B-163653, APR. 19, 1968

B-163653: Apr 19, 1968

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ASKS FOR OUR POSITION AS TO THE PROPRIETY OF USING AN APPROVED PLAN OF PAYROLL DEDUCTIONS TO ACCOMPLISH A PURPOSE FOR WHICH YOU SAY A DEDUCTION IS PRESENTLY UNAUTHORIZED. ARE DRAWN IN THE NAME OF THE FEDERAL EMPLOYEE AS OWNER AND THE NAME OF A REPRESENTATIVE OF THE UNION OR ASSOCIATION AS COOWNER. THE BONDS ARE DELIVERED DIRECTLY TO THE COOWNER AND PERIODICALLY ARE CASHED BY HIM AND THE PROCEEDS THEREOF USED TO PAY THE WAGE TAX ASSESSED BY THE CITY OF PHILADELPHIA. IS AUTHORIZED TO ISSUE * * * UNITED STATES SAVINGS BONDS * * *. WE POINTED OUT IN THOSE DECISIONS THAT WHILE NO SPECIFIC STATUTORY AUTHORITY EXISTED THEREFOR SINCE THE BOND WAS ISSUED TO AND IN THE NAME OF THE EMPLOYEE THE PROCEDURE COULD BE REGARDED.

B-163653, APR. 19, 1968

TO MR. MERRITT:

YOUR LETTER OF FEBRUARY 23, 1968, ASKS FOR OUR POSITION AS TO THE PROPRIETY OF USING AN APPROVED PLAN OF PAYROLL DEDUCTIONS TO ACCOMPLISH A PURPOSE FOR WHICH YOU SAY A DEDUCTION IS PRESENTLY UNAUTHORIZED.

YOU SUBMIT INFORMATION WITH YOUR REQUEST SHOWING THAT THE SPECIFIC SITUATION INVOLVED CONCERNS THE VOLUNTARY USE BY CERTAIN CIVILIAN EMPLOYEES OF THE PAYROLL ALLOTMENT PLAN FOR THE PURCHASE OF SAVINGS BONDS. THESE BONDS, THE INFORMATION SHOWS, ARE DRAWN IN THE NAME OF THE FEDERAL EMPLOYEE AS OWNER AND THE NAME OF A REPRESENTATIVE OF THE UNION OR ASSOCIATION AS COOWNER. THE BONDS ARE DELIVERED DIRECTLY TO THE COOWNER AND PERIODICALLY ARE CASHED BY HIM AND THE PROCEEDS THEREOF USED TO PAY THE WAGE TAX ASSESSED BY THE CITY OF PHILADELPHIA, PENNSYLVANIA, AGAINST THE EMPLOYEE, WITH ANY INTEREST AND PENALTIES DUE FROM A DELINQUENT TAXPAYER BEING WAIVED BY THE CITY OF PHILADELPHIA.

31 U.S.C. 757C. (A) PROVIDES, IN PART, THAT:

"THE SECRETARY OF THE TREASURY, WITH THE APPROVAL OF THE PRESIDENT, IS AUTHORIZED TO ISSUE * * * UNITED STATES SAVINGS BONDS * * *. THE VARIOUS ISSUES AND SERIES OF THE SAVINGS BONDS * * * SHALL BE ISSUED IN SUCH MANNER AND SUBJECT TO SUCH TERMS AND CONDITIONS CONSISTENT WITH SUBSECTIONS (B/-/D) OF THIS SECTION, AND INCLUDING ANY RESTRICTIONS ON THEIR TRANSFER, AS THE SECRETARY OF THE TREASURY MAY FROM TIME TO TIME PRESCRIBE.'

