B-201003, SEPTEMBER 29, 1981, 60 COMP.GEN. 710

B-201003, SEPTEMBER 29, 1981, 60 COMP.GEN. 710

INTEREST - INTERGOVERNMENTAL CLAIMS - FEDERAL AGENCY, ETC. AGAINST STATE, LOCAL, ETC. GOVERNMENTS - FEDERAL LAW APPLICABILITY - CLAIMS ORIGINATING IN FEDERAL LAW AS A GENERAL RULE, INTEREST IS NOT ALLOWED ON CLAIMS BROUGHT AGAINST GOVERNMENTAL ENTITIES UNLESS EXPRESSLY AUTHORIZED BY STATUTE OR STIPULATED TO BY CONTRACT. HOWEVER, WHERE A CLAIM IS INTER GOVERNMENTAL IN NATURE, AND HAS ITS ORIGIN IN FEDERAL LAW, THE LIABILITY OF THE DEBTOR WILL DEPEND ON FEDERAL LAW AND NOT LOCAL LAW. IF FEDERAL LAW FAILS TO RESOLVE THIS QUESTION, THEN AGENCIES MUST BE GUIDED BY CONSIDERATIONS OF EQUITY AND PUBLIC CONVENIENCE AND DUE REGARD SHOULD BE PAID TO LOCAL INSTITUTIONS AND INTERESTS INCLUDING LOCAL LAW. GOVERNMENT PRINTING OFFICE - PRINTING AND BINDING AGREEMENTS - DEBT COLLECTION - INTEREST CLAIM - DISTRICT OF COLUMBIA INDEBTEDNESS GOVERNMENT PRINTING OFFICE (GPO) MAY CHARGE INTEREST FROM THE DATE PAYMENTS WERE DUE UNDER AGREEMENT BETWEEN GPO AND THE DISTRICT OF COLUMBIA FOR PRINTING AND BINDING SERVICES, OR IF NO DATE WAS ESTABLISHED BY AGREEMENT, FROM THE DATE PAYMENT WAS DEMANDED DUE. AGREEMENT AND ACTION ON THE AGREEMENT HAD THEIR ORIGINS IN FEDERAL LAW AND INTEREST HAS BEEN AUTHORIZED BY COURTS AND IN STATUTES ON CLAIMS BROUGHT AGAINST DISTRICT OF COLUMBIA IN THE PAST. DISTRICT OF COLUMBIA - STATUS - DEBTS OWED TO UNITED STATES - SET-OFF RIGHT ALTHOUGH THE DISTRICT OF COLOMBIA RECEIVES AN ANNUAL LUMP-SUM PAYMENT FROM THE FEDERAL GOVERNMENT, A VALID CLAIM MAY EXIST BETWEEN THE DISTRICT OF COLUMBIA AND THE FEDERAL GOVERNMENT SINCE THEY ARE SEPARATE AND DISTINCT LEGAL ENTITIES. THEREFORE, CLAIMS BY FEDERAL GOVERNMENT AGAINST DISTRICT OF COLUMBIA MAY BE COLLECTED THROUGH SETOFF AGAINST UNAPPROPRIATED FUNDS OF THE DISTRICT IN THE HANDS OF THE FEDERAL GOVERNMENT. SET-OFF - AUTHORITY - STATE, ETC. GOVERNMENT DEBTS - AGAINST FEDERAL SALARY DEDUCTIONS FOR STATE, ETC. INCOME TAXES - PUBLIC POLICY CONSIDERATIONS GOVERNMENT PRINTING OFFICE (GPO) MAY NOT SET OFF DEBTS OWED TO IT BY DISTRICT OF COLUMBIA AGAINST TAXES WITHHELD BY GPO FROM WAGES OF ITS EMPLOYEES FOR PAYMENT OF EMPLOYEES INCOME TAXES. THE WITHHELD TAXES, WHILE THEY CONSTITUTE AN EMPLOYER INDEBTEDNESS, ARE HELD IN TRUST FOR THE BENEFIT OF THE DISTRICT OF COLUMBIA. STRONG PUBLIC POLICY CONSIDERATION PRECLUDES THE SETTING OFF OF DEBT AGAINST DEMANDS FOR PAYMENT OF TAXES IN THE ABSENCE OF STATUTORY AUTHORITY.

