A-7117, FEBRUARY 26, 1925, 4 COMP. GEN. 717

A-7117: Feb 26, 1925

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ARE REQUIRED. ACCOUNTS COVERING THE SPECIAL DEPOSIT TRANSACTIONS ARE REQUIRED TO ACCOMPANY THE REGULAR ACCOUNTS OF THE COLLECTORS OF INTERNAL REVENUE. 1925: I HAVE YOUR LETTER OF DECEMBER 20. AS FOLLOWS: REFERENCE IS MADE TO SECTION 1031 OF THE REVENUE ACT OF 1924. WHICH PROVIDES THAT EACH COLLECTOR OF INTERNAL REVENUE WILL MAINTAIN WITH THE TREASURER OF THE UNITED STATES A SPECIAL DEPOSIT ACCOUNT FOR THE FOLLOWING CLASSES OF REMITTANCES: (A) SUMS OFFERED IN COMPROMISE UNDER THE PROVISIONS OF SECTION 3229. THE AMOUNTS DEPOSITED IN THIS FUND ARE SUBJECT TO CHECK BY THE COLLECTOR OF INTERNAL REVENUE. IN THE CASE OF REJECTED OFFERS THE COLLECTOR'S CHECK IS DRAWN IN FAVOR OF THE PROPONENT AND IS FORWARDED TO HIM.

A-7117, FEBRUARY 26, 1925, 4 COMP. GEN. 717

ACCOUNTS, SPECIAL DEPOSIT - INTERNAL REVENUE COLLECTIONS RECEIPTS FROM OFFERS IN COMPROMISE, FROM OFFERS FOR REAL ESTATE, AND FROM THE NET PROCEEDS OF DISTRAINT SALES, ARE REQUIRED, BY SECTION 1031 OF THE ACT OF JUNE 2, 1924, 43 STAT. 351, TO BE DEPOSITED BY COLLECTORS OF INTERNAL REVENUE IN SPECIAL DEPOSIT ACCOUNTS. ACCOUNTS COVERING THE SPECIAL DEPOSIT TRANSACTIONS ARE REQUIRED TO ACCOMPANY THE REGULAR ACCOUNTS OF THE COLLECTORS OF INTERNAL REVENUE, AND ALL EXPENDITURES FROM THE SPECIAL DEPOSIT FUNDS SHOULD BE SUPPORTED BY VOUCHERS WHICH SHOULD SHOW THE AUTHORITY FOR MAKING THE REFUNDS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, FEBRUARY 26, 1925:

I HAVE YOUR LETTER OF DECEMBER 20, 1924, AS FOLLOWS:

REFERENCE IS MADE TO SECTION 1031 OF THE REVENUE ACT OF 1924, WHICH PROVIDES THAT EACH COLLECTOR OF INTERNAL REVENUE WILL MAINTAIN WITH THE TREASURER OF THE UNITED STATES A SPECIAL DEPOSIT ACCOUNT FOR THE FOLLOWING CLASSES OF REMITTANCES:

(A) SUMS OFFERED IN COMPROMISE UNDER THE PROVISIONS OF SECTION 3229, R.S., AND SECTIONS 33 OF TITLE II OF THE NATIONAL PROHIBITION ACT.

(B) SUMS OFFERED FOR THE PURCHASE OF REAL ESTATE UNDER THE PROVISIONS OF SECTION 3208 OF THE REVISED STATUTES.

(C) SURPLUS PROCEEDS IN ANY DISTRAINT SALE AFTER MAKING ALLOWANCE FOR THE AMOUNT OF TAX, INTEREST, PENALTIES, AND ADDITIONS THERETO, AND FOR COSTS AND CHARGES OF THE DISTRAINT AND SALE.

THE AMOUNTS DEPOSITED IN THIS FUND ARE SUBJECT TO CHECK BY THE COLLECTOR OF INTERNAL REVENUE. IN THE CASE OF REJECTED OFFERS THE COLLECTOR'S CHECK IS DRAWN IN FAVOR OF THE PROPONENT AND IS FORWARDED TO HIM.

IN THE CASE OF ACCEPTED OFFERS THE COLLECTOR DRAWS HIS CHECK, PAYABLE TO THE TREASURER OF THE UNITED STATES OR IN FAVOR OF HIS REGULAR DEPOSITARY BANK FOR CREDIT IN THE ACCOUNT OF THE TREASURER OF THE UNITED STATES, AND DEPOSITS THE PROCEEDS AS INTERNAL-REVENUE COLLECTIONS. SUCH INTERNAL- REVENUE COLLECTIONS ARE, OF COURSE, INCLUDED IN THE REGULAR COLLECTION ACCOUNTS OF THE COLLECTOR AND ARE REFERRED TO YOU QUARTERLY FOR SETTLEMENT.

