B-170395, SEP 30, 1970, 50 COMP GEN 236

B-170395: Sep 30, 1970

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IS THE GROSS AND NOT THE NET AMOUNT LEFT AFTER THE DEDUCTION OF FEDERAL AND STATE INCOME TAXES AND THE SOCIAL SECURITY TAX WITHHELD FROM THE INTERIM CIVILIAN EARNINGS OF THE MEMBER OF THE UNIFORMED SERVICES. THE QUESTION OF WHETHER TAXES SHOULD BE REFUNDED IS FOR DETERMINATION BY THE TAXING AUTHORITIES CONCERNED. YOUR REQUEST WAS APPROVED AND ASSIGNED CONTROL NO. SERGEANT KAMINSKI'S NAVAL RECORD WAS CORRECTED TO SHOW THAT HE WAS NOT DISCHARGED UNDER HONORABLE CONDITIONS BY REASON OF UNFITNESS ON SEPTEMBER 18. WAS RETAINED ON ACTIVE DUTY UNDER VALID EXTENSIONS OF ENLISTMENT UNTIL JUNE 9. WHEN HE WAS TRANSFERRED TO THE FLEET MARINE CORPS RESERVE AND RELEASED FROM ACTIVE DUTY. VOUCHER SUBMITTED WITH YOUR LETTER SHOWS THAT THE AMOUNT FOUND TO BE DUE IS $15.

B-170395, SEP 30, 1970, 50 COMP GEN 236

MILITARY PERSONNEL - RECORD CORRECTION - PAYMENT BASIS - INTERIM CIVILIAN EARNINGS THE AMOUNT OF CIVILIAN EARNINGS FOR DEDUCTION FROM THE GROSS PAY AND ALLOWANCES DETERMINED TO BE DUE INCIDENT TO THE CORRECTION OF MILITARY RECORDS, PURSUANT TO 10 U.S.C. 1552, IS THE GROSS AND NOT THE NET AMOUNT LEFT AFTER THE DEDUCTION OF FEDERAL AND STATE INCOME TAXES AND THE SOCIAL SECURITY TAX WITHHELD FROM THE INTERIM CIVILIAN EARNINGS OF THE MEMBER OF THE UNIFORMED SERVICES. TO LIMIT THE DEDUCTION FROM THE BACK PAY AND ALLOWANCES FOUND TO BE DUE A MEMBER TO CIVILIAN EARNINGS AFTER TAXES WOULD BE TANTAMOUNT TO REFUNDING THE TAXES WITHHELD FROM THE INTERIM CIVILIAN COMPENSATION EARNED, AND THE QUESTION OF WHETHER TAXES SHOULD BE REFUNDED IS FOR DETERMINATION BY THE TAXING AUTHORITIES CONCERNED.

TO LIEUTENANT COLONEL C. R. WINDER, UNITED STATES MARINE CORPS, SEPTEMBER 30, 1970:

YOUR LETTER DATED JUNE 24, 1970, FILE REFERENCE CA-CRW-AJM 7220, WITH ENCLOSURES, FORWARDED HERE BY LETTER DATED JUNE 17, 1970, HEADQUARTERS UNITED STATES MARINE CORPS, REQUESTS AN ADVANCE DECISION AS TO WHETHER THE GROSS OR NET CIVILIAN EARNINGS OF FIRST SERGEANT THADDEUS H. KAMINSKI, 64 41 38, UNITED STATES MARINE CORPS FLEET RESERVE, SHOULD BE DEDUCTED FROM THE AMOUNT OF MILITARY PAY AND ALLOWANCES DETERMINED TO BE DUE AS A RESULT OF THE CORRECTION OF HIS NAVAL RECORDS. YOUR REQUEST WAS APPROVED AND ASSIGNED CONTROL NO. DO-MC-1087 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

PURSUANT TO THE DECISION AND RECOMMENDATION OF THE BOARD FOR CORRECTION OF NAVAL RECORDS, SERGEANT KAMINSKI'S NAVAL RECORD WAS CORRECTED TO SHOW THAT HE WAS NOT DISCHARGED UNDER HONORABLE CONDITIONS BY REASON OF UNFITNESS ON SEPTEMBER 18, 1967, BUT WAS RETAINED ON ACTIVE DUTY UNDER VALID EXTENSIONS OF ENLISTMENT UNTIL JUNE 9, 1969, WHEN HE WAS TRANSFERRED TO THE FLEET MARINE CORPS RESERVE AND RELEASED FROM ACTIVE DUTY.