MATTER OF: COLLECTING DEBTS FROM THE DISTRICT OF COLUMBIA GOVERNMENT BY OFFSET, SEPTEMBER 29, 1981:

THIS DECISION TO THE PUBLIC PRINTER IS IN RESPONSE TO AN INQUIRY FROM THE GENERAL COUNSEL, GOVERNMENT PRINTING OFFICE (GPO), ASKING:

- WHETHER GPO CAN CHARGE THE DISTRICT OF COLUMBIA GOVERNMENT INTEREST ON ITS OVERDUE ACCOUNTS.

- WHETHER GPO CAN SETTLE THE PAST DUE DISTRICT GOVERNMENT ACCOUNT BY SETTING OFF ITS DEBT AGAINST MONEY THE GPO HAS WITHHELD FROM WAGES AND SALARIES FOR PAYMENT OF ITS EMPLOYEES' DISTRICT INCOME TAXES.

FOR THE REASONS STATED BELOW WE CONCLUDE THAT THE GPO CAN CHARGE THE DISTRICT OF COLUMBIA GOVERNMENT INTEREST ON ITS OVERDUE ACCOUNTS BUT FOR POLICY CONSIDERATIONS RECOMMEND AGAINST SETTING OFF THIS INDEBTEDNESS AGAINST MONEY WITHHELD FROM WAGES AND SALARIES FOR PAYMENT OF ITS EMPLOYEES' DISTRICT INCOME TAXES.

THE GENERAL COUNSEL HAS INFORMED US THAT PURSUANT TO 31 U.S.C. 685A, GPO PROVIDED PRINTING AND BINDING SERVICES TO THE DISTRICT OF COLUMBIA GOVERNMENT FOR WHICH IT IS OWED IN EXCESS OF $150,000. 31 U.S.C. 685A AUTHORIZES FEDERAL AGENCIES TO ENTER INTO AGREEMENTS TO PROVIDE CERTAIN SERVICES TO THE DISTRICT OF COLUMBIA GOVERNMENT UPON THE APPROVAL OF BOTH THE OFFICE OF MANAGEMENT AND BUDGET AND THE MAYOR. IN RETURN, FEDERAL AGENCIES ARE TO BE REIMBURSED THEIR ACTUAL COSTS IN PROVIDING THESE SERVICES. THE GENERAL COUNSEL HAS ALSO INFORMED US THAT GPO'S ATTEMPTS TO COLLECT THIS AMOUNT HAVE THUS FAR PROVED UNSUCCESSFUL. HOWEVER, WHILE CHARGING INTEREST AND SETTING OFF DEBTS ARE MEASURES GENERALLY AVAILABLE TO FEDERAL AGENCIES FOR USE AGAINST PRIVATE PERSONS, THE GENERAL COUNSEL IS CONCERNED OVER THE PROPRIETY OF USING THESE MEASURES AGAINST THE DISTRICT OF COLUMBIA GOVERNMENT WHICH, IN ADDITION TO REVENUES GENERATED BY LOCAL TAXES OR ASSESSMENTS, RECEIVES A LUMP-SUM PAYMENT FROM THE FEDERAL GOVERNMENT AS PART OF ITS ANNUAL OPERATING BUDGET.

INTEREST ON DISTRICT GOVERNMENT DEBTS

THE FEDERAL CLAIMS COLLECTION STANDARDS (ISSUED JOINTLY BY THE ATTORNEY GENERAL AND THE COMPTROLLER GENERAL PURSUANT TO AUTHORITY SET FORTH IN THE FEDERAL CLAIMS COLLECTION ACT, 31 U.S.C. 951-953) REQUIRE THE CHARGING OF INTEREST ON DELINQUENT DEBTS. 4 C.F.R. 102.11, PROVIDES THAT:

IN THE ABSENCE OF A DIFFERENT RULE PRESCRIBED BY STATUTE, CONTRACT, OR REGULATION, INTEREST SHOULD BE CHARGED ON DELINQUENT DEBTS AND DEBTS BEING PAID IN INSTALLMENTS IN CONFORMITY WITH THE TREASURY FISCAL REQUIREMENTS MANUAL. WHEN A DEBT IS PAID IN INSTALLMENTS, THE INSTALLMENT PAYMENTS WILL FIRST BE APPLIED TO THE PAYMENT OF ACCRUED INTEREST AND THEN TO PRINCIPAL, IN ACCORDANCE WITH THE SO-CALLED "U.S. RULE," UNLESS A DIFFERENT RULE IS PRESCRIBED BY STATUTE, CONTRACT, OR REGULATION * * * .

