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B-141063, DEC. 14, 1959

B-141063 Dec 14, 1959
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DANA LATHAM: REFERENCE IS MADE TO A LETTER DATED MAY 25. THE CONTRACT WAS ENTERED INTO ON MAY 26. THE QUESTION OF THE PROPRIETY OF SUCH A SETOFF WAS SUBMITTED HERE BY THE DEPARTMENT OF THE ARMY. IT APPEARS THAT ANY PROFIT WHICH FINALLY MAY RE REALIZED BY THE WESTBURY PAVING CORPORATION FROM THE JOINT VENTURE IS SUBJECT TO THE TAX LIEN. IN THIS CONNECTION THERE IS ENCLOSED A COPY OF A LETTER DATED SEPTEMBER 29. WE ARE THEREFORE SUGGESTING TO THE CERTIFYING OFFICER THAT HE MAY WISH TO WITHHOLD PAYMENT ON THE VOUCHER UNTIL YOU HAVE HAD AN OPPORTUNITY TO SERVE A LEVY ON THE JOINT VENTURE OR TAKE OTHER ACTION LOOKING TOWARD COLLECTION OF THE TAXES INVOLVED.

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B-141063, DEC. 14, 1959

TO MR. DANA LATHAM:

REFERENCE IS MADE TO A LETTER DATED MAY 25, 1959, YOUR FILE C:C:OM, FROM THE CHIEF, COLLECTION OPERATIONS BRANCH, INTERNAL REVENUE SERVICE, ADDRESSED TO THE OFFICE OF THE CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, RELATIVE TO THE INDEBTEDNESS OF THE WESTBURY PAVING CORPORATION TO THE UNITED STATES FOR WITHHOLDING AND FICA ASSESSMENTS FOR THE SECOND, THIRD AND FOURTH QUARTERS OF 1957 AND THE FIRST QUARTER OF 1958.

YOUR OFFICE REQUESTED THE DEPARTMENT OF THE ARMY TO TAKE THE NECESSARY STEPS TO WITHHOLD FROM ANY MONEYS DETERMINED TO BE DUE WESTBURY UNDER CONTRACT NO. DA-31-075-ENG-657 AN AMOUNT SUFFICIENT TO LIQUIDATE ITS UNPAID TAX LIABILITY. THE CONTRACT WAS ENTERED INTO ON MAY 26, 1958, BETWEEN THE UNITED STATES AND N. RYAN COMPANY, INC., AND WESTBURY PAVING CORPORATION, A JOINT VENTURE, FOR AN OUTFALL DITCH AT SEYMOUR JOHNSON AIR FORCE BASE, GOLDSBORO, NORTH CAROLINA.

THE QUESTION OF THE PROPRIETY OF SUCH A SETOFF WAS SUBMITTED HERE BY THE DEPARTMENT OF THE ARMY. FOR THE REASONS STATED IN OUR DECISION OF TODAY, TO THE CERTIFYING OFFICER, COPY HEREWITH, WE DO NOT BELIEVE THAT SUCH A SETOFF LEGALLY CAN BE MADE. HOWEVER, IN VIEW OF THE HOLDINGS IN UNITED STATES V. WORLEY, 213 F.2D 509, AND UNITED STATES V. BALANOVSKI, 236 F.2D 298, IT APPEARS THAT ANY PROFIT WHICH FINALLY MAY RE REALIZED BY THE WESTBURY PAVING CORPORATION FROM THE JOINT VENTURE IS SUBJECT TO THE TAX LIEN. IN THIS CONNECTION THERE IS ENCLOSED A COPY OF A LETTER DATED SEPTEMBER 29, 1959, FROM N. RYAN COMPANY, INC., TO THE CERTIFYING OFFICER CONCERNING THE RELATIONSHIP BETWEEN THE JOINT VENTURERS. WE ARE THEREFORE SUGGESTING TO THE CERTIFYING OFFICER THAT HE MAY WISH TO WITHHOLD PAYMENT ON THE VOUCHER UNTIL YOU HAVE HAD AN OPPORTUNITY TO SERVE A LEVY ON THE JOINT VENTURE OR TAKE OTHER ACTION LOOKING TOWARD COLLECTION OF THE TAXES INVOLVED.

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