THIS OFFICE UNDERSTANDS THAT THERE IS NO PROVISION OF LAW REQUIRING COLLECTORS TO RENDER PERIODICAL ACCOUNTS COVERING THE SPECIAL-DEPOSIT FUNDS WHICH ARE MERELY HELD IN TRUST BY THEM, AND THAT THE COLLECTION REPORTS WHICH ARE NOW RENDERED AND WHICH WILL COVER ALL SUCH FUNDS FROM THE TIME THEY BECOME INTERNAL-REVENUE COLLECTIONS ARE ALL THAT ARE REQUIRED.

WILL YOU PLEASE STATE IF THE UNDERSTANDING OF THIS OFFICE IS CORRECT?

SECTION 1031 OF THE REVENUE ACT APPROVED JUNE 2, 1924, 43 STAT. 351, 352, PROVIDES AS FOLLOWS:

SEC. 1031. (A) SECTION 3195 OF THE REVISED STATUTES IS AMENDED TO READ AS FOLLOWS:

"SEC. 3195. WHEN ANY PROPERTY LIABLE TO DISTRAINT FOR TAXES IS NOT DIVISIBLE, SO AS TO ENABLE THE COLLECTOR BY SALE OF A PART THEREOF TO RAISE THE WHOLE AMOUNT OF THE TAX, WITH ALL COSTS AND CHARGES, THE WHOLE OF SUCH PROPERTY SHALL BE SOLD, AND THE SURPLUS OF THE PROCEEDS OF THE SALE, AFTER MAKING ALLOWANCE FOR THE AMOUNT OF THE TAX, INTEREST, PENALTIES, AND ADDITIONS THERETO, AND FOR THE COSTS AND CHARGES OF THE DISTRAINT AND SALE, SHALL BE DEPOSITED WITH THE TREASURER OF THE UNITED STATES AS PROVIDED IN SUBDIVISION (B) OF SECTION 3210.'

(B) SECTION 3210 OF THE REVISED STATUTES IS AMENDED TO READ AS FOLLOWS:

"SEC. 3210. (A) EXCEPT AS PROVIDED IN SUBDIVISION (B) THE GROSS AMOUNT OF ALL TAXES AND REVENUES RECEIVED UNDER THE PROVISIONS OF THIS ACT, AND COLLECTIONS OF WHATEVER NATURE RECEIVED OR COLLECTED BY AUTHORITY OF ANY INTERNAL-REVENUE LAW, SHALL BE PAID DAILY INTO THE TREASURY OF THE UNITED STATES UNDER INSTRUCTIONS OF THE SECRETARY OF THE TREASURY AS INTERNAL- REVENUE COLLECTIONS, BY THE OFFICER RECEIVING OR COLLECTING THE SAME, WITHOUT ANY ABATEMENT OR DEDUCTION ON ACCOUNT OF SALARY, COMPENSATION, FEES, COSTS, CHARGES, EXPENSES, OR CLAIMS OF ANY DESCRIPTION. CERTIFICATE OF SUCH PAYMENT, STATING THE NAME OF THE DEPOSITOR AND THE SPECIFIC ACCOUNT ON WHICH THE DEPOSIT WAS MADE, SIGNED BY THE TREASURER, ASSISTANT TREASURER, DESIGNATED DEPOSITARY, OR PROPER OFFICER OF A DEPOSIT BANK, SHALL BE TRANSMITTED TO THE COMMISSIONER OF INTERNAL REVENUE.