SUBSECTION (D) THEREOF READS, IN PART, AS FOLLOWS:

"* * * THE SAVINGS BONDS * * * SHALL NOT BEAR THE CIRCULATION PRIVILEGE.' OUR DECISIONS CONCERNING THE PURCHASE OF SAVINGS BONDS, BY PAYROLL DEDUCTIONS, I.E., B-20620, SEPTEMBER 26, 1941 (21 COMP. GEN. 268) AND B-25264, APRIL 20, 1942 (21 ID. 942), INVOLVED RESPECTIVELY THE QUESTIONS OF THE PAYMENT AT THE EMPLOYEE'S REQUEST OF ACCRUED SALARY OF A GOVERNMENT EMPLOYEE BY THE DELIVERY OF A GOVERNMENT BOND INSTEAD OF CASH OR CHECK AND THE PAYMENT OF SALARY DUE AN EMPLOYEE PARTLY BY CHECK AND THE BALANCE BY A SAVINGS BOND ISSUED TO AND IN THE NAME OF AN EMPLOYEE WITH THE PRIVILEGE OF DESIGNATING A COOWNER OR BENEFICIARY. WE POINTED OUT IN THOSE DECISIONS THAT WHILE NO SPECIFIC STATUTORY AUTHORITY EXISTED THEREFOR SINCE THE BOND WAS ISSUED TO AND IN THE NAME OF THE EMPLOYEE THE PROCEDURE COULD BE REGARDED, IN ITS PRACTICABLE EFFECT, AS COMPLETE PAYMENT TO THE EMPLOYEE OF THE SALARY DUE.

WE NOTE THAT YOUR CURRENT REGULATIONS, DEPARTMENTAL CIRCULAR NO. 530, NINTH REVISION, DATED DECEMBER 23, 1964, AS AMENDED, SUBPART M, PROVIDE THAT SAVINGS BONDS CAN BE REGISTERED IN THE NAMES OF TWO NATURAL PERSONS AS COOWNERS WITH EITHER ONE ENTITLED TO PAYMENT THEREOF UPON HIS SEPARATE REQUEST AND THAT SUCH PAYMENT NEGATES ANY CLAIM FROM THE OTHER COOWNER.

STANDARD FORM 1192, UNITED STATES SAVINGS BONDS AUTHORIZATION, EXECUTED BY AN EMPLOYEE DESIGNATING HIMSELF AS OWNER AND NAMING THE INDIVIDUAL WHO REPRESENTS THE UNION OR ASSOCIATION AS COOWNER AND AUTHORIZING DELIVERY OF THE BONDS TO SUCH REPRESENTATIVE, WOULD, WE BELIEVE, ADEQUATELY MEET THE REQUIREMENTS OF YOUR CURRENT REGULATIONS AND FURNISH THE GOVERNMENT A GOOD ACQUITTANCE FOR THE PAYMENT OF SALARY PERIODICALLY UNDER THE PROPOSED PROGRAM.

WE REALIZE THAT THE PURPOSE INTENDED TO BE SERVED BY THE PROPOSED PROGRAM, WHILE IT MAY BE RELATED TO SAVINGS IN A LIMITED SENSE, BASICALLY IS DESIGNED FOR THE PURPOSE OF COLLECTING THE WAGE TAX INVOLVED RATHER THAN THE PURPOSE OF SAVINGS FOR WHICH THE PAYROLL ALLOTMENT PLAN WAS CONCEIVED. FURTHER, WE ARE NOT UNAWARE THAT APPROVAL OF THE PROPOSED PROGRAM COULD RESULT IN ADDITIONAL REQUESTS FOR FURTHER EXTENSION THEREOF AND IF EXTENDED WIDELY ENOUGH MIGHT OBVIATE THE NECESSITY FOR LEGISLATION TO PROVIDE FOR WITHHOLDING ON A MANDATORY BASIS OF CITY WAGE OR INCOME TAX, SUBJECT TO THE SAME CONDITIONS AS NOW IN EFFECT FOR WITHHOLDING OF STATE INCOME TAXES. SEE 5 U.S.C. 5517. ALSO SEE GENERALLY 42 COMP. GEN. 342; ID. 663.

OUR OPINION IS THAT IN THE FINAL ANALYSIS THE QUESTION YOU PRESENT BASICALLY CONCERNS A MATTER OF POLICY THE APPROPRIATE SOLUTION TO WHICH RESTS WITH THE TREASURY DEPARTMENT UNDER THE PROVISIONS OF 31 U.S.C. 757C.