B-199002.OM, JUN 4, 1980
Highlights
LUTER STATED THAT IT WAS NOT CLEAR WHETHER AUTHORITY FOR THE PAYMENT OF THIS COLA WAS 5 U.S.C. 5924 OR 5941 (1976). HE SAID THAT THE COLA IS GOVERNED BY REGULATIONS ISSUED BY THE OFFICE OF PERSONNEL MANAGEMENT. LUTER REPORTED THAT THE INTERNAL REVENUE SERVICE HAS ADVISED THEM THAT THE ALLOWANCE GRANTED UNDER SECTION 5924 IS TAXABLE. THUS SUBJECT TO WITHHOLDING WHILE THE ALLOWANCE AUTHORIZED BY SECTION 5941 IS NOT TAXED. SECTION 5924 IS NOT APPLICABLE TO EMPLOYEES STATIONED IN ALASKA. THAT TERM IS DEFINED BY 5 U.S.C. 5921(6) (1976) AS: "(A) THE TRUST TERRITORY OF THE PACIFIC ISLANDS. THE TERM "UNITED STATES" IS DEFINED AT SECTION 5921(4) TO MEAN THE SEVERAL STATES AND THE DISTRICT OF COLUMBIA.
B-199002.OM, JUN 4, 1980
SUBJECT: COST-OF-LIVING ALLOWANCE RECEIVED BY GAO EMPLOYEES STATIONED IN ANCHORAGE, ALASKA - B-199002-O.M.
CHIEF, FINANCIAL MANAGEMENT BRANCH, OBFM - STUART KLEIN:
MR. TOM LUTER OF YOUR OFFICE INFORMALLY CONTACTED MR. RONEY OF THIS OFFICE CONCERNING THE STATUTORY AUTHORITY OF GAO TO PAY ITS EMPLOYEES STATIONED IN ANCHORAGE, ALASKA, A COST-OF-LIVING ALLOWANCE (COLA) BASED ON LIVING COSTS SUBSTANTIALLY HIGHER THAN IN THE DISTRICT OF COLUMBIA. MR. LUTER STATED THAT IT WAS NOT CLEAR WHETHER AUTHORITY FOR THE PAYMENT OF THIS COLA WAS 5 U.S.C. 5924 OR 5941 (1976). HOWEVER, HE SAID THAT THE COLA IS GOVERNED BY REGULATIONS ISSUED BY THE OFFICE OF PERSONNEL MANAGEMENT. APPARENTLY, THE QUESTION AROSE INCIDENT TO COMPUTING THE PROPER WITHHOLDING TAX SINCE MR. LUTER REPORTED THAT THE INTERNAL REVENUE SERVICE HAS ADVISED THEM THAT THE ALLOWANCE GRANTED UNDER SECTION 5924 IS TAXABLE, AND THUS SUBJECT TO WITHHOLDING WHILE THE ALLOWANCE AUTHORIZED BY SECTION 5941 IS NOT TAXED.
SECTION 5924 IS NOT APPLICABLE TO EMPLOYEES STATIONED IN ALASKA. THAT SECTION AUTHORIZES CERTAIN COST-OF-LIVING ALLOWANCES TO EMPLOYEES IN A "FOREIGN AREA." THAT TERM IS DEFINED BY 5 U.S.C. 5921(6) (1976) AS:
"(A) THE TRUST TERRITORY OF THE PACIFIC ISLANDS; AND
"(B) ANY OTHER AREA OUTSIDE THE UNITED STATES, THE COMMONWEALTH OF PUERTO RICO, THE CANAL ZONE, AND TERRITORIES AND POSSESSIONS OF THE UNITED STATES."
THE TERM "UNITED STATES" IS DEFINED AT SECTION 5921(4) TO MEAN THE SEVERAL STATES AND THE DISTRICT OF COLUMBIA. THUS, ALASKA MAY NOT BE CONSIDERED A "FOREIGN AREA" AND SECTION 5924 HAS NO APPLICATION TO EMPLOYEES IN ALASKA.
WE ARE NOT AWARE OF ANY STATUTE SPECIFICALLY AUTHORIZING GAO TO PAY ITS EMPLOYEES A COST-OF-LIVING ALLOWANCE. A REVIEW OF THE LEGISLATIVE BRANCH APPROPRIATION ACT, 1979, PUB. L. NO. 95-391, 92 STAT. 763 (TO BE CODIFIED IN 2 U.S.C. 60A NOTE), DOES NOT REVEAL ANY SPECIFIC AUTHORITY FOR GAO TO PAY A COST-OF-LIVING ALLOWANCE. HOWEVER, SECTION 5941 AUTHORIZES PAYMENT OF A COLA FOR EMPLOYEES OF AN "EXECUTIVE AGENCY" STATIONED OUTSIDE THE CONTINENTAL UNITED STATES OR IN ALASKA WHOSE PAY IS FIXED BY STATUTE. EMPLOYEES OF THE GENERAL ACCOUNTING OFFICE ARE ELIGIBLE FOR THE ALLOWANCE UNDER SECTION 5941 SINCE THE TERM "EXECUTIVE AGENCY" AS DEFINED IN 5 U.S.C. 105 INCLUDES AN "INDEPENDENT ESTABLISHMENT" WHICH IS DEFINED AT 5 U.S.C. 104(2) TO SPECIFICALLY INCLUDE THE GAO.
MR. LUTER INDICATED THAT THE COLA GAO EMPLOYEES ARE RECEIVING IS GOVERNED BY OPM REGULATIONS. THE REGULATIONS IMPLEMENTING SECTION 5941 ARE PROMULGATED BY THE OFFICE OF PERSONNEL MANAGEMENT (OPM) AND ARE FOUND AT 5 C.F.R. PART 591, SUBPART B, "COST-OF-LIVING ALLOWANCE AND POST DIFFERENTIAL - NONFOREIGN AREAS." REGULATIONS IMPLEMENTING SECTION 5924 ARE ISSUED BY THE SECRETARY OF STATE AND ARE FOUND IN CHAPTER 3 OF THE FOREIGN AFFAIRS MANUAL.
THEREFORE, BASED ON THE INFORMATION PRESENTED BY YOUR OFFICE, WE BELIEVE THAT THE AUTHORITY TO PAY A COST OF LIVING ALLOWANCE TO GAO EMPLOYEE STATIONED IN ANCHORAGE IS FOUND IN 5 U.S.C. 5941, SUPRA.