) Reimbursement is as illustrated:
Lump Sum ITRA Tax Paid to Employee------------------------------------------------------------------------ ------------------------------------------------------------------------ITRA reimbursement for tax year 1993.......................... $14,435Federal Tax liability on ITRA Reimbursement (@ 28%)........... 4,042VA State tax liability (@ 5.75%).............................. 830Local tax liability........................................... 0 --------- Total reimbursement......................................... 19,307------------------------------------------------------------------------
|
(b) Reimbursement of the ITRA and the tax on the ITRA is a final lump sum payment with no further reimbursement. You will be responsible for any income taxes due on $19,307. § 301-11.528 If I do not elect lump sum payment is there any additional reimbursement?Yes. You are reimbursed for the tax on the tax reimbursement received. Your agency will calculate the tax on the tax reimbursement using the formulas developed for the Year 2 reimbursements of the relocation income tax allowance (see §302–11.8 of this title). Agency Responsibilities§ 301-11.531 What documentation must the employee submit to substantiate a claim?You must determine what documentation you require to be submitted with the employee's claim. It can include: (a) A certified statement as prescribed in §302–11.10 of this title or copies of completed Federal, State and local tax return for the tax year in which the taxes were withheld and paid. (b) Copies of W-2's and Form 1099's. (c) Any documentation received from the IRS identifying any interest or penalty payment (tax years 1993 and 1994 only). (d) Any other documentation necessary to substantiate the claim. § 301-11.532 How should we compute the employee's ITRA?You should follow the procedures prescribed for the relocation income tax allowance, see §302–11.7, §302–11.8 and Appendices A, B, C, and D to part 302–11 of this title or as illustrated in §301–11.535. § 301-11.533 Are tax penalty and interest payments reimbursable?Yes, the total amount of any penalty and interest assessed by the IRS (for tax years 1993 and 1994 only) due to the failure of the Government to withhold the appropriate income taxes are reimbursable. § 301-11.534 What tax tables should we use to calculate the amount of allowable reimbursement?The tax tables for the year the tax was incurred are to be used. § 301-11.535 How should we calculate the ITRA?(a) Use the documents prescribed in §301–11.531 to calculate the ITRA as follows: (1) Determine Federal, State and local marginal tax rates by using the procedures and the marginal tax tables established for the relocation income tax allowance in §302–11.7, §302–11.8 and Appendices A, B, C and D to part 302–11 of this title; and (2) Add any penalty or interest for tax years 1993 or 1994 only to determine the full ITRA payment; or (b) As calculated in the following illustration.
Example of calculating an employee's tax return using the marginal tax rate schedules in Appendix B to part 302–11 of this title: |
For Tax Years 1993 or 1994 (Married Filing Joint Return)------------------------------------------------------------------------ Original Recalculated------------------------------------------------------------------------1. Adjusted Gross Income (w/ travel $75,246 $75,246 reimbursement).........................2. Subtract travel reimbursement........ .............. (15,482)3. Subtract personal exemptions and (12,689) (12,689) itemized or standard deductions........4. Adjusted taxable Income.............. 62,557 47,0755. Tax liability on adjusted taxable income: a. Federal.......................... 17,516 $7,061* (28%) (15%) b. State, VA (5.75% tax bracket).... 3,597 2,707 c. Local: Not applicable............ 0 0 ------------------------------- d. Total............................ 21,113 9,7686. Difference of total of column 1 minus total of column 2: Additional Taxes Incurred due to travel reimbursement_$11,3457. Add to the tax difference: a. Penalty Payment imposed by IRS tax year 1993_1,500 b. Interest Payment imposed by IRS tax year 1993_1,500Total 6 and 7a and b = ITRA_$14,345**------------------------------------------------------------------------* Adjusted taxable income places employee in lower tax bracket.** The ITRA reimbursement is taxable income for the year in which paid at the appropriate Federal, State and local income tax rates.
§ 301-11.536 Is the ITRA reimbursement considered to be income to the employee?Yes. The ITRA reimbursement is considered taxable income in the year paid and is subject to tax withholding as any other income. § 301-11.537 Are income taxes to be withheld from the ITRA?Yes, as determined by your internal tax withholding procedures established for your agency pursuant to IRS procedures. § 301-11.538 May we offer a lump sum payment to cover the income tax liability on the covered ITRA?Yes, if the employee mutually agrees in writing to the lump sum payment and understands that he/she is responsible for any income taxes without further reimbursement. (See the illustration in §301–11.527.) § 301-11.539 If the employee does not elect a lump sum payment, how is the tax on the ITRA calculated?The tax on the ITRA reimbursement should be calculated using the Year 2 formulas developed for the relocation income tax allowance. (See §302–11.8.) § 301-11.540 How do we handle any excess payment?You must collect any excess payments, which includes issuing corrected W-2's or 1099's. Browse Previous | Browse Next
|
