B-117424, OCTOBER 26, 1953, 33 COMP. GEN. 191

B-117424, OCTOBER 26, 1953, 33 COMP. GEN. 191

LUMP-SUM LEAVE PAYMENTS - REFUNDS UPON REEMPLOYMENT - EXCESS INCOME TAX WITHHOLDING - REFUNDS AN EMPLOYEE SEPARATED FROM THE SERVICE WHO WAS REEMPLOYED PRIOR TO THE EXPIRATION OF THE PERIOD FOR WHICH LUMP-SUM LEAVE PAYMENT HAS BEEN MADE AND WHO WAS FINALLY SEPARATED WITHOUT HAVING MADE REFUND OF THE LUMP-SUM PAYMENT COVERING THE UNEXPIRED PORTION OF SUCH PERIOD, BUT WHO HAD BEEN RECREDITED WITH THE LEAVE, IS NOT ENTITLED TO REFUND OF AMOUNT WITHHELD FROM SECOND LUMP-SUM LEAVE PAYMENT AS TAX ON THAT PART OF THE LEAVE RECREDITED FROM THE FIRST POSITION EVEN THOUGH THE TAX WAS WITHHELD FROM FIRST LUMP-SUM PAYMENT, AND ANY QUESTION OF EXCESS TAX WITHHOLDING IS FOR ADJUSTMENT BETWEEN THE EMPLOYEE AND THE BUREAU OF INTERNAL REVENUE.

COMPTROLLER GENERAL WARREN TO SHIRLEY F. THOMAS, HOUSING AND HOME FINANCE AGENCY, OCTOBER 26, 1953:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16, 1953, REQUESTING DECISION WHETHER YOU MAY CERTIFY FOR PAYMENT THE VOUCHER THEREWITH TRANSMITTED PROPOSING REFUND TO JOHN R. ROSS OF $109.49 WITHHELD AS TAX IN A PAYMENT MADE TO HIM UPON SEPARATION FROM EMPLOYMENT WITH THE PUBLIC HOUSING ADMINISTRATION.

IT APPEARS FROM YOUR SUBMISSION THAT MR. ROSS HAD BEEN SEPARATED FROM EMPLOYMENT WITH THE NATIONAL PRODUCTION AUTHORITY ON APRIL 26, 1953, AT WHICH TIME HE RECEIVED A LUMP-SUM LEAVE PAYMENT FOR 282 HOURS BASED ON THE SALARY OF $8,760 PER ANNUM WHICH WOULD HAVE CARRIED HIM IN A PAY STATUS THROUGH 2 HOURS ON JUNE 15, 1953. HE WAS REEMPLOYED BY THE PUBLIC HOUSING ADMINISTRATION ON MAY 22, 1953, AT A SALARY OF $8,040 PER ANNUM AND WAS REQUESTED TO REFUND THAT PORTION OF THE LUMP SUM PAYMENT COVERING MAY 22, THROUGH 2 HOURS ON JUNE 15 (130 HOURS) WHICH AMOUNTED TO $547.42 GROSS, BUT SUCH REFUND WAS NOT MADE AT THAT TIME. EFFECTIVE AUGUST 30, 1953, HIS EMPLOYMENT WITH THE PUBLIC HOUSING ADMINISTRATION WAS TERMINATED THROUGH REDUCTION IN FORCE AT WHICH TIME AN ADDITIONAL 42 HOURS ANNUAL LEAVE HAD ACCRUED TO HIS CREDIT. THEREFORE, IN ADDITION TO HIS FINAL SALARY PAYMENT, A LUMP-SUM PAYMENT WAS MADE TO HIM FOR 172 HOURS AT $8,040 PER ANNUM PLUS ONE HOLIDAY AMOUNTING TO $695.86, FROM WHICH THERE WAS DEDUCTED (1) WITHHOLDING TAX ($139.02) APPLICABLE TO THE WHOLE $695.86, AND (2) THE GROSS REFUND DUE FROM HIM OF $547.42 WHICH LEFT A NET PAYMENT TO HIM OF $9.42.

THE PROPOSED REFUND IS BASED ON THE CONTENTION THAT AS THE TAX WAS WITHHELD FROM THE FIRST LUMP-SUM PAYMENT IT SHOULD NOT HAVE BEEN WITHHELD FOR THAT PART OF THE LEAVE CREDITED AND AGAIN PAID FOR IN THE LUMP-SUM PAYMENT UPON FINAL SEPARATION FROM THE SERVICE.

THE LUMP-SUM LEAVE ACT OF DECEMBER 21, 1944, 58 STAT. 845 MAKES DEFINITE REQUIREMENT WITH RESPECT TO REFUND UPON REEMPLOYMENT OF THE UNEXPIRED PORTION OF THE LEAVE COVERED BY THE LUMP-SUM LEAVE PAYMENT, AND IT WAS HELD BY THIS OFFICE THAT THE REFUND MUST COVER THE GROSS PAYMENT APPLICABLE TO SUCH UNUSED LEAVE INCLUDING THE TAX WITHHELD IN THE PRIOR PAYMENT. 24 COMP. GEN. 522. THE SUBSEQUENT AMENDMENT OF THE LUMP-SUM LEAVE ACT BY SECTION 4 OF THE ACT OF JULY 2, 1953, 67 STAT. 137 MADE NO CHANGE IN THIS REQUIREMENT. THE PROCEDURE PRESCRIBED IN 26 COMP. GEN. 259, WHERE THE REFUND HAD NOT BEEN ACCOMPLISHED BEFORE THE EMPLOYEE'S SEPARATION FROM A SUBSEQUENT EMPLOYMENT, WAS INTENDED TO ACCOMPLISH THE SAME RESULT IN THE FINAL ANALYSIS AS THOUGH THE REFUND HAD BEEN MADE AT THE PROPER TIME UPON REEMPLOYMENT. HAD SUCH REFUND BEEN MADE AND THE LEAVE RECREDITED THERE WOULD HAVE BEEN NO DOUBT BUT THAT UPON SUBSEQUENT LUMP-SUM PAYMENT THE WITHHOLDING TAX WOULD BE FOR APPLICATION TO THE ENTIRE LUMP-SUM PAYMENT AT THAT TIME. THE FACT THAT THE REFUND OR ADJUSTMENT IS NOT MADE UNTIL THE SUBSEQUENT SEPARATION FROM THE SERVICE, WHEN IT IS ACCOMPLISHED BY SETOFF, DOES NOT AUTHORIZE OR REQUIRE ANY CHANGE IN THAT RESPECT. ANY QUESTION OF EXCESS TAX WITHHOLDING IS FOR ADJUSTMENT BETWEEN THE EMPLOYEE AND THE BUREAU OF INTERNAL REVENUE. ACCORDINGLY AS THE WITHHOLDING TAX APPEARS TO HAVE BEEN COMPUTED PROPERLY WHEN THIS EMPLOYEE RECEIVED HIS FINAL LUMP-SUM PAYMENT FROM YOUR ADMINISTRATION THE VOUCHER FORWARDED WITH YOUR LETTER MAY NOT BE CERTIFIED FOR PAYMENT.