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B-124720, B-129346, AUG. 1, 1961

B-124720,B-129346 Aug 01, 1961
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705) THAT WITHHOLDING OF INCOME TAX IS REQUIRED UNDER SECTION 3402 OF THE 1954 INTERNAL REVENUE CODE FROM THE FULL AMOUNT OF A BACK-SALARY PAYMENT MADE TO A FORMER EMPLOYEE WHO WAS SEPARATED FROM HIS POSITION. IS REFERRED TO THE HOLDING OF THE COURT OF CLAIMS IN LEVERETTE V. OUR OFFICE WAS ENTITLED. FINAL JUDGMENTS OF THE COURT OF CLAIMS ARE PAID ON SETTLEMENTS OF THE GENERAL ACCOUNTING OFFICE ON PRESENTATION OF A CERTIFICATION OF THE JUDGMENT BY THE CLERK AND CHIEF JUDGE OF THE COURT. WE ARE NOT AUTHORIZED TO CERTIFY JUDGMENTS FOR PAYMENT OTHER THAN IN ACCORDANCE WITH THEIR TERMS. WE MUST HOLD THAT WE ARE WITHOUT AUTHORITY TO DEDUCT. THE SETTLEMENTS REFERRED TO BY THE COMMISSIONER IN WHICH DEDUCTIONS WERE MADE FOR THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND AND THE FEDERAL EMPLOYEE'S LIFE INSURANCE FUND INVOLVED JUDGMENTS SPECIFICALLY DIRECTING SUCH DEDUCTIONS.

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B-124720, B-129346, AUG. 1, 1961

TO THE SECRETARY OF THE TREASURY:

ON JUNE 5, 1961, REFERENCE O:ADP:S, THE COMMISSIONER OF INTERNAL REVENUE SUGGESTED THAT WE ESTABLISH ADMINISTRATIVE PROCEDURES TO SET OFF INCOME WITHHOLDING TAX FROM THE AMOUNTS OF JUDGMENTS RENDERED BY THE UNITED STATES COURT OF CLAIMS IN CASES INVOLVING SALARIES OF EMPLOYEES OF THE UNITED STATES. THE COMMISSIONER CITED AN INTERNAL REVENUE SERVICE RULING (REV.RUL. 57-603, C.D. 1957-2,705) THAT WITHHOLDING OF INCOME TAX IS REQUIRED UNDER SECTION 3402 OF THE 1954 INTERNAL REVENUE CODE FROM THE FULL AMOUNT OF A BACK-SALARY PAYMENT MADE TO A FORMER EMPLOYEE WHO WAS SEPARATED FROM HIS POSITION; AND IS REFERRED TO THE HOLDING OF THE COURT OF CLAIMS IN LEVERETTE V. UNITED STATES, 135 CT.CL. 207, 142 F.SUPP. 955, THAT UNDER THE WITHHOLDING PROVISIONS OF THE INCOME TAX LAW, OUR OFFICE WAS ENTITLED, IF NOT REQUIRED, TO WITHHOLD INCOME TAX FROM BACK-PAY AWARDS.

FINAL JUDGMENTS OF THE COURT OF CLAIMS ARE PAID ON SETTLEMENTS OF THE GENERAL ACCOUNTING OFFICE ON PRESENTATION OF A CERTIFICATION OF THE JUDGMENT BY THE CLERK AND CHIEF JUDGE OF THE COURT, AS PROVIDED BY SECTION 2517 (A) OF THE JUDICIAL CODE (28 U.S.C.). EXCEPT FOR THE ADDITION OF INTEREST IN CERTAIN CASES, AS PROVIDED BY 28 U.S.C. 2516 (B) AND SECTION 1302 OF THE ACT OF JULY 27, 1956, 70 STAT. 694, 31 U.S.C. 724A, AND EXCEPT FOR THE WITHHOLDING OF AN AMOUNT EQUAL TO A PLAINTIFF'S DEBT TO THE UNITED STATES, IN ACCORDANCE WITH THE PROCEDURES ESTABLISHED BY THE ACT OF MARCH 3, 1875, AS AMENDED, 31 U.S.C. 227, WE ARE NOT AUTHORIZED TO CERTIFY JUDGMENTS FOR PAYMENT OTHER THAN IN ACCORDANCE WITH THEIR TERMS. UNITED STATES V. O-GRADY, 89 U.S. (22 WALL.) 641; BENEDICT V. UNITED STATES, 66 CT.CL. 437. CONSEQUENTLY, WE MUST HOLD THAT WE ARE WITHOUT AUTHORITY TO DEDUCT, OR TO DIRECT THE DEDUCTION OF, ANY AMOUNT FOR INCOME WITHHOLDING TAX FROM COURT OF CLAIMS JUDGMENTS FOR SALARY, UNLESS, OF COURSE, THE JUDGMENT SHOULD SPECIFICALLY SO PROVIDE.

THE SETTLEMENTS REFERRED TO BY THE COMMISSIONER IN WHICH DEDUCTIONS WERE MADE FOR THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND AND THE FEDERAL EMPLOYEE'S LIFE INSURANCE FUND INVOLVED JUDGMENTS SPECIFICALLY DIRECTING SUCH DEDUCTIONS. THE CASE OF LEVERETTE V. UNITED STATES, SUPRA, INVOLVED A DIRECT SETTLEMENT OF A CLAIM UNDER AUTHORITY OF SECTION 236 OF THE REVISED STATUTES, AS AMENDED, 31 U.S.C. 71, RATHER THAN A JUDGMENT. ALL APPLICABLE DEDUCTIONS, INCLUDING THE INCOME WITHHOLDING TAX, ARE ROUTINELY MADE IN CONNECTION WITH THE LATTER TYPE OF SETTLEMENT. A RULING ON JANUARY 9, 1956, BY THE ASSISTANT COMMISSIONER, RENDERED AT OUR REQUEST, WHICH IS IDENTICAL WITH THE ONE CITED BY THE COMMISSIONER, WAS APPLIED IN OUR DECISION IN 35 COMP. GEN. 452.

CONCERNING THE PROVISIONS OF SECTION 6041 OF THE INTERNAL REVENUE CODE AND SECTION 1.6041-1, ET SEQ., OF THE INCOME TAX REGULATIONS FOR INFORMATION RETURNS ON PAYMENTS OF GAINS, PROFITS, OR INCOME, IT MAY BE THAT YOUR BUREAU OF ACCOUNTS, TO WHICH OUR SETTLEMENTS ARE TRANSMITTED IN THE COURSE OF PAYMENT, IS IN A POSITION TO FURNISH THE INFORMATION. HOWEVER, IF WE CAN BE OF ANY ASSISTANCE, WE SHALL BE PLEASED TO DISCUSS THE MATTER.

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