1 TREASURY FISCAL REQUIREMENTS MANUAL, (TFRM) 6-8020.40, REQUIRES LATE CHARGES BE APPLIED AND COLLECTED FOR OVERDUE PAYMENTS AT A PERCENTAGE RATE BASED ON THE CURRENT VALUE OF FUNDS TO THE TREASURY.

ADDITIONALLY, IN UNITED STATES V. UNITED DRILL AND TOOL CORP., 183 F.2D 998(D.C. CIR., 1950), THE COURT HELD THAT STATUTORY OBLIGATIONS IN THE NATURE OF A DEBT BEAR INTEREST EVEN THOUGH THE STATUTE CREATING THE OBLIGATION FAILS TO PROVIDE FOR IT. ALSO, WE HAVE HELD THAT FEDERAL AGENCIES ARE AUTHORIZED TO CHARGE INTEREST ON THE EQUITABLE THEORY THAT A CREDITOR IS ENTITLED TO BE COMPENSATED FOR THE DETENTION OF HIS MONEY WITHOUT REGARD TO THE MANNER IN WHICH THE OBLIGATION AROSE. SEE 59 COMP.GEN. 359(1981).

WE NOTE THAT AS A GENERAL RULE, COURTS HAVE HELD THAT INTEREST IS NOT ALLOWED ON CLAIMS BROUGHT AGAINST GOVERNMENTAL ENTITIES (FEDERAL STATE OR LOCAL GOVERNMENT) UNLESS EXPRESSLY AUTHORIZED BY STATUTE OR STIPULATED TO BY CONTRACT. SEE FOR EXAMPLE UNITED STATES V. THAYER WEST-POINT HOTEL CO., 329 U.S. 585(1947); UNITED STATES V. NORTH CAROLINA, 136 U.S. 211(1890); FOLLMER V. STATE OF NEBRASKA; 142 N.W. 908, (NEB. 1913); BLUM V. CITY OF SAN FRANCISCO, 19 CAL.RPTR. 574(CAL. APP., 1962) AND 51 COMP.GEN. 251(1971). HOWEVER, THE RULE IS NOT UNIFORMLY APPLIED BY THE STATES. SEE CASES COLLECTED AT 24 ALR 2D928 999.

HOWEVER, REGARDLESS OF THE RULE FOLLOWED BY A PARTICULAR STATE'S COURTS, WHERE A CLAIM IS INTER-GOVERNMENTAL IN NATURE AND HAS ITS ORIGIN IN FEDERAL LAW, THE LIABILITY OF THE DEBTOR (STATE OR LOCAL GOVERNMENT) WILL DEPEND ON FEDERAL LAW, NOT LOCAL LAW. IF THE FEDERAL LAW FAILS TO RESOLVE THIS QUESTION, THEN AGENCIES MUST BE GUIDED BY CONSIDERATION OF EQUITY AND PUBLIC CONVENIENCE. BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF JACKSON, KANSAS V. UNITED STATES, (BOARD OF COMMISSIONERS), 308 U.S. 343(1939). OF COURSE, IN CONSIDERING PUBLIC CONVENIENCE, DUE REGARD WILL BE PAID TO LOCAL INSTITUTIONS AND INTERESTS (INCLUDING LOCAL LAW) IN THE ABSENCE OF ANY LEGISLATIVE POLICY TO THE CONTRARY. BOARD OF COMMISSIONERS, ABOVE, 351-352.

