41 CFR 302-12.5: -12.5 Income tax consequences for use of an RSC.

Employees may incur income taxes on relocation services provided by a relocation services company and paid for by their agency. Section 82 of the Internal Revenue Code states there shall be included in gross income (as compensation for services) any amount received or accrued, directly or indirectly, by an individual as a payment for or reimbursement of expenses of moving from one residence to another residence which is attributable to employment. Employees will receive a relocation income tax allowance (RITA) if their agency determines that such expenses are taxable. The Government does not assume responsibility for payment of an employee's taxes.