A-38833, DECEMBER 2, 1931, 11 COMP. GEN. 213

A-38833: Dec 2, 1931

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SUCH LAWS ARE SUSCEPTIBLE OF THE CONSTRUCTION THAT THE TAX SHOULD BE BORNE BY THE PAYEE NEGOTIATING THE CHECK. THERE IS NO AUTHORITY FOR THE PAYMENT OF THE TAX BY DISBURSING OFFICERS OF THE UNITED STATES FROM PUBLIC FUNDS. WHERE THE CHECKS ARE DRAWN IN FAVOR OF FOREIGN SERVICE OFFICERS FOR OFFICIAL EXPENDITURES. 1931: THERE IS FOR CONSIDERATION BY THIS OFFICE THE QUESTION WHETHER CREDIT SHOULD BE ALLOWED IN THE ACCOUNTS OF DISBURSING OFFICERS STATIONED ABROAD FOR EXPENSES INCURRED IN CONNECTION WITH THE PURCHASE OF EXCISE TAX STAMPS TO BE AFFIXED TO CHECKS DRAWN BY SUCH OFFICERS IN THE PAYMENT OF OBLIGATIONS OF THE GOVERNMENT OF THE UNITED STATES. THE PARTICULAR MATTER UNDER CONSIDERATION IS AS TO OFFICERS STATIONED IN CANADA.

A-38833, DECEMBER 2, 1931, 11 COMP. GEN. 213

TAXES, EXCISE - STAMPS ON CHECKS UNDER THE LAWS OF A FOREIGN COUNTRY REQUIRING THE AFFIXING OF EXCISE TAX STAMPS ON CHECKS DRAWN OR NEGOTIATED IN THAT COUNTRY, AND SUCH LAWS ARE SUSCEPTIBLE OF THE CONSTRUCTION THAT THE TAX SHOULD BE BORNE BY THE PAYEE NEGOTIATING THE CHECK, THERE IS NO AUTHORITY FOR THE PAYMENT OF THE TAX BY DISBURSING OFFICERS OF THE UNITED STATES FROM PUBLIC FUNDS, EXCEPT IN SUCH CASES IN CANADA, OR ELSEWHERE, WHERE THE CHECKS ARE DRAWN IN FAVOR OF FOREIGN SERVICE OFFICERS FOR OFFICIAL EXPENDITURES.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 2, 1931:

THERE IS FOR CONSIDERATION BY THIS OFFICE THE QUESTION WHETHER CREDIT SHOULD BE ALLOWED IN THE ACCOUNTS OF DISBURSING OFFICERS STATIONED ABROAD FOR EXPENSES INCURRED IN CONNECTION WITH THE PURCHASE OF EXCISE TAX STAMPS TO BE AFFIXED TO CHECKS DRAWN BY SUCH OFFICERS IN THE PAYMENT OF OBLIGATIONS OF THE GOVERNMENT OF THE UNITED STATES, EITHER ON ACCOUNTS CARRIED BY THEM WITH BANKING INSTITUTIONS IN A FOREIGN COUNTRY OR ON THEIR OFFICIAL ACCOUNT WITH THE TREASURER OF THE UNITED STATES, WHEN THE LAWS OF THE FOREIGN COUNTRY REQUIRE THE AFFIXING OF SUCH EXCISE STAMPS OR OTHER EQUIVALENTS TO A CHECK DRAWN OR NEGOTIATED IN SUCH FOREIGN COUNTRY.

THE PARTICULAR MATTER UNDER CONSIDERATION IS AS TO OFFICERS STATIONED IN CANADA, THE LAWS OF WHICH COUNTRY, AS NOW IN EFFECT, PROVIDE IN SUBSTANCE THAT NO PERSON SHALL (1) ISSUE A CHECK FOR AN AMOUNT EXCEEDING $5 PAYABLE AT OR BY A BANK OR DRAWN UPON OR ADDRESSED TO A BANK AND REQUIRING OR DIRECTING PAYMENT OF A SUM OF MONEY; OR (2) PRESENT TO A BANK FOR PAYMENT A CHECK FOR AN AMOUNT EXCEEDING $5 UNLESS THERE IS AFFIXED THERETO AN ADHESIVE 2 CENT EXCISE OR POSTAGE STAMP OR UNLESS THERE IS IMPRESSED THEREON BY MEANS OF A DIE A STAMP OF THE VALUE OF 2 CENTS.