IN THE PRESENT CASE SINCE THE ACTION AROSE UNDER FEDERAL LAW - 31 U.S.C. 685A AUTHORIZING THE AGREEMENT AND REQUIRING REIMBURSEMENT BASED ON ACTUAL COST - IT SHOULD BE GOVERNED BY FEDERAL RATHER THAN LOCAL LAW. UNITED STATES V. ALLEGHENY COUNTY, 322 U.S. 174, 172-183(1943). ADDITIONALLY, INTEREST HAS PREVIOUSLY BEEN ALLOWED AGAINST THE DISTRICT GOVERNMENT AT THE RATE OF 6 PERCENT PER YEAR (NOTWITHSTANDING D.C. CODE 28-3302 PROVIDING FOR INTEREST AT 4 PERCENT PER YEAR) FROM THE DATE PAYMENT WAS DUE IN A CONTRACT ACTION WHERE PAYMENT WAS WRONGFULLY WITHHELD. KENNEY CONSTRUCTION CO., V. D.C., 262 F.2D 926(D.C. CIR., 1959). THUS IN OUR OPINION, INTEREST MAY BE ASSESSED ON THE UNPAID DEBTS OF THE DISTRICT GOVERNMENT AT THE RATE PRESCRIBED IN 1 TFRM 6 8020.40 FROM THE DATE PAYMENT WAS DUE UNDER THE AGREEMENT OF DEMAND MADE UPON THE DISTRICT.

SETOFF OF DISTRICT OF COLUMBIA'S DEBTS

GENERALLY, THE RIGHT OF SETOFF IS INHERENT IN THE UNITED STATES GOVERNMENT AND IS GROUNDED IN THE COMMON LAW RIGHT OF EVERY CREDITOR TO APPLY THE MONEYS OF HIS DEBTOR IN HIS HANDS TO THE EXTINGUISHMENT OF CLAIMS DUE TO HIM FROM THE DEBTOR. GRATIOT V. UNITED STATES, 40 U.S. (15 PET.) 336, 370(1841); UNITED STATES V. MUNSEY TRUST CO., 322 U.S. 234, 239(1946); 41 COMP.GEN. 178(1961). THIS IS THE CASE EVEN THOUGH THE CLAIM HAS NOT BEEN REDUCED TO JUDGMENT. SHAY V. AGRICULTURAL STABILIZATION AND CONSERVATION STATE COMMITTEE FOR ARIZONA, 299 F.2D 516, 524-525 (9TH CIR., 1962). THIS IS REFLECTED BY THE FEDERAL CLAIMS COLLECTION STANDARDS WHICH PROVIDE IN PERTINENT PART, THAT:

COLLECTIONS BY OFFSET WILL BE UNDERTAKEN ADMINISTRATIVELY ON CLAIMS WHICH ARE LIQUIDATED OR CERTAIN IN AMOUNT IN EVERY INSTANCE IN WHICH THIS IS FEASIBLE * * * . APPROPRIATE USE SHOULD BE MADE OF THE COOPERATIVE EFFORTS OF OTHER AGENCIES IN EFFECTING COLLECTIONS BY OFFSET, INCLUDING UTILIZATION OF THE ARMY HOLDUP LIST, AND ALL AGENCIES ARE ENJOINED TO COOPERATE IN THIS ENDEAVOR. 4 C.F.R. 102.3. SEE ALSO 4 GAO 69.

FURTHERMORE, WE HAVE SPECIFICALLY APPROVED COLLECTION OF INTEREST AS WELL AS PRINCIPAL ON DEBTS COLLECTED BY SETOFF. 59 COMP.GEN. 359. (1980).

COLLECTION OF CLAIMS BY SETOFF HAS BEEN APPROVED FOR USE IN COLLECTING DEBTS OWED TO THE FEDERAL GOVERNMENT BY STATE GOVERNMENTS. SEE UNITED STATES V. LOUISIANA, 127 U.S. 182(1888), B-163922.53, FEBRUARY 10, 1978. 20 OP.ATTY.GEN. 363(1892).

