B-25264, APRIL 20, 1942, 21 COMP. GEN. 942

B-25264: Apr 20, 1942

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PURCHASE OF SAVINGS BONDS BY GOVERNMENT EMPLOYEES - PAYMENT OF PURCHASE PRICE BY PAY ROLL DEDUCTIONS NO OBJECTION WILL BE MADE TO AN ADMINISTRATIVELY PROPOSED PROCEDURE WHEREBY PAYMENT OF AN EMPLOYEE'S SALARY WOULD BE MADE PARTLY BY CHECK OR CASH AND PARTLY IN THE FORM OF UNITED STATES SAVINGS BONDS. THERE BE OBTAINED AT THE TIME EACH BOND IS DELIVERED A RECEIPT ACKNOWLEDGING FULL PAYMENT OF SALARY FOR THE PERIOD INVOLVED. 1942: I HAVE YOUR LETTER OF APRIL 9. THERE ARE NUMEROUS CASES WHERE EMPLOYEES HAVE BEEN PURCHASING SAVINGS BONDS FOR CASH. IN SOME CASES THE BOND IS INSCRIBED IN THE NAME OF THE WIFE WITH THE NAME OF A CHILD AS COOWNER OR BENEFICIARY. CASE OF THIS TYPE IS ILLUSTRATED IN A LETTER RECENTLY RECEIVED FROM THE INTERNAL REVENUE AGENT AT OMAHA.

B-25264, APRIL 20, 1942, 21 COMP. GEN. 942

PURCHASE OF SAVINGS BONDS BY GOVERNMENT EMPLOYEES - PAYMENT OF PURCHASE PRICE BY PAY ROLL DEDUCTIONS NO OBJECTION WILL BE MADE TO AN ADMINISTRATIVELY PROPOSED PROCEDURE WHEREBY PAYMENT OF AN EMPLOYEE'S SALARY WOULD BE MADE PARTLY BY CHECK OR CASH AND PARTLY IN THE FORM OF UNITED STATES SAVINGS BONDS, EVEN THOUGH THE PROCEDURE CONTEMPLATES THAT THE BONDS MAY BE ISSUED IN THE NAME OF ANOTHER PERSON OR PERSONS DESIGNATED BY THE EMPLOYEE AND THAT THE SALARY DEDUCTION FOR EACH PAY PERIOD MAY NOT IN EVERY INSTANCE COVER THE FULL PURCHASE PRICE OF A BOND, PROVIDED THAT, IN ADDITION TO THE EMPLOYEE'S PREVIOUSLY EXECUTED AUTHORIZATION FOR THE SALARY DEDUCTIONS, THERE BE OBTAINED AT THE TIME EACH BOND IS DELIVERED A RECEIPT ACKNOWLEDGING FULL PAYMENT OF SALARY FOR THE PERIOD INVOLVED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE TREASURY, APRIL 20, 1942:

I HAVE YOUR LETTER OF APRIL 9, 1942, AS FOLLOWS:

UNDER TREASURY DEPARTMENT CIRCULAR NO. 677, DATED JANUARY 24, 1942, CONTAINING REGULATIONS GOVERNING THE ISSUANCE OF SAVINGS BONDS TO EMPLOYEES OF THE TREASURY DEPARTMENT UNDER THE PAY-ROLL ALLOTMENT PLAN, BONDS MUST BE ISSUED IN THE NAME OF THE EMPLOYEE, WITH THE PRIVILEGE OF DESIGNATING A COOWNER OR BENEFICIARