B-132700, FEB. 25, 1958

B-132700, FEB. 25, 1958

TO MR. JUSTIN M. SMITH:

YOUR LETTER OF DECEMBER 13, 1957, REFERS TO OUR DECISION, B-132700, DATED AUGUST 26, 1957, TO MR. RICHARD P. MCGARREY, AUTHORIZED CERTIFYING OFFICER, SOIL CONSERVATION SERVICE, 222 S.W. TEMPLE, SALT LAKE CITY 1, UTAH, CONCERNING THE AMOUNT OF BACK PAY DUE YOU UNDER THE ACT OF JUNE 10, 1948, 5 U.S.C. 652, FOR THE PERIOD OF YOUR SEPARATION, MARCH 2, 1956, TO JUNE 26, 1957. YOU ALSO REFER TO OUR LETTER DATED NOVEMBER 6, 1957, TO YOU, ADVISING THAT IF YOU ARE NOT SATISFIED WITH THE AMOUNT RECEIVED AS BACK PAY YOU MAY FILE A CLAIM WITH OUR OFFICE.

YOU SUBMIT CARBON COPIES OF THE AFFIDAVITS WHICH THE CERTIFYING OFFICER FORWARDED WITH HIS REQUEST FOR DECISION IN YOUR CASE. THOSE AFFIDAVITS SHOW THAT YOU HAD OUTSIDE EARNINGS OF $2,416.58 AND CLAIMED EXPENSES OF $3,224.63 WHICH AMOUNTS WERE FULLY CONSIDERED IN OUR DECISION OF AUGUST 26, 1957.

BECAUSE YOUR CLAIM IS IN GREAT DETAIL, WE WILL CONSIDER IT STEP BY STEP IN THE ORDERS PRESENTED BY YOU. YOUR FIRST CONTENTION IS, IN EFFECT, THAT THE EXPENSES INCURRED BY YOU IN SECURING YOUR REINSTATEMENT, I.E., LEGAL EXPENSES INCIDENTAL THERETO AS WELL AS TRAVELING AND PER DIEM EXPENSES ASSOCIATED THEREWITH, AMOUNTING TO $307.80, SHOULD BE ALLOWED. IN OUR DECISION, 35 COMP. GEN. 268, INVOLVING A SIMILAR BACK PAY CASE UNDER THE SAME LAW, WE SAID THAT "THE LANGUAGE OF THE 1948 STATUTE REQUIRES THE PAYMENT OF RETROACTIVE COMPENSATION LESS "ANY AMOUNT EARNED * * * THROUGH OTHER EMPLOYMENT" DURING THE PERIOD OF SEPARATION. THE LANGUAGE "ANY AMOUNT EARNED" HAS BEEN CONSTRUED AS EXCLUDING EXPENSES INCURRED IN SEEKING RESTORATION AND IN SEEKING OR QUALIFYING FOR OTHER EMPLOYMENT.'" WE HAVE CONSISTENTLY SO HELD IN NUMEROUS OTHER CASES. THEREFORE, UNDER THE APPLICABLE LAW, NO BASIS EXISTS FOR THE ALLOWANCE OF YOUR CLAIM FOR $307.80.

CONCERNING THE EXPENSES INCURRED IN YOUR EMPLOYMENT WITH BLACK AND WILSON AND WITH HARVEY PLATT, WHICH PAYMENTS BY THOSE EMPLOYERS YOU SHOWED AS ONLY PARTIALLY COVERING THE EXPENSES YOU INCURRED, OUR DECISION OF AUGUST 26, 1957, MERELY POINTED OUT FROM YOUR AFFIDAVITS THAT IT APPEARED THAT SOME OF YOUR EXPENSES WERE REIMBURSED BY THOSE EMPLOYERS. NOTHING CONTAINED THEREIN CONVEYED, OR WAS INTENDED TO CONVEY, THE SLIGHTEST IMPLICATION CONCERNING THE TRUTH OR FALSITY OF YOUR REPORTING SUCH EXPENSES AS "PARTIAL.'

THE EXPENSES INCURRED IN THE EXTENSIVE TRAVELING AND CANVASSING PERFORMED BY YOU TO SECURE A POSITION AS A TEACHER AND IN QUALIFYING THEREFOR WERE MATTERS PERSONAL TO YOU AND THOSE EXPENSES DO NOT PROPERLY FALL WITHIN THE PURVIEW OF THE FOREGOING ACT. SECTION 39.23 (A/-15 OF THE INTERNAL REVENUE REGULATIONS PROVIDES THAT AN INDIVIDUAL'S EXPENSE IN SEEKING EMPLOYMENT OR PLACING HIMSELF IN A POSITION TO BEGIN WORK ARE NOT DEDUCTIBLE FOR PURPOSES OF DETERMINING TAXABLE INCOME.

WHAT WE HAVE ALREADY SAID RESPECTING EXPENSES INCURRED APPLIES EQUALLY TO YOUR EMPLOYMENT WITH THE ASSOCIATED CIVIC CLUBS OF SOUTHERN AND EASTERN UTAH.

CONCERNING YOUR REPORTING OF THE EXPENSES YOU INCURRED IN CONNECTION WITH THE EMPLOYMENTS MENTIONED ABOVE WE HAVE NO REQUIREMENT THAT NON-DEDUCTIBLE EXPENSES BE REPORTED. WE NOTE FROM THE COPY OF THE MEMORANDUM ADDRESSED TO YOU BY THE CERTIFYING OFFICER THAT YOU WERE REQUESTED TO REPORT SUCH EXPENSES AND BY REPORTING THEM THEY RECEIVED CONSIDERATION WHETHER ANY OF SUCH EXPENSES PROPERLY WERE FOR DEDUCTION FROM YOUR OUTSIDE EARNINGS.