WHILE NOT A STATE, THE DISTRICT GOVERNMENT HAS BEEN HELD TO BE A MUNICIPAL CORPORATION WITH ITS OWN POWERS AND FUNCTIONS, ITS OWN FUNDS AND ITS OWN OBLIGATIONS AND LIABILITIES, SEPARATE AND DISTINCT FROM THOSE OF THE FEDERAL GOVERNMENT. 25 COMP.GEN. 579(1946) AND 36 ID. 457(1956). SEE ALSO BRADSHAW V. UNITED STATES, 443 F.2D 759(D.C. CIR., 1971), HOLDING THAT UNITED STATES IS NOT LIABLE FOR CLAIMS AGAINST DISTRICT OF COLUMBIA ON GROUNDS THAT THEY ARE SEPARATE AND DISTINCT LEGAL ENTITIES. THIS BEING THE CASE, THE REVERSE SHOULD ALSO BE TRUE, THAT IS, THE DISTRICT OF COLUMBIA IS NOT LIABLE FOR CLAIMS AGAINST THE UNITED STATES. SINCE NEITHER GOVERNMENT IS RESPONSIBLE FOR CLAIMS AGAINST THE OTHER GOVERNMENT, IT FOLLOWS THAT CLAIMS MAY EXIST BETWEEN THE TWO GOVERNMENTS. WHILE THESE DECISIONS WERE RENDERED PRIOR TO THE PASSAGE OF THE DISTRICT OF COLUMBIA SELF-GOVERNMENT AND GOVERNMENTAL REORGANIZATION ACT (HOME RULE ACT) PUB. L. NO. 93-198, DECEMBER 24, 1973, 87 STAT. 774, THIS STATUS HAS REMAINED UNCHANGED BY VIRTUE OF 717(A) OF THE HOME RULE ACT, 87 STAT. 820. SEE ALSO 102(A) OF THE HOME RULE ACT, 87 STAT. 777, WHICH, IF ANYTHING, INDICATES THAT THE PURPOSE OF THE HOME RULE ACT WAS TO GIVE THE DISTRICT GOVERNMENT EVEN MORE CONTROL OVER LOCAL AFFAIRS.

GENERALLY, FEDERAL INTER-AGENCY CLAIMS FOR DAMAGES TO PROPERTY ARE NOT REIMBURSED (WHEN NOT NECESSARY TO ACCOMPLISH THE PURPOSE OF SOME LAW, 59 COMP.GEN. 515(1980)), ON THE THEORY THAT ALL PROPERTY OF AGENCIES AND INSTRUMENTALITIES OF THE FEDERAL GOVERNMENT IS NOT THE PROPERTY OF SEPARATE ENTITIES BUT RATHER OF THE GOVERNMENT AS A SINGLE ENTITY. THUS THERE CAN BE NO REIMBURSEMENT BY THE GOVERNMENT TO ITSELF FOR DAMAGE TO OR LOSS OF ITS PROPERTY.

ALTHOUGH THE DISTRICT RECEIVES A LUMP-SUM FEDERAL PAYMENT AS PART OF ITS ANNUAL OPERATING BUDGET, THIS DOES NOT AFFECT THE NATURE OF THE CLAIM GPO HAS AGAINST THE DISTRICT GOVERNMENT. IN 46 COMP.GEN. 586(1966) WE HELD THAT THE FACT THAT THE GOVERNMENT OF AMERICAN SAMOA (A TERRITORY OF THE UNITED STATES) RECEIVED DIRECT FEDERAL APPROPRIATIONS AND GRANTS-IN-AID FROM THE FEDERAL GOVERNMENT IN ADDITION TO ITS REVENUES, WAS INSUFFICIENT TO PRECLUDE THE DEPARTMENT OF AGRICULTURE FROM RECOVERING A CLAIM FOR DAMAGES TO PROPERTY RESULTING FROM IMPROPER STORAGE OF DONATED COMMODITIES. SEE ALSO BRADSHAW V. UNITED STATES, 443 F.2D 759-770 (D.C. CIR., 1971).

CONSEQUENTLY, SINCE DISTRICT OF COLUMBIA GOVERNMENT AND UNITED STATES GOVERNMENT ARE SEPARATE LEGAL ENTITIES, A VALID CLAIM MAY EXIST BETWEEN THE DISTRICT AND GPO, NOTWITHSTANDING THE FACT THAT THE DISTRICT OF COLUMBIA RECEIVES A LUMP-SUM PAYMENT FROM THE UNITED STATES. FURTHERMORE, SETOFF IS AVAILABLE TO GPO AS A MEANS FOR COLLECTING THIS CLAIM.