PURSUANT TO THE PROVISIONS OF SECTION 35 AND 36 OF THE ACT OF FEBRUARY 23, 1931, 46 STAT. 1216, ALL DIPLOMATIC AND CONSULAR OFFICERS IN CANADA, NEWFOUNDLAND, AND NOVA SCOTIA HAVE BEEN INCLUDED IN ONE FISCAL DISTRICT WITH A CENTRAL DISTRICT ACCOUNTING AND DISBURSING OFFICE AT OTTAWA, CANADA. IT IS PROVIDED BY THE NEW SYSTEM NOW UNDER OPERATION THAT ALL FEES COLLECTED BY SUCH OFFICERS ARE FOR TRANSMISSION TO THE TREASURER OF THE UNITED STATES, THERE BEING DISCONTINUED THE PRACTICE HERETOFORE PREVAILING OF USING FEES COLLECTED FOR PAYMENT OF SALARIES AND EXPENSES OF THE OFFICES. THE EXPENSES OF SUCH OFFICES ARE PAID FROM APPROPRIATED FUNDS ADVANCED PERIODICALLY TO SUCH FOREIGN SERVICE OFFICER AT OTTAWA BY MEANS OF CHECKS DRAWN ON THE TREASURER OF THE UNITED STATES. SALARIES ARE PAID BY THE DISTRICT ACCOUNTING AND DISBURSING OFFICER BY CHECKS DRAWN ON THE TREASURER OF THE UNITED STATES IN FAVOR OF THE OFFICERS OR EMPLOYEES CONCERNED.

THE PROCEEDS OF THE CHECKS FOR ADVANCES ARE DEPOSITED IN BANKS EITHER DESIGNATED BY THE SECRETARY OF THE TREASURY AS DEPOSITARIES UNDER THE ACT OF JUNE 19, 1922, 42 STAT. 662, OR SELECTED BY THE FOREIGN SERVICE OFFICER, APPARENTLY WITH THE CONSENT AND AUTHORITY OF THE DEPARTMENT OF STATE. AGAINST THIS ACCOUNT THE FOREIGN SERVICE OFFICERS DRAWN CHECKS IN PAYMENT OF THE EXPENSES OF THEIR OFFICES.

UNDER THE ABOVE PROCEDURE THERE ARE FOR CONSIDERATION THREE CLASSES OF CHECKS, VIZ: (1) CHECKS DRAWN BY THE CENTRAL DISBURSING OFFICER ON THE TREASURER OF THE UNITED STATES FOR ADVANCES TO FOREIGN SERVICE OFFICERS FOR THE PAYMENT OF OFFICE EXPENSES, ETC., (2) CHECKS DRAWN BY THE SAME OFFICER ON THE TREASURER OF THE UNITED STATES IN PAYMENT OF SALARIES, ETC., AND (3) CHECKS DRAWN BY FOREIGN SERVICE OFFICERS ON LOCAL BANKS WHICH MAY, OR MAY NOT, BE GOVERNMENT DEPOSITARIES.