THE CORRECTION BOARD RECOMMENDED THAT THE DEPARTMENT OF THE NAVY PAY TO SERGEANT KAMINSKI, OR OTHER PROPER PARTY OR PARTIES, AS A RESULT OF THE CORRECTION OF HIS NAVAL RECORD, ALL MONIES LAWFULLY FOUND TO BE DUE. VOUCHER SUBMITTED WITH YOUR LETTER SHOWS THAT THE AMOUNT FOUND TO BE DUE IS $15,817.44.

YOU SAY THAT IN LINE WITH MEMORANDUM DATED MARCH 12, 1969, FROM THE DEPARTMENT OF DEFENSE ADVISING THAT CIVILIAN EARNINGS SHOULD BE OFFSET IN CASES WHERE A DECISION OF THE BOARD FOR CORRECTION OF NAVAL RECORDS RESTORED MEMBERS TO ACTIVE DUTY, SERGEANT KAMINSKI WAS REQUESTED TO FURNISH INFORMATION AS TO THE GROSS CIVILIAN WAGES EARNED BY HIM FROM SEPTEMBER 19, 1967, TO JUNE 9, 1969. IN REPLY TO THIS REQUEST, SERGEANT KAMINSKI SUBMITTED INFORMATION SHOWING THAT HIS GROSS CIVILIAN EARNINGS DURING THE PERIOD INVOLVED WERE $10,186.95, AND THAT HIS NET CIVILIAN EARNINGS AFTER DEDUCTION OF FEDERAL AND STATE INCOME TAX WITHHOLDINGS AND SOCIAL SECURITY TAX WERE $6,943.17.

YOU REFER TO OUR DECISIONS OF APRIL 2, 1970, 49 COMP. GEN. 656, AND MARCH 10, 1969, 48 COMP. GEN. 580, AS TO THE PROPRIETY OF SUBJECTING BACK PAY AND ALLOWANCES FOUND DUE A MEMBER OR FORMER MEMBER OF THE UNIFORMED SERVICES BY REASON OF A CORRECTION OF HIS MILITARY OR NAVAL RECORDS PURSUANT TO 10 U.S.C. 1552 TO A DEDUCTION OF EARNINGS RECEIVED FROM CIVILIAN EMPLOYMENT DURING THE CORRESPONDING PERIOD. YOU ALSO REFER TO 32 C.F.R. 723.10(C)(1) WHICH DIRECTS THAT, IN THE SETTLEMENT OF CLAIMS BY THE DEPARTMENT OF THE NAVY IN CASES ARISING UNDER 10 U.S.C. 1552, EARNINGS RECEIVED BY AN INVOLVED MEMBER FROM CIVILIAN EMPLOYMENT DURING ANY PERIOD FOR WHICH ACTIVE DUTY PAY AND ALLOWANCES ARE PAYABLE WILL BE DEDUCTED FROM THE SETTLEMENT.

YOU SAY, HOWEVER, THAT IT IS NOT CLEAR WHETHER UNDER DECISIONS AND REGULATIONS THE GROSS OR NET AMOUNT OF THE CIVILIAN EARNINGS SHOULD BE DEDUCTED FROM THE GROSS PAY AND ALLOWANCES DETERMINED TO BE DUE SERGEANT KAMINSKI. AS INDICATED ABOVE, THE DIFFERENCE BETWEEN THE GROSS AND NET CIVILIAN EARNINGS IN THIS CASE CONSISTS ENTIRELY OF FEDERAL AND STATE TAXES, AGGREGATING $3,243.78.

