[Decision Concerning Order of Priority for Payment of Remaining Contract Proceeds Held by EPA]

The Environmental Protection Agency (EPA) requested a decision concerning the priority of payments of remaining contract funds between the Internal Revenue Service (IRS), an assignee bank, and a trustee. GAO held that: (1) the assignee bank was not entitled to payment out of the remaining contract proceeds, since it did not render any financial assistance to the contractor or subcontractor to facilitate contract performance; (2) although IRS was entitled to set off the contractor's tax liability, it had to obtain relief from a court of competent jurisdiction; and (3) the trustee in the bankruptcy proceeding was entitled to the remaining funds after offsetting collections were completed. Accordingly, EPA should pay IRS first, if IRS can obtain relief under bankruptcy proceedings.