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What type of dispute are you having?
I am confused by your description. You say that the agreement is very clear that the lump sum (your company paying the lease off) is a benefit that you are responsible for the taxes on. Since they are treating this payment as compensation, it is being added to your W2, and subject to tax. Then you object to it being added to your W2?
A business (your company) does write off or deduct wages/compensation as business expenses, but this does not negate the fact that this compensation is taxable to you as income. Even if they paid the leasing company directly, this is considered a "third party" transaction, in that they are paying exenses on your behalf.
In addition, even if this is considered "moving expense" reimbursement, the cost of breaking a lease or paying off a lease is not a deductible type of expense, so it would not be eligible to be treated as nontaxable compensation.
If they are open to negotiation, you may suggest that they "gross-up" the payment of the lease. This is a common strategy used when the employer desires that the employee receive the full cost of a benefit that is reduced because of income and payroll taxes.
When an amount is grossed up, there is an equation used that takes into consideration the employee's federal and state tax brackets, and adds the SS and Medicare %'s. Then, when this "grossed-up" amount is added to the employees income, he or she will realize the approximate value of the benefit.
For example, if you are in the 15% bracket, and pay approx. 10% SS, Medicare and state tax, and you receive a taxable benefit of 1000 dollars, you only see 750. So the employer would need to pay you approx 1332 dollars for you to realize the net benefit.
You could argue that your "agreement" does not state that you will be paying tax on the lease payment, and that you are prepared to dispute it with the IRS, and possibly with an attorney. Then you could suggest grossing up the lease payment as an "out" for them.