41 CFR 301-11.603: -11.603 Procedures for WTA and ETTRA calculation and reimbursement.

(a) If the agency knows from the beginning that the TDY assignment qualifies as taxable extended TDY, the agency will:

(1) Withhold a WTA;

(2) Pay the WTA as withholding tax to the Internal Revenue Service (IRS) until the assignment ends; and

(3) Increase (or “gross-up”) the WTA amount to reimburse the employee for additional taxes on the WTA.

(b) If the agency realizes during the TDY assignment that taxes will be incurred, the agency will:

(1) Compute the WTA for all taxable benefits received since recognizing the assignment is no longer “temporarily away from home”;

(2) Pay the computed amount to the IRS; and

(3) Begin paying WTA to the IRS until the extended TDY assignment ends.

(c) For the ETTRA, the agency will use the same one-year or two-year process chosen for the relocation income tax allowance (RITA). Additional information on WTA and RITA processes is available in part 302-17 of this subtitle.

(d) If the agency offers a choice, the WTA is optional for the employee.