Subject:

Tax Consequences Associated with an Incorrect Official Station Designation

Reference:

Guide to Financial Operations (GFO), Chapter XIII, Section 6 – Potential Tax Consequences of Assigning an Incorrect Official Station

Office of the State Comptroller (OSC) Travel Manual

Guidance:

In accordance with the OSC Travel Manual an employee’s official station (i.e., usual work location, regardless of where the employee maintains residence) must be designated in the best interest of the State and not for the convenience of an employee or to maximize travel expense reimbursement. In most cases, the official station will be the employee’s tax home (i.e., the general area where an employee’s usual place of work is located). Agencies should periodically review official station and tax home designations to ensure the designations are appropriate. This includes assessing designations for employees in telecommuting scenarios.

There may be adverse tax consequences to the employee when (i) the agency head designates an official station that is not the same as the employee’s tax home, or (ii) an employee’s tax home changes without a corresponding change to the employee’s official station. In these circumstances, travel expense reimbursements (e.g., hotel costs, per diems) will likely be taxable income to the employee, which may be a significant and unexpected tax liability for the employee.

Chapter XIII, Section 6 - Potential Tax Consequences of Assigning an Incorrect Official Station and the related chart in Exhibit A can assist the agency head with (i) understanding the personal income tax implications associated with an employee’s official station and (ii) monitoring official stations to help prevent employees from incurring unexpected tax liabilities.