THE GENERAL RULE WITH RESPECT TO DEPOSITING PUBLIC FUNDS IN A BANKING INSTITUTION IN A FOREIGN COUNTRY IS THAT AS THERE IS NO REQUIREMENT OF LAW FOR SUCH DEPOSITS, WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, WHEN ADMINISTRATIVE PERMISSION IS GIVEN A COLLECTION AND DISBURSING OFFICER IN A FOREIGN COUNTRY TO DEPOSIT AND KEEP IN AND DISBURSE PUBLIC FUNDS FROM A LOCAL BANK FOR THE CONVENIENCE OF THE OFFICER, THE DEPOSIT OF SUCH FUNDS IN A FOREIGN BANK IS AT THE OFFICER'S OWN RISK AND EXPENSE, AND THAT ANY AND ALL EXPENSES INCIDENT TO SUCH DEPOSITS AND WITHDRAWALS ARE PROPERLY CHARGEABLE TO HIM WHETHER THEY REPRESENT CHARGES IMPOSED BY THE FOREIGN BANK OR BY THE LAWS OF THE FOREIGN COUNTRY IN WHICH THE BANK IS DOING BUSINESS. 6 COMP. GEN. 315. IT HAS BEEN HELD, ALSO, THAT IN CASES OF OUT -OF-TOWN DISBURSEMENTS IN WHICH PAYMENT CAN BE MADE ONLY BY CHECK, POSTAL MONEY ORDER OR SIMILAR MEANS OF PAYMENT, RATHER THAN IN CASH AT THE CONSULATE OR DIPLOMATIC MISSION, IF SUCH MEANS OF PAYMENT OTHER THAN BY CASH IS UTILIZED FOR THE CONVENIENCE OF THE CREDITOR OR THE CONSULAR OFFICER, ANY ADDITIONAL EXPENSE IN CONNECTION WITH THE PAYMENT SHOULD BE BORNE BY THE ONE BENEFITED. DECISION OF JULY 30, 1928, A-23753.

IT IS, ALSO, A WELL SETTLED PRINCIPLE OF LAW THAT WHEN PAYMENT IS MADE OF AN OBLIGATION OF THE UNITED STATES, IF MADE BY CHECK ON A GOVERNMENT DEPOSITARY IN THE FULL AMOUNT THEREOF IN FAVOR OF THE PERSON ENTITLED TO PAYMENT, THE OBLIGATION IS FULLY DISCHARGED AND ANY EXPENSE INCIDENT TO THE CASHING OR NEGOTIATING OF THE CHECK IS ONE PROPERLY TO BE BORNE BY THE PAYEE OF THE CHECK. 22 COMP. DEC. 341; 6 COMP. GEN. 295; FRANK KINSEY HILL V. UNITED STATES, 62 CT. CLS. 412.

THE LAWS OF THE DOMINION OF CANADA, AS HEREINBEFORE REFERRED TO, PROVIDE FOR THE PAYING OF THE TAX ON CHECKS EITHER BY THE DRAWER OF THE CHECK OR BY THE PAYEE THEREOF, AND SUCH LAWS CAN NOT BE CONSTRUED AND CONSIDERED AS IMPOSING A TAX UPON CHECKS DRAWN ON THE TREASURER OF THE UNITED STATES BY THE CENTRAL ACCOUNTING AND DISBURSING OFFICER IN OTTAWA. AS TO THOSE CHECKS PRESENTED FOR PAYMENT AND NEGOTIATION IN CANADA, THE LAW IMPOSES A TAX UPON THE PAYEE BUT NOT UPON THE DRAWER, AND THE MATTER MUST BE CONSIDERED UPON THAT BASIS.

APPLYING THESE PRINCIPLES TO THE THREE CLASSES OF CHECKS HEREINBEFORE MENTIONED, THERE SHOULD BE CHARGED TO THE GOVERNMENT ONLY THE TAX FOR SUCH CHECKS AS ARE DRAWN BY THE CENTRAL DISBURSING OFFICER IN FAVOR OF FOREIGN SERVICE OFFICERS ADVANCING FUNDS FOR THE PAYMENT OF EXPENSES OF THEIR OFFICES. AS TO ALL OTHER CHECKS, EITHER DRAWN BY SUCH DISBURSING OFFICER OR BY FOREIGN SERVICE OFFICERS AT THEIR POST OF DUTY, IN PAYMENT OF SALARY OR FOR OTHER PURPOSES, THE TAX SHOULD BE CONSIDERED AS PAYABLE BY THE PAYEE OF THE CHECK ON THE THEORY THAT IT IS AN EXPENSE INCIDENT TO THE CASHING OF THE CHECK TO BE BORNE BY THE PAYEE THEREOF.

THE RULE AS HEREIN SET FORTH WILL BE FOR APPLICATION NOT ONLY TO DIPLOMATIC AND CONSULAR OFFICERS, BUT TO ALL DISBURSING OFFICERS OF THE GOVERNMENT STATIONED IN CANADA OR IN OTHER FOREIGN COUNTRIES HAVING SIMILAR LAWS AS TO A TAX ON CHECKS.