SETOFF AGAINST TAXES

ALTHOUGH AS A GENERAL PROPOSITION THE GPO CAN SET OFF DEBTS OWED TO IT BY THE DISTRICT OF COLUMBIA GOVERNMENT AGAINST GOVERNMENT FUNDS DUE AND OWING TO THE DISTRICT, WE DO NOT THINK THAT THE DISTRICT'S INDEBTEDNESS MAY BE SET OFF AGAINST A FEDERAL EMPLOYEE'S DISTRICT INCOME TAX WITHHOLDINGS.

FEDERAL AGENCIES ARE DIRECTED TO ENTER INTO AGREEMENTS WITH THE DISTRICT OF COLUMBIA TO WITHHOLD MONEY FROM THE SALARIES OF EMPLOYEES FOR PAYMENT OF THE EMPLOYEES' DISTRICT INCOME TAXES BY 5 U.S.C. 5516, WHICH ALSO DIRECTS AGENCY HEADS TO COMPLY WITH THE PROVISIONS OF SUBCHAPTER II OF CHAPTER 15 OF TITLE 47, D.C. CODE. UNDER THIS SUBCHAPTER, EMPLOYEES ARE REQUIRED TO WITHHOLD EMPLOYEE TAXES AND ARE MADE PERSONALLY AND INDIVIDUALLY LIABLE TO THE DISTRICT FOR FAILURE TO WITHHOLD OR PAY ANY AMOUNTS REQUIRED TO BE WITHHELD AND PAID. D.C. CODE SEC. 47-1586GB), (F)(1) AND (H). FURTHERMORE, EMPLOYEE TAXES ACTUALLY WITHHELD AT THE SOURCE ARE DEEMED PAID BY THE EMPLOYEE OF APRIL 15 FOR TAX PURPOSES, D.C. CODE 47-1586J. THE EMPLOYEE'S RIGHT TO CLAIM A TAX CREDIT FOR WITHHOLDING IS NOT CONDITIONED UPON THE EMPLOYER PAYING OVER THE WITHHELD AMOUNT BY THE DISTRICT. FINALLY, AMOUNTS WITHHELD BY EMPLOYERS ARE HELD IN TRUST FOR THE DISTRICT. D.C. CODE 47 1586GF)(1).

THUS IT IS CLEAR THAT UNDER DISTRICT LAW, THE EMPLOYEE IS NOT LIABLE FOR PAYMENT OF THE AMOUNTS WITHHELD. INSTEAD HE IS ENTITLED TO A TAX CREDIT UP TO THE AMOUNT WITHHELD AND HIS TAX LIABILITY IS EXTINGUISHED UP TO THE AMOUNT WITHHELD. THUS, THE FUNDS WITHHELD SHOULD NOT BE CONSIDERED ASSETS OF THE EMPLOYEES SINCE WHAT HAPPENS TO THE FUNDS WILL NOT AFFECT THEIR TAX INDEBTEDNESS. INSTEAD, THEY ARE HELD FOR THE PURPOSE OF EXTINGUISHING WHAT, BY LAW, HAS BECOME AN EMPLOYER INDEBTEDNESS. THUS, ANY ACTION AGAINST THESE FUNDS WILL NOT AFFECT THE EMPLOYEE. HOWEVER, THE WITHHOLDINGS ARE APPARENTLY TRUST FUNDS HELD FOR THE BENEFIT OF THE DISTRICT AND AS SUCH ARE NOT SUBJECT TO DIVERSION EVEN FOR THE PAYMENT OF THE DISTRICT'S DEBTS. COMPARE UNITED STATES V. LOUISIANA, 127 U.S. 182(1887).

