I received an offer for a new job out of state. The company is offering me a relocation lump sum of $ 17,000 but will gross it up so the "real" amount will be approx. $ 27,150

In the relo agreement they want me to sign, they pro rate the money to be reimbursed for the time prior to 18 month. After that I wouldn't have any money to pay back in case I leave. They prorating always the $27,150 although I only received 17,000.

Should I sign this? Shouldn't I pay a prorated sum based on the 17,000 back since I did only that money. They company would have to ask for a tax reimbursement/credit from the IRS, right? I do not want to pay money back, I didn't receive (taxes).

The employer is grossing up amount to $27,150 to cover the tax liabilities. That is why you will receive only the $17,000.

If you leave the company before the terms of the contract are met, you would have to pay taxes on the pro-rated amount of the money you received. No credits would be due from the IRS.

Whether you sign or not is a personal decision. It sounds like a fair deal, but I cannot really comment authoritatively without a LOT more information.

Stated another way - under this agreement the company pays you $27K, of which $17K comes to you as cash and $10K goes to the IRS on your behalf. So the company is out the full $27K if you leave early. They really have no mechanism to ask the IRS for the $10K back, as the payment of that amount is between you and the IRS. The only way you would ever get that part back is by claiming a deduction for unreimbursed business expenses, but even if you do that you won't come out whole. Think of it as an incentive to stay the full 18 months. This is a fairly common way of doing this sort of thing - in fact in my experience many relo agreements force you to pay the entire amount back if you leave early, not a pro-rated share, and the agreement is often for a longer period of two or even three years. So this deal isn't too bad at all.