Board of Contract Appeals

                 General Services Administration

                      Washington, D.C. 20405





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                         October 11, 2002

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                         GSBCA 15865-RELO

                                 



               In the Matter of SOAMS L. SHIFFLETT          





     Soams L. Shifflett, Orange Park, FL, Claimant.



     G.J. Murphy, Disbursing Officer, Personnel Support Activity, Department of the

Navy, Jacksonville Naval Air Station, FL, appearing for Department of the Navy.

     

BORWICK, Board Judge.



     Claimant, Soams L. Shifflett, contests the Department of the Navy's use of twenty-

eight percent in calculating the year two relocation income tax allowance (RITA) that was

due incident to his relocation.  We deny the claim as the agency correctly applied the

governing provisions of the Joint Travel Regulations (JTR).  



     In May 1998, the agency transferred claimant in the interest of the Government from

the Navy Calibration Laboratory, Rota, Spain, to the Naval Aviation Depot, Jacksonville,

Florida.  The agency reimbursed claimant for his relocation expenses, including the

withholding tax allowance (WTA) of $2399.46 for year one and the relocation income tax

allowance (RITA) of $1407.09 for year two.  The agency used the federal marginal tax rate

of twenty-eight percent in calculating the WTA and the tax rate of fifteen percent in

calculating the RITA.  



     Claimant states:



     I was paid a RIT claim in the amount of $1407.09 for overpayment of taxes

     withheld from my PCS [permanent change of station] claim.  I received the

     refund because [the agency] withheld federal taxes at the [twenty-eight

     percent] rate rather than the [fifteen percent] rate that was actually due.  When

     they issued the RIT check [the agency] again took out taxes based on a

     [twenty-eight percent] withholding rate rather than the [fifteen percent] rate

     that is due.  I filed this appeal for overpayment of taxes on the RIT claim.  



     Claimant does not challenge the agency's reimbursement of $1407.09 as the RITA

payment, but only the amount of federal income tax withheld ($393.99) from the RITA

reimbursement.  Clamant maintains that the amount withheld should have been $211.06

(fifteen percent of $1407.99) and that claimant was owed an additional $182.93.  



     The RITA is designed to provide a transferred employee substantially enough money, 

in addition to relocation benefits, to pay all income taxes due on the benefits and the

allowance itself.  5 U.S.C.   5724b(a) (Supp. IV 1998); 41 CFR 302-11.1 (1998); JTR

C16001.  The RITA consists of two parts, a WTA, generally payable in the year in which the

employee moves (year one), and a RITA, generally payable in the following year (year two). 

Both the WTA and the RITA are calculated in strict conformance to formulas prescribed by

regulation.  The WTA roughly covers the employee's federal income tax withholding liability

on covered taxable reimbursements in year one.  JTR 16002-D.11.  The RITA is calculated

in year two and paid to cover substantially all of the estimated additional federal, state, and

local income tax liability incurred as a result of the covered moving expense reimbursements

received in year one.  JTR C16002-C; see Patricia Russell, GSBCA 14758-REL0, 99-1 BCA 

 30,291.  



     In calculating the year two RITA, the JTR provide: 



     Since the amount of the RIT allowance is income to an employee in year [two],

     it is subject to the same tax withholding requirements as all other moving

     expense reimbursements.  DoD components must determine the appropriate

     amounts for withholding taxes under their internal tax withholding procedures.

     The amount of withholding taxes is deducted from the RIT allowance to arrive

     at the net payment to an employee.  



JTR 16008-G.  In this matter, the agency relied upon an agency directive, which prescribed

a twenty-eight percent withholding tax rate, that went into effect in January 1994 and was

effective until August 5, 2001.  



     The agency correctly applied the provisions of the JTR.  The Board denies the claim. 







                                        __________________________

                                        ANTHONY S. BORWICK

                                        Board Judge