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

1. (1) Withhold a WTA;
2. (2) Pay the WTA as withholding tax to the Internal Revenue Service (IRS) until the assignment ends; and
3. (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. (1) Compute the WTA for all taxable benefits received since recognizing the assignment is no longer “temporarily away from home”;
2. (2) Pay the computed amount to the IRS; and
3. (3) Begin paying WTA to the IRS until the extended TDY assignment ends.