"/B) SUMS OFFERED IN COMPROMISE UNDER THE PROVISIONS OF SECTION 3229 OF THE REVISED STATUTES AND SECTION 35 OF TITLE II OF THE NATIONAL PROHIBITION ACT SUMS OFFERED FOR THE PURCHASE OF REAL ESTATE UNDER THE PROVISIONS OF SECTION 3208 OF THE REVISED STATUTES, AND SURPLUS PROCEEDS IN ANY DISTRAINT SALE, AFTER MAKING ALLOWANCE FOR THE AMOUNT OF THE TAX, INTEREST, PENALTIES, AND ADDITIONS THERETO, AND FOR COSTS AND CHARGES OF THE DISTRAINT AND SALE, SHALL BE DEPOSITED WITH THE TREASURER OF THE UNITED STATES IN A SPECIAL DEPOSIT ACCOUNT IN THE NAME OF THE COLLECTOR MAKING THE DEPOSIT. UPON ACCEPTANCE OF SUCH OFFER IN COMPROMISE OR OFFER FOR THE PURCHASE OF SUCH REAL ESTATE, THE AMOUNT SO ACCEPTED SHALL BE WITHDRAWN BY THE COLLECTOR FROM HIS SPECIAL DEPOSIT ACCOUNT WITH THE TREASURER OF THE UNITED STATES AND DEPOSITED IN THE TREASURY OF THE UNITED STATES AS INTERNAL-REVENUE COLLECTIONS. UPON THE REJECTION OF ANY SUCH OFFER, THE COMMISSIONER SHALL AUTHORIZE THE COLLECTOR, THROUGH WHOM THE AMOUNT OF SUCH OFFER WAS SUBMITTED, TO REFUND TO THE MAKER OF SUCH OFFER THE AMOUNT THEREOF. IN THE CASE OF SURPLUS PROCEEDS FROM DISTRAINT SALES THE COMMISSIONER SHALL, UPON APPLICATION AND SATISFACTORY PROOF IN SUPPORT THEREOF, AUTHORIZE THE COLLECTOR THROUGH WHOM THE AMOUNT WAS RECEIVED TO REFUND THE SAME TO THE PERSON OR PERSONS LEGALLY ENTITLED THERETO.'

PURSUANT TO THE ACT OF MAY 27, 1908, 35 STAT. 325, AS SUPPLEMENTED BY THE ACT OF MAY 10, 1916, 39 STAT. 86, OFFERS IN COMPROMISE, OFFERS FOR REAL ESTATE AND THE GROSS PROCEEDS FROM DISTRAINT SALES, AND FROM OTHER OBJECTS, WERE REQUIRED TO BE COVERED INTO THE TREASURY AS INTERNAL REVENUE COLLECTIONS. REFUNDS OF REJECTED OFFERS AND SURPLUS PROCEEDS OF DISTRAINT SALES WERE MADE FROM APPROPRIATIONS PROVIDED FOR THAT PURPOSE, THE APPROPRIATION FOR THE FISCAL YEAR 1925, ACT OF APRIL 4, 1924, 43 STAT. 72, BEING AS FOLLOWS:

TO ENABLE THE SECRETARY OF THE TREASURY TO REFUND MONEY COVERED INTO THE TREASURY AS INTERNAL-REVENUE COLLECTIONS, UNDER THE PROVISIONS OF THE ACT APPROVED MAY 27, 1908, $200,000.

NO APPROPRIATION FOR THE FISCAL YEAR 1926,"FOR REFUNDING INTERNAL REVENUE COLLECTIONS" HAS BEEN MADE, BECAUSE NO APPROPRIATION WILL BE NECESSARY IN VIEW OF THE PROVISIONS OF SECTION 1031 OF THE ACT OF JUNE 2, 1924, QUOTED, SUPRA. SEE PAGE 464 OF THE HEARING BEFORE THE SUBCOMMITTEE OF THE HOUSE COMMITTEE ON APPROPRIATIONS, TREASURY DEPARTMENT APPROPRIATION BILL, 1926.

BY THE TERMS OF THE ACT OF MAY 27, 1908, 35 STAT. 325, AS SUPPLEMENTED BY THE ACT OF MAY 10, 1916, 39 STAT. 86, THE GROSS "AMOUNTS OF ALL COLLECTIONS OF WHATEVER NATURE" WERE REQUIRED TO BE COVERED INTO THE TREASURY AS INTERNAL-REVENUE COLLECTIONS, AND, BY REASON THEREOF, THERE WAS NECESSARILY A FULL ACCOUNTABILITY FOR ALL EXPENDITURES MADE UNDER THE APPROPRIATION FOR "REFUNDING INTERNAL REVENUE COLLECTIONS," WHETHER SUCH EXPENDITURES WERE ON ACCOUNT OF EXPENSES IN CONNECTION WITH DISTRAINT SALES, ON ACCOUNT OF THE RETURN OF REJECTED OFFERS IN COMPROMISE, OR ON ACCOUNT OF REJECTED OFFERS FOR REAL ESTATE. IN THIS CONNECTION IT WAS SAID IN DECISION OF AUGUST 20, 1909, TO THE THEN SECRETARY OF THE TREASURY, THAT---

