A-51662, FEBRUARY 21, 1935, 14 COMP. GEN. 634

A-51662: Feb 21, 1935

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WHEN THE AMOUNT THEREOF IS FIXED WITHOUT DIRECT RELATION TO THE AMOUNT OF THE SALARY OR COMPENSATION. ARE NOT SUBJECT TO THE PERCENTAGE DEDUCTIONS UNDER THE ECONOMY ACT. AS FOLLOWS: REFERENCE IS MADE TO YOUR DECISION A-51662 OF OCTOBER 31. WHEREIN IT IS HELD THAT . GRATUITIES * * * PAID IN FOREIGN COUNTRIES IN ACCORDANCE WITH THE CUSTOMS OF THOSE COUNTRIES MAY BE CONSIDERED A PROPER EXPENDITURE FOR WHICH DIPLOMATIC AND CONSULAR OFFICERS ARE ENTITLED TO CREDIT.'. IT IS NOW DESIRED TO HAVE YOUR DECISION WHETHER THE AMOUNTS EXPENDED AS SUCH GRATUITIES ARE SUBJECT TO THE LEGISLATIVE DEDUCTION OF 5 PERCENT AS REQUIRED BY LAW. WHETHER EXCHANGE LOSSES ON SUCH AMOUNTS ARE PAYABLE UNDER THE PROVISIONS OF THE ACT OF MARCH 26.

A-51662, FEBRUARY 21, 1935, 14 COMP. GEN. 634

COMPENSATION - GRATUITIES - ECONOMY DEDUCTIONS - EXCHANGE LOSSES GRATUITIES PAID TO EMPLOYEES IN FOREIGN COUNTRIES UPON STATED HOLIDAYS IN ACCORDANCE WITH THE CUSTOMS OF SUCH COUNTRIES, WHEN THE AMOUNT THEREOF IS FIXED WITHOUT DIRECT RELATION TO THE AMOUNT OF THE SALARY OR COMPENSATION, ARE NOT SUBJECT TO THE PERCENTAGE DEDUCTIONS UNDER THE ECONOMY ACT, NOR MAY THEY BE MADE THE BASIS FOR CLAIMS FOR CURRENCY APPRECIATION LOSSES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF STATE, FEBRUARY 21, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF JANUARY 25, 1935, AS FOLLOWS:

REFERENCE IS MADE TO YOUR DECISION A-51662 OF OCTOBER 31, 1933, WHEREIN IT IS HELD THAT ,GRATUITIES * * * PAID IN FOREIGN COUNTRIES IN ACCORDANCE WITH THE CUSTOMS OF THOSE COUNTRIES MAY BE CONSIDERED A PROPER EXPENDITURE FOR WHICH DIPLOMATIC AND CONSULAR OFFICERS ARE ENTITLED TO CREDIT.'

IT IS NOW DESIRED TO HAVE YOUR DECISION WHETHER THE AMOUNTS EXPENDED AS SUCH GRATUITIES ARE SUBJECT TO THE LEGISLATIVE DEDUCTION OF 5 PERCENT AS REQUIRED BY LAW, AND FURTHER, WHETHER EXCHANGE LOSSES ON SUCH AMOUNTS ARE PAYABLE UNDER THE PROVISIONS OF THE ACT OF MARCH 26, 1934, AND THE EXECUTIVE ORDER NO. 6928 OF DECEMBER 24, 1934.

SUCH GRATUITIES, BEING GIFTS OR REWARDS AS INCIDENTS OF THE EMPLOYMENT PURSUANT TO LOCAL CUSTOM, ARE NOT TO BE REGARDED AS SALARY, PAY, COMPENSATION, OR ALLOWANCES WITHIN THE MEANING OF EITHER OF THE LAWS REFERRED TO IN YOUR LETTER. HENCE, IF IT HAS BEEN THE CUSTOM TO FIX THE AMOUNTS OF SUCH GRATUITIES WITHOUT ANY DIRECT RELATION TO THE AMOUNT OF THE SALARY OR COMPENSATION THE AMOUNTS OF THE GRATUITIES ARE NOT AFFECTED BY THE LAWS REFERRED TO. OF COURSE, IF THE LOCAL CUSTOM IS TO FIX THE GRATUITY AT A FIXED PERCENTAGE OF THE REGULAR COMPENSATION, ANY PERCENTAGE OR OTHER REDUCTION IN THE REGULAR COMPENSATION OF THE EMPLOYEE WOULD RESULT IN A CORRESPONDING REDUCTION IN THE AMOUNT OF THE GRATUITY.