WE CONCUR IN YOUR VIEW THAT WITHHOLDING TAXES SHOULD HAVE BEEN COMPUTED ON THE GROSS AMOUNT OF BACK PAY DUE LESS THE AMOUNT OF YOUR OUTSIDE EARNINGS. THE COMPUTATION FURNISHED BY THE CERTIFYING OFFICER WAS CONSIDERED PROPER IN OUR DECISION OF AUGUST 26, 1957, BUT WE FIND THAT IT WAS NOT CORRECT BASED UPON OUR DECISION B-125762, NOVEMBER 19, 1957. HOWEVER, SINCE THE EXCESS TAXES HAVE BEEN REPORTED TO THE INTERNAL REVENUE SERVICE, SUCH REPORTS BEING REQUIRED QUARTERLY, NO ADJUSTMENT CAN NOW BE MADE ADMINISTRATIVELY, BUT YOU MAY OBTAIN AN ADJUSTMENT THEREON WHEN YOU FILE YOUR CURRENT INCOME TAX RETURN BY CALLING ATTENTION TO THE OVER COLLECTION.

YOU SAY YOU SHOULD NOT HAVE BEEN CHARGED PREMIUMS ON YOUR GOVERNMENT INSURANCE FOR THE PERIOD OF YOUR SEPARATION. WE RULED IN 36 COMP. GEN. 225, THAT SINCE THE ACT OF JUNE 10, 1948, PROVIDES THAT AN EMPLOYEE "SHALL FOR ALL PURPOSES EXCEPT THE ACCUMULATION OF LEAVE BE DEEMED TO HAVE RENDERED SERVICE DURING SUCH PERIOD," EMPLOYEES RESTORED TO DUTY ARE COVERED BY THE LIFE INSURANCE ACT DURING THE PERIOD OF THEIR SEPARATION AND THEREFORE A DEDUCTION OF THE INSURANCE PREMIUM FOR SUCH PERIOD IS REQUIRED. FOR THAT REASON YOUR INSURANCE PREMIUMS WERE DEDUCTED BY THE CERTIFYING OFFICER FROM THE BACK PAY FOUND DUE YOU.

YOU CLAIM INTEREST ON THE MONEY YOU BORROWED TO SUBSIST YOUR FAMILY DURING THE PERIOD OF YOUR SEPARATION PLUS INTEREST ON EACH BIWEEKLY PAY CHECK FROM THE DATE IT SHOULD HAVE BEEN PAID TO YOU TO THE DATE ACTUALLY PAID OR TO BE PAID. IT IS WELL ESTABLISHED THAT INTEREST IS NOT PAYABLE UPON CLAIMS AGAINST THE UNITED STATES EXCEPT WHEN THE INTEREST IS STIPULATED IN LEGAL AND PROPER CONTRACTS OR WHERE THE ALLOWANCE OF INTEREST IS SPECIFICALLY DIRECTED BY STATUTE. 27 COMP. GEN. 690. HENCE, THERE IS NO BASIS FOR THE PAYMENT OF INTEREST UPON THE PRESENT CLAIM. 127817, NOVEMBER 6, 1956.

IN THE ABSENCE OF SPECIFIC LANGUAGE IN THE ACT OF JUNE 10, 1948, DIRECTING WHAT EXEMPTIONS ARE ALLOWABLE, THERE GENERALLY HAVE BEEN APPLIED INTERNAL REVENUE LAWS AND REGULATIONS CONCERNING INCOME TAX DEDUCTIONS. THOSE APPLICABLE TO YOUR CASE WERE IDENTIFIED AND EXPLAINED IN DETAIL IN OUR DECISION OF AUGUST 26, 1957, TO YOU. IT WILL BE APPARENT THAT TO HOLD OTHERWISE AND TO ALLOW THE EXPENSES INCURRED AND CLAIMED BY YOU WOULD BE TANTAMOUNT TO PAYING YOU IN EXCESS OF THE AMOUNT OF COMPENSATION AUTHORIZED BY THE ACT OF JUNE 10, 1948, WHICH WE ARE WITHOUT AUTHORITY TO DO.

THEREFORE, OUR DECISION OF AUGUST 26, 1957, REGARDING THE EXPENSES INCURRED BY YOU GENERALLY IS SUSTAINED EXCEPT FOR AN ITEM OF $32 REFERRED TO BELOW.

IF IT BE SHOWN THAT THE ITEM OF $32 REGARDING FEES FOR MEMBERSHIPS IN EDUCATIONAL ASSOCIATIONS IS DEDUCTIBLE FOR INCOME TAX PURPOSES WE WILL NOT OBJECT TO THE ALLOWANCE OF THAT ITEM AS A DEDUCTION FROM YOUR GROSS OUTSIDE EARNINGS.

A COPY OF THIS DECISION IS, TODAY, BEING FURNISHED MR. RICHARD P. MCGARREY, AUTHORIZED CERTIFYING OFFICER, TO WHOM YOU SHOULD FURNISH EVIDENCE IN CONNECTION WITH ANY CLAIM FOR THE $32 ITEM.