UNDER THE OPERATION OF THIS ACT COLLECTORS DEPOSIT ALL COLLECTIONS OF EVERY NATURE IMMEDIATELY AS INTERNAL REVENUE COLLECTIONS, AND CONGRESS HAS PROVIDED THE ABOVE APPROPRIATION TO MAKE REFUNDS OR TO RETURN MONEY COVERED AS INTERNAL-REVENUE COLLECTIONS WHICH, UNDER THE PROVISIONS OF THE SECTIONS OF THE REVISED STATUTES HEREINBEFORE REFERRED TO, WAS AUTHORIZED TO BE REFUNDED OR RETURNED FROM THE PROCEEDS OF SALES. REFUNDS ARE NOW MADE FROM FUNDS ADVANCED TO THE COLLECTORS AND THE SAME IS TRUE AS TO THE EXPENSES INCIDENT TO THE SALE OF DISTRAINED OR SEIZED PROPERTY.

IT DOES NOT APPEAR THAT THE DESIRE TO MAKE EARLY REFUNDS OF SURPLUS MONEYS DERIVED FROM SUCH SALES WOULD JUSTIFY THE PROPOSED AMENDMENT, PARTICULARLY IN CASES WHERE THE PROCEEDS ARE NOT SUFFICIENT TO MEET THE DEMANDS AND CHARGES OF THE UNITED STATES. IT CAN BE SEEN THAT ANY EXCESSIVE PAYMENT MADE BY COLLECTORS FOR TRANSPORTATION OF DISTRAINED OR SEIZED GOODS IN SUCH CASES WOULD BE INIMICAL TO THE INTERESTS OF THE GOVERNMENT.

TO OVERCOME THE DIFFICULTIES ATTENDANT UPON THE NECESSARY PROCEDURE PURSUANT TO THE ACTS OF MAY 27, 1908, AND MAY 10, 1916, REFERRED TO, SUPRA, AND THE ANNUAL APPROPRIATIONS MADE PURSUANT TO THOSE ACTS, THE LEGISLATION HERE UNDER CONSIDERATION WAS ENACTED AUTHORIZING THE MONEYS REFERRED TO IN PARAGRAPH (B) OF SECTION 3210, REVISED STATUTES, AS AMENDED, SUPRA, BEING SO PLACED THAT REFUNDS THEREFROM WOULD NOT BE DEPENDENT UPON ANNUAL ESTIMATES AND APPROPRIATIONS.

IN ANSWER TO THE QUESTION SUBMITTED, YOU ARE ADVISED THAT A SPECIAL DEPOSIT ACCOUNT IS PRIMARILY FOR THE PURPOSE OF ACCOUNTING FOR MONEYS WHICH CAN NOT BE TAKEN UP IN REGULAR ACCOUNTS BECAUSE OF USES WHICH FIRST MUST BE MADE OF SUCH MONEYS. 21 COMP. DEC. 435. HOWEVER, AN ACCOUNT OF THE SPECIAL DEPOSIT TRANSACTIONS IS REQUIRED TO BE RENDERED QUARTERLY AND IN CONNECTION WITH THE REGULAR ACCOUNT, AND PAYMENTS OF THE CHARACTER HERE IN QUESTION, MADE FROM SUCH SPECIAL DEPOSIT FUNDS, ARE REQUIRED TO BE SUPPORTED BY VOUCHERS, AND SUCH VOUCHERS, AMONG OTHER THINGS, ARE REQUIRED TO SHOW SPECIFICALLY THE AUTHORITY FOR MAKING THE REFUNDS. THE ACCOUNT CURRENT COVERING THE SPECIAL DEPOSIT TRANSACTIONS ALSO SHOULD LIST THE RECEIPTS DEPOSITED TO THE CREDIT OF THE SPECIAL DEPOSIT ACCOUNTS, AND THE NATURE AND SOURCE OF EACH RECEIPT SHOULD BE SHOWN. RECEIPTS FROM EACH DISTRAINT SALE SHOULD BE SUPPORTED BY A FORM OF RECEIPT VOUCHER SHOWING THE GROSS AMOUNT RECEIVED; AND THE PROPER AND AUTHORIZED EXPENDITURES IN CONNECTION THEREWITH ARE REQUIRED TO BE EVIDENCED AND SUPPORTED BY VOUCHERS AND BY SUBVOUCHERS WHERE NECESSARY, AS IN THE CASE OF EXPENDITURES FROM APPROPRIATED MONEYS.