B-175344, JUL 5, 1972

B-175344: Jul 5, 1972

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THEN APPROPRIATIONS AVAILABLE AT THE TIME SUCH ORDER IS ISSUED FOR THE PURCHASE. IS NOT AWARE OF ANY STATUTE WHICH WOULD AUTHORIZE EITHER GAO OR IRS TO PAY THE CLAIM. IF THERE IS ANY AUTHORITY FOR THE PAYMENT OF SUCH CLAIM BY OUR OFFICE. THE RELATED CIRCUMSTANCES ARE AS FOLLOWS: "ON JANUARY 10. THE VEHICLE WAS SEIZED. THE SEIZURE WAS PREDICTED UPON THE PROVISIONS OF 26 U.S.C. 7302 WHICH PROVIDES FOR THE SEIZURE AND FORFEITURE OF ANY PROPERTY USED IN VIOLATING THE PROVISION OF THE INTERNAL REVENUE LAWS. WERE CONDUCTING A WAGERING BUSINESS WITHOUT COMPLYING WITH THE PROVISIONS OF 26 U.S.C. 4401. THE VIOLATORS WERE ALSO CHARGED WITH VIOLATING 26 U.S.C. 4901. "AT THE TIME OF SEIZURE THE FORD WAS VALUED AT $2.

B-175344, JUL 5, 1972

GENERAL GOVERNMENT MATTERS - FORFEITURE - AUTHORITY FOR REMISSION CONCERNING WHETHER THE INTERNAL REVENUE SERVICE HAS AUTHORITY TO PAY A CLAIM BY THE OWNER OF PROPERTY SEIZED AND FORFEITED FOR VIOLATION OF WAGERING TAX LAWS. IF UPON RECONSIDERATION, IRS ORDERS REMISSION OF THE FORFEITURE UNDER 19 U.S.C. 1613, THEN APPROPRIATIONS AVAILABLE AT THE TIME SUCH ORDER IS ISSUED FOR THE PURCHASE, HIRE, OPERATION, MAINTENANCE AND REPAIR OF PROPERTY OF ANY LAND MAY BE USED TO PAY ANY AMOUNT FOUND DUE THE CLAIMANT PURSUANT TO 40 U.S.C. 304J. HOWEVER, OTHER THAN REMISSION THE COMP. GEN. IS NOT AWARE OF ANY STATUTE WHICH WOULD AUTHORIZE EITHER GAO OR IRS TO PAY THE CLAIM.

TO MR. SECRETARY:

CONSIDERATION HAS BEEN GIVEN TO A LETTER DATED FEBRUARY 28, 1972, FROM THE ACTING CHIEF COUNSEL, INTERNAL REVENUE SERVICE (REFERENCE CC: ATF- 14,508 L: CAN) REQUESTING A DECISION AS TO WHETHER - UNDER THE CIRCUMSTANCES SET FORTH BELOW - THE INTERNAL REVENUE SERVICE HAS AUTHORITY TO PAY A CLAIM SUBMITTED BY THE OWNER OF PROPERTY SEIZED AND FORFEITED FOR VIOLATION OF THE WAGERING TAX LAWS, AND, IF NOT, IF THERE IS ANY AUTHORITY FOR THE PAYMENT OF SUCH CLAIM BY OUR OFFICE.

THE RELATED CIRCUMSTANCES ARE AS FOLLOWS:

"ON JANUARY 10, 1964, SPECIAL AGENTS, INTELLIGENCE DIVISION, INTERNAL REVENUE SERVICE, SEIZED A 1963 FORD CONVERTIBLE REGISTERED IN THE NAME OF STEVE G. VALLTOS. THE VEHICLE WAS SEIZED, WITH OTHER PROPERTY, IN MT. RAINIER, MARYLAND, BECAUSE INVESTIGATING AGENTS HAD OBSERVED ITS USE BY MR. VALLTOS TO TRANSPORT WAGERING PARAPHERNALIA. THE SEIZURE WAS PREDICTED UPON THE PROVISIONS OF 26 U.S.C. 7302 WHICH PROVIDES FOR THE SEIZURE AND FORFEITURE OF ANY PROPERTY USED IN VIOLATING THE PROVISION OF THE INTERNAL REVENUE LAWS. THE VIOLATORS, INCLUDING MR. VALLTOS, WERE CONDUCTING A WAGERING BUSINESS WITHOUT COMPLYING WITH THE PROVISIONS OF 26 U.S.C. 4401, WHICH IMPOSES A 10% EXCISE TAX ON ALL WAGERS AND IMPOSES LIABILITY FOR SUCH TAX UPON THOSE ENGAGED IN THE BUSINESS OF ACCEPTING WAGERS. THE VIOLATORS WERE ALSO CHARGED WITH VIOLATING 26 U.S.C. 4901, WHICH IMPOSES A SPECIAL TAX UPON PERSONS CARRYING ON A WAGERING BUSINESS. THE VIOLATORS FAILED TO PAY EITHER THE 10% EXCISE TAX OR THE SPECIAL OCCUPATIONAL TAX.