EVEN IF THESE FUNDS ARE NOT CONSIDERED TO BE HELD IN TRUST FOR THE BENEFIT OF THE DISTRICT GOVERNMENT (IN CONTRADICTION TO THE EXPRESS PRONOUNCEMENT OF D.C. CODE 47-1576GF)(1)), ANOTHER CONSIDERATION MILITATES AGAINST EXERCISING THIS REMEDY IN THESE CIRCUMSTANCES. WHILE THIS OFFICE, THE ATTORNEY GENERAL AND THE COURTS HAVE BEEN AMENDABLE TO SETTING OFF DEBTS OWED BY TAXPAYERS AGAINST REFUNDS OWED TO THEM, 55 COMP.GEN. 1329(1976); 20 OP.ATTY.GEN. 363(1892); BELGARD V. UNITED STATES, 232 F.SUPP. 365 (W.D.LA., 1964); CHERRY COTTON MILLS, INC. V. UNITED STATES, 59 F.SUPP. 122(CT.CL., 1945), THEY HAVE BEEN RELUCTANT, AS A MATTER OF PUBLIC POLICY, TO PERMIT SETTING OFF OF DEBTS AGAINST DEMANDS FOR THE PAYMENT OF TAXES IN THE ABSENCE OF EXPRESS STATUTORY AUTHORITY, UNITED STATES V. PACIFIC RAILROAD CO., FED. CASE NO. 15,983 (C.C.E.D. MO., 1877); APPERSON V. MEMPHIS, FED. CASE NO. 497 (C.C.W.D. TENN., 1879); CRABTREE V. MADDEN, 54 F. 426, 431 (8TH CIR., 1893); STATE V. HUMBLE OIL AND REFINING CO., 169 S.W.2D 707, 708 (TEX., 1943; BOSTON FIVE CENTS SAVING BANK V. CITY OF BOSTON, 61 N.E.2D 124, 126 (MASS., 1945). SEE ALSO CASES COLLECTED IN 90 A.L.R. 433-438; 20 AM.JUR.2D COUNTERCLAIM RECOUPMENT, ETC. 113; 80 C.J.S. SET-OFF AND COUNTERCLAIM 20; 61 C.J. TAXATION 1391; 57 C.J. SET-OFF AND COUNTERCLAIM 31; AND, MCQUILLIN MUN. CORP. (3RD ED) SEC. 44.138. WE NOTE THAT THE COLLECTION OF TAXES IS VITAL TO THE FUNCTIONING AND, IN FACT, TO THE EXISTENCE OF GOVERNMENT, UNITED STATES V. KIMBELL FOODS, INC., 440 U.S. 715, 734 (1979). OBVIOUSLY, IF INDIVIDUAL CREDITORS OF A GOVERNMENTAL UNIT ARE PERMITTED TO SETT OFF DEBTS OWED TO THEM BY THAT GOVERNMENTAL UNIT AGAINST TAXES THEY OWE TO THE GOVERNMENTAL UNIT, THIS WOULD RESULT IN A SEVERE DISRUPTION IN THE ORDERLY COLLECTION OF TAXES AND THE ORDERLY ADMINISTRATION OF GOVERNMENT. FURTHERMORE, IT WOULD INCREASE THE RISK OF ERRONEOUS DUPLICATE PAYMENTS BEING MADE TO CREDITORS.

WHILE IN THE PRESENT SITUATION THE FEDERAL GOVERNMENT WOULD NOT BE SETTING OFF A DEBT AGAINST TAXES IT OWES TO THE DISTRICT GOVERNMENT, BUT INSTEAD AGAINST FUNDS WITHHELD BY IT PURSUANT TO AGREEMENT AUTHORIZED BY LAW FOR PAYMENT OF ITS EMPLOYEES' DISTRICT INCOME TAXES, THIS DISTINCTION IS INSUFFICIENT TO REMOVE IT FROM THE PUBLIC POLICY PROHIBITION. THE PURPOSE OF THE ENACTMENT OF THE EMPLOYEE WITHHOLDING TAX PROVISION WAS TO FACILITATE THE PAYMENT AND COLLECTION OF EMPLOYEE INCOME TAXES. TO PERMIT SETOFF OF THE FUNDS WITHHELD WOULD CONTRAVENE THIS PURPOSE. CONSEQUENTLY, IN VIEW OF THE STRONG PUBLIC POLICY FAVORING NONINTERFERENCE IN THE COLLECTION OF TAXES, WE WOULD RECOMMEND AGAINST TAKING SUCH ACTION IN THE ABSENCE OF CLEAR LEGISLATIVE MANDATE TO DO SO.