B-154601, AUG. 20, 1964

B-154601: Aug 20, 1964

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SMALL BUSINESS ADMINISTRATION: REFERENCE IS MADE TO LETTER DATED JUNE 16. IS INDEBTED TO THE SMALL BUSINESS ADMINISTRATION ON A PROMISSORY NOTE AND. IT IS STATED FURTHER THAT ON DECEMBER 12. YOU WERE ADVISED BY THE DEPARTMENT OF THE ARMY THAT IT WAS READY TO DISBURSE $11. IT IS YOUR VIEW THAT INASMUCH AS YOUR CLAIM WAS MADE PRIOR TO THAT OF THE INTERNAL REVENUE SERVICE IT SHOULD BE SATISFIED FIRST AND. YOUR CLAIM IS FOR THE FULL AMOUNT OF $11. WERE MADE AGAINST STANDLEY AND COMPANY. THE TAX LIEN CREATED THEREBY IN THE INSTANT CASE IS ENTITLED TO A HIGHER PRIORITY THAN THE DEBT OWED TO YOUR AGENCY BY STANDLEY AND COMPANY. EVEN THOUGH THE DEPARTMENT OF THE ARMY WAS ADVISED OF THE INDEBTEDNESS OF STANDLEY AND COMPANY.

B-154601, AUG. 20, 1964

TO THE HONORABLE EUGENE P. FOLEY, ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION:

REFERENCE IS MADE TO LETTER DATED JUNE 16, 1964, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL, REFERENCE GC:MAD, REGARDING THE MATTER OF YOUR AGENCY'S CLAIM THAT THE FULL AMOUNT OF $11,351.76 OWED TO STANDLEY AND COMPANY, INC., BY THE DEPARTMENT OF THE ARMY BE SET OFF AGAINST A DEBT OWED YOUR AGENCY BY STANDLEY AND COMPANY, INC., IN THE PRINCIPAL AMOUNT OF $38,334.76.

THE GENERAL COUNSEL STATES THAT STANDLEY AND COMPANY, INC., CAPE GIRARDEAU, MISSOURI, IS INDEBTED TO THE SMALL BUSINESS ADMINISTRATION ON A PROMISSORY NOTE AND, THAT THE COLLATERAL FOR THE LOAN HAS BEEN SOLD, LEAVING A DEFICIENCY IN THE PRINCIPAL AMOUNT OF $38,334.76, PLUS INTEREST COMPUTED AT 5 1/2 PERCENT. IT IS STATED FURTHER THAT ON DECEMBER 12, 1963, YOUR AGENCY WROTE THE DEPARTMENT OF THE ARMY AND ASKED THAT ANY AMOUNT OWED BY THE DEPARTMENT TO STANDLEY AND COMPANY, INC., PARTICULARLY UNDER CONTRACT NO. 88-B-50352-SL, BE SET OFF AGAINST THE DEBT OWED YOUR AGENCY BY STANDLEY AND COMPANY, INC. ON MARCH 16, 1964, THE GENERAL COUNSEL APPARENTLY WROTE TO THE UNITED STATES ARMY ENGINEER PROCUREMENT OFFICE, CHICAGO, ILLINOIS, AND ASKED THAT A CHECK BE FORWARDED FOR APPLICATION AGAINST THE INDEBTEDNESS OF STANDLEY AND COMPANY, INC. SUBSEQUENTLY, YOU WERE ADVISED BY THE DEPARTMENT OF THE ARMY THAT IT WAS READY TO DISBURSE $11,351.76 TO STANDLEY AND COMPANY, INC., AND THAT THE INTERNAL REVENUE SERVICE HAD LEVIED ON THAT AMOUNT TO THE EXTENT OF $1,071.10. IT IS YOUR VIEW THAT INASMUCH AS YOUR CLAIM WAS MADE PRIOR TO THAT OF THE INTERNAL REVENUE SERVICE IT SHOULD BE SATISFIED FIRST AND, ACCORDINGLY, YOUR CLAIM IS FOR THE FULL AMOUNT OF $11,351.76.

BY LETTER OF JULY 13, 1964, THE FINANCE AND ACCOUNTS OFFICE, UNITED STATES ARMY, WASHINGTON, D.C., FORWARDED TREASURY CHECK NO. 42541 IN THE AMOUNT OF $11,351.76, DATED MAY 27, 1964, PAYABLE TO STANDLEY AND COMPANY, INC., OR TREASURER OF THE UNITED STATES, TO OUR OFFICE FOR APPROPRIATE ACTION.

THE RECORD SHOWS THAT THE INTERNAL REVENUE SERVICE BY NOTICE OF LEVY DATED APRIL 20, 1964, NOTIFIED THE FINANCE AND ACCOUNTING OFFICER, UNITED STATES ARMY CORPS ENGINEERS, CHICAGO, ILLINOIS, OF DEFICIENCY TAX ASSESSMENTS AGAINST STANDLEY AND COMPANY, INC., IN THE TOTAL AMOUNT OF $1,071.10. THE NOTICE OF LEVY SHOWS THAT THREE TAX ASSESSMENTS DATED DECEMBER 6, 1963, FEBRUARY 28, 1964, AND MARCH 6, 1964, IN THE AMOUNTS OF $84.77, $752.57, AND $233.51 RESPECTIVELY, WERE MADE AGAINST STANDLEY AND COMPANY, INC.

SECTIONS 6321 AND 6322 OF TITLE 26, U.S.C. PROVIDES THAT THE FAILURE TO PAY UPON DEMAND ANY TAX DUE CREATES A LIEN IN FAVOR OF THE UNITED STATES UPON ALL PROPERTY AND RIGHTS TO PROPERTY, WHETHER REAL OR PERSONAL, BELONGING TO THE TAXPAYER, SUCH LIEN ARISING GENERALLY AT THE TIME OF THE TAX ASSESSMENT. IN VIEW OF THESE STATUTORY PROVISIONS, THE TAX LIEN CREATED THEREBY IN THE INSTANT CASE IS ENTITLED TO A HIGHER PRIORITY THAN THE DEBT OWED TO YOUR AGENCY BY STANDLEY AND COMPANY, INC., EVEN THOUGH THE DEPARTMENT OF THE ARMY WAS ADVISED OF THE INDEBTEDNESS OF STANDLEY AND COMPANY, INC., TO YOUR AGENCY BEFORE TWO OF THE TAX ASSESSMENTS HAD BEEN MADE AND THE ISSUANCE OF THE NOTICE OF LEVY.

ACCORDINGLY, ACTION WILL BE TAKEN TO DEPOSIT THE AMOUNT OF $1,071.10 TO THE CREDIT OF THE ACCOUNT OF EDWIN O. BOOKWALTER, DISTRICT OF INTERNAL REVENUE, ST. LOUIS, MISSOURI AND THE REMAINDER OF $11,351.76 TO THE CREDIT OF YOUR ACCOUNT NO. 73 X 4150.