"AT THE TIME OF SEIZURE THE FORD WAS VALUED AT $2,000.00 AND ADMINISTRATIVELY FORFEITED PURSUANT TO 26 U.S.C. 7325. THE EXACT DATE OF FORFEITURE IS UNKNOWN BECAUSE OF THE UNAVAILABILITY OF RECORDS BUT IT IS KNOWN THAT IT WAS ACQUIRED FOR OFFICIAL USE BY THE REVENUE SERVICE ON OR ABOUT JULY 1, 1964. IT IS NO LONGER IN USE. IT WAS ACQUIRED FOR OFFICIAL USE IN ACCORDANCE WITH 40 U.S.C. 304H.

"AFTER THE ACQUISITION OF THE FORD FOR OFFICIAL USE, A PETITION FOR REMISSION OR MITIGATION OF FORFEITURE WAS FILED BY MR. STEVE G. VALLTOS, ON OR ABOUT AUGUST 21, 1964. THE PETITION WAS DENIED AND THE PETITIONER WAS SO ADVISED ON OR SHORTLY AFTER OCTOBER 21, 1964. IT WAS DENIED BECAUSE IT WAS NOT TIMELY FILE (SEE: 19 U.S.C. 1613, INVOKED BY 26 U.S.C. 7327, WHEN A FORFEITED VEHICLE HAS EITHER BEEN SOLD OR ACQUIRED FOR OFFICIAL USE).

"ON JANUARY 29, 1968, THE SUPREME COURT, IN THE CASES OF MARCHETTI V. UNITED STATES, 390 U.S. 39, AND GROSSO V. UNITED STATES, 390 U.S. 62, HELD THAT THE FIFTH AMENDMENT PRIVILEGE AGAINST SELF-INCRIMINATION BARRED THE CRIMINAL PROSECUTION OF A DEFENDANT CHARGED WITH A VIOLATION UNDER THE INTERNAL REVENUE WAGERING TAX LAWS. THEN, ON APRIL 5, 1971, THE SAME COURT HELD, IN THE CASE OF UNITED STATES V. UNITED STATES COIN AND CURRENCY, 401 U.S. 715, THAT MARCHETTI AND GROSSO ALSO BARRED THE FORFEITURE OF PROPERTY SEIZED FROM A WAGERING TAX VIOLATOR BECAUSE OF ITS USE IN SUCH VIOLATION. THE COURT ALSO RULED THAT ITS DECISION WAS COMPLETELY RETROACTIVE.

"ON FEBRUARY 1, 1972, MR. VALLTOS' ATTORNEY, I. ELLIOTT GOLDBERG, ESQUIRE, WROTE THE ASSISTANT REGIONAL COUNSEL, INTERNAL REVENUE SERVICE, PHILADELPHIA, PENNSYLVANIA, AND STATED IN THE LAST PARAGRAPH OF HIS LETTER:

"'BECAUSE OF THE HOLDING IN THE CASE OF UNITED STATES V. UNITED STATES COIN AND CURRENCY, 401 U.S. 715, 91 S. CT. 1041 (1971), WE ASK YOU TO CONSIDER THIS LETTER AN ADDITIONAL PETITION FOR THE RETURN OF SEIZED PROPERTY, IN ADDITION TO THE ONE FILED BY MR. VOLLTOS DATED AUGUST 17, 1964.'

"AS INDICATED ABOVE, THE 1963 FORD WAS DULY FORFEITED, UNDER THE THEN INTERPRETATION OF THE FORFEITURE LAWS, AS APPLIED TO WAGERING TAX VIOLATIONS, AND PLACED INTO OFFICIAL USE ON OR ABOUT JULY 1, 1964. SINCE THE VEHICLE IS NO LONGER IN USE AND HAS BEEN DISPOSED OF, IT CANNOT BE RETURNED TO MR. VALLTOS AND WE ARE NOT AWARE OF ANY STATUTE, PURSUANT TO WHICH, WE CAN PAY TO MR. VALLTOS, AT THIS LATE DATE, THE VALUE OF HIS VEHICLE, WHICH WAS $2,000.00 AT THE TIME OF SEIZURE. IT IS, OF COURSE, AXIOMATIC THAT FUNDS CANNOT BE PAID BY AN AGENCY UNLESS CONGRESS HAD APPROPRIATED FUNDS FOR THAT PURPOSE. WE HAVE NO SUCH APPROPRIATION AND KNOW OF NO STATUTE WHICH CAN FURNISH US AUTHORIZATION TO COMPLY WITH MR. VALLTOS' REQUEST."

SUBSEQUENTLY, BY LETTER DATED APRIL 20, 1972, THE OFFICE OF CHIEF COUNSEL FORWARDED US FOR USE IN CONSIDERING THE QUESTIONS PRESENTED A COPY OF THE OPINION OF THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT DATED MARCH 27, 1972, IN THE CASE OF UNITED STATES V. ONE 1961 RED CHEVROLET IMPALA SEDAN, ETC., NOS. 71-2241 AND 71-2242, AND COPIES OF THE OPINIONS AND ORDERS OF TWO CASES DATED MARCH 21, 1972, IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO, WESTERN DIVISION. THESE CASES ARE ENTITLED UNITED STATES V. ONE 1967 PONTIAC CONVERTIBLE, ETC., NO. 66-276 AND UNITED STATES V. ONE 1965 CHEVROLET IMPALA CONVERTIBLE, ETC., NO. 66-278.

THE JURISDICTION OF THIS OFFICE IS SUCH THAT WE MAY RENDER AUTHORITATIVE DECISIONS ONLY TO THE HEADS OF FEDERAL AGENCIES AND TO CERTAIN DISBURSING AND CERTIFYING OFFICERS. SEE 31 U.S.C. 74 AND 82D. THEREFORE WE ARE NOT AUTHORIZED TO RENDER A DECISION TO THE ACTING CHIEF COUNSEL, INTERNAL REVENUE SERVICE, IN THE MATTER. HOWEVER, BECAUSE OF THE NATURE OF THE QUESTIONS PRESENTED WE ARE ADDRESSING OUR REPLY TO YOU AS THE HEAD OF THE AGENCY, IN ACCORDANCE WITH THE AUTHORITY CONTAINED IN 31 U.S.C. 74.

SECTION 304H OF TITLE 40, U.S.C. PROVIDES THAT ANY PROPERTY SEIZED BY AN AGENCY THAT IS FORFEITED TO THE UNITED STATES "OTHERWISE THAN BY COURT DECREE," MAY BE RETAINED BY THE SEIZING AGENCY FOR OFFICIAL USE. U.S.C. 304K MAKES THE RETENTION OF PROPERTY BY THE SEIZING AGENCY FOR OFFICIAL USE EQUIVALENT TO THE SALE THEREOF FOR PURPOSES OF THE LAWS PROVIDING FOR THE REMISSION OR MITIGATION OF FORFEITURES.

AS TO THE REMISSION OF FORFEITURES, 19 U.S.C. 1613 WHICH IS MADE APPLICABLE TO FORFEITURES UNDER THE INTERNAL REVENUE LAWS BY 26 U.S.C. 7327, PROVIDES, IN PART THAT:

"ANY PERSON CLAIMING ANY VESSEL, VEHICLE, MERCHANDISE, OR BAGGAGE, OR ANY INTEREST THEREIN, WHICH HAS BEEN FORFEITED AND SOLD UNDER THE PROVISIONS OF THIS CHAPTER, MAY AT ANY TIME WITHIN THREE MONTHS AFTER THE DATE OF SALE APPLY TO THE SECRETARY OF THE TREASURY IF THE FORFEITURE AND SALE WAS UNDER THE CUSTOMS LAWS, OR IF THE FORFEITURE AND SALE WAS UNDER THE NAVIGATION LAWS, FOR A REMISSION OF THE FORFEITURE AND RESTORATION OF THE PROCEEDS OF SUCH SALE, OR SUCH PART THEREOF AS MAY BE CLAIMED BY HIM. UPON THE PRODUCTION OF SATISFACTORY PROOF THAT THE APPLICANT DID NOT KNOW OF THE SEIZURE PRIOR TO THE DECLARATION OR CONDEMNATION OF FORFEITURE, AND WAS IN SUCH CIRCUMSTANCES AS PREVENTED HIM FROM KNOWING OF THE SAME, AND THAT SUCH FORFEITURE WAS INCURRED WITHOUT ANY WILLFUL NEGLIGENCE OR INTENTION TO DEFRAUD ON THE PART OF THE APPLICANT, THE SECRETARY OF THE TREASURY MAY ORDER THE PROCEEDS OF THE SALE, OR ANY PART THEREOF, RESTORED TO THE APPLICANT, AFTER DEDUCTING THE COST OF SEIZURE AND OF SALE, THE DUTIES, IF ANY, ACCRUING ON THE MERCHANDISE OR BAGGAGE, AND ANY SUM DUE ON A LIEN FOR FREIGHT, CHARGES, OR CONTRIBUTION IN GENERAL AVERAGE THAT MAY HAVE BEEN FILED. ***"

SECTION 304J OF TITLE 40, U.S.C. MAKES AGENCY APPROPRIATIONS THAT ARE AVAILABLE FOR THE PURCHASE, HIRE, OPERATION, MAINTENANCE OF PROPERTY OF ANY KIND ALSO AVAILABLE FOR THE PAYMENT OF ANY MONEYS FOUND TO BE DUE ANY PERSON UPON THE DULY AUTHORIZED REMISSION OF ANY FORFEITURE.