THE REGULATIONS HERE CONCERNED DO NOT PROVIDE FOR THE DEDUCTION OF NET CIVILIAN EARNINGS BUT REQUIRE DEDUCTION OF EARNINGS RECEIVED FROM CIVILIAN EMPLOYMENT. SUCH A REQUIREMENT IS SUBSTANTIALLY THE SAME AS THAT CONTAINED IN SECTION 6(B)(1) OF THE ACT OF AUGUST 24, 1912, AS AMENDED BY THE ACT OF JUNE 10, 1948, 62 STAT. 355, 5 U.S.C. 652(B)(1) (1952 ED.) (NOW CODIFIED IN 5 U.S.C. 5596(B)(1) (SUPP. V)) PROVIDING FOR THE DEDUCTION OF ANY AMOUNTS EARNED BY A CIVILAIN EMPLOYEE "THROUGH OTHER EMPLOYMENT DURING SUCH PERIOD" FROM THE BACK PAY DUE HIM FOR A PERIOD OF REMOVAL OR SUSPENSION UPON REINSTATEMENT OR RESTORATION TO DUTY ON THE GROUND THAT HIS REMOVAL OR SUSPENSION WAS UNJUSTIFIED OR UNWARRANTED. DECISION B-131439, DATED OCTOBER 8, 1957, CONSTRUING THE PROVISIONS OF SECTION 6(B)(1) WE SAID THAT -

MR. MCCARTHY ALSO QUESTIONS DEDUCTIONS FROM BACK PAY OF HIS GROSS EARNINGS (BEFORE THE DEDUCTION OF INCOME TAXES) FROM OTHER EMPLOYMENT DURING THE PERIOD OF SUSPENSION OR SEPARATION, IT BEING HIS CONTENTION THAT THE DEDUCTION SHOULD BE FOR "INTERIM NET EARNINGS" WHICH, IN HIS OPINION, WOULD EXCLUDE INCOME TAXES ON THE AMOUNTS EARNED. THE PHRASE "INTERIM NET EARNINGS" APPEARS IN THE BACK PAY'S PROVISIONS OF THE ACT OF AUGUST 26, 1950, SUPRA, WHICH ARE INAPPLICABLE HERE (36 COMP. GEN. 225 SUPRA). THE STATUTORY PROVISION HERE APPLICABLE (ACT OF JUNE 10, 1948, SUPRA) REQUIRES THAT THERE BE DEDUCTED "ANY AMOUNTS EARNED BY HIM THROUGH OTHER EMPLOYMENT." CLEARLY, THE DEDUCTION MUST BE THE TOTAL AMOUNTS EARNED WITHOUT REDUCTION BY THE AMOUNT OF INCOME TAXES THEREON.

NO REASON IS APPARENT FOR APPLYING THE MILITARY REGULATIONS DIFFERENTLY IN THIS CASE. IN THIS RESPECT, IT MAY BE NOTED THAT TO LIMIT THE DEDUCTIONS FROM SERGEANT KAMINSKI'S BACK PAY AND ALLOWANCES TO HIS CIVILIAN EARNINGS AFTER TAXES WOULD BE TANTAMOUNT TO REFUNDING TO HIM THE INCOME AND OTHER TAXES CONCERNED. THE QUESTION OF WHETHER THOSE TAXES, OR ANY PART THEREOF, SHOULD BE REFUNDED TO HIM IS FOR DETERMINATION BY THE TAXING AUTHORITIES CONCERNED.

ACCORDINGLY, IT IS OUR VIEW THAT THE REGULATIONS REQUIRE THE DEDUCTION OF THE GROSS CIVILIAN EARNINGS OF $10,186.95 IN THIS CASE. THE VOUCHER AND SUPPORTING PAPERS ARE RETURNED FOR PAYMENT ON THAT BASIS.