IT APPEARS FROM THE ENCLOSURES TRANSMITTED WITH THE ACTING CHIEF COUNSEL'S LETTER THAT A PETITION FOR REMISSION OR MITIGATION OF THE FORFEITURE INVOLVED HERE WAS FILED ON BEHALF OF THE CLAIMANT ON OR ABOUT AUGUST 21, 1964, AND WAS DENIED ON OCTOBER 21, 1964, FOR THE FOLLOWING REASONS:

"THE PETITIONER FAILED TO PRODUCE SATISFACTORY PROOF THAT HE DID NOT KNOW OF THE SEIZURE OF THE VEHICLE PRIOR TO THE DECLARATION OR CONDEMNATION OF FORFEITURE THEREOF, AND THAT HE WAS IN SUCH CIRCUMSTANCES AS PREVENTED HIM FROM KNOWING OF THE SAME, AS REQUIRED BY 19 U.S.C. 1613, INVOKED BY 26 U.S.C. 7327, FOR APPLICATION IN A CASE WHEREIN SALE (OR ACQUISITION FOR OFFICIAL USE (EQUIVALENT TO SALE UNDER 40 U.S.C. 304(K))) OF PERSONAL PROPERTY PURSUANT TO FORFEITURE HAS BEEN EFFECTED PRIOR TO THE FILING OF A PETITION IN REGARD THERETO."

THE CLAIMANT'S ATTORNEY BY LETTER DATED FEBRUARY 1, 1972, REQUESTS, IN EFFECT, RECONSIDERATION OF THE CLAIMANT'S ORIGINAL PETITION FOR REMISSION OF FORFEITURE AND FURTHER REQUESTS THAT HIS LETTER OF FEBRUARY 1, 1972 - IN WHICH HE REFERS TO THE CASE OF UNITED STATES V. UNITED STATES COIN AND CURRENCY, SUPRA - BE CONSIDERED AS "AN ADDITIONAL PETITION" FOR THE RETURN OF THE SEIZED PROPERTY. IN OTHER WORDS, IT APPEARS THAT THE PETITIONER IS ASKING YOUR DEPARTMENT TO RECONSIDER ITS DENIAL OF HIS ORIGINAL PETITION FOR REMISSION OF FORFEITURE AND REQUESTING THAT IN ACTING ON SUCH RECONSIDERATION THERE BE CONSIDERED THE UNITED STATES COIN AND CURRENCY CASE.

IF UPON RECONSIDERATION OF THE CLAIMANT'S ORIGINAL PETITION YOU (OR YOUR DESIGNEE) AUTHORIZE OR ORDER THE REMISSION OF THE FORFEITURE UNDER THE AUTHORITY OF THE APPLICABLE STATUTES, IT IS OUR VIEW THAT APPROPRIATIONS AVAILABLE TO THE INTERNAL REVENUE SERVICE - AT THE TIME SUCH AUTHORIZATION OR ORDER IS ISSUED - FOR THE PURCHASE, HIRE, OPERATION, MAINTENANCE AND REPAIR OF PROPERTY OF ANY KIND MAY BE USED TO PAY ANY AMOUNT FOUND DUE THE CLAIMANT ON ACCOUNT OF SUCH REMISSION.

OTHER THAN REMISSION OF THE FORFEITURE AS PROVIDED BY LAW, WE ARE NOT AWARE OF ANY STATUTE PURSUANT TO WHICH YOUR DEPARTMENT OR OUR OFFICE MAY PAY THE INSTANT CLAIM. FOR YOUR INFORMATION, WE MIGHT POINT OUT, HOWEVER, THAT UNDER 28 U.S.C. 2414 THE ATTORNEY GENERAL HAS THE AUTHORITY TO COMPROMISE CLAIMS REFERRED TO HIM FOR DEFENSE OF IMMINENT LITIGATION.

ACCORDINGLY, THE DECISION OF JULY 8, 1971, IS AFFIRMED. MINORITY OWNED, LABOR SURPLUS AREA CONCERN HAVE A BEARING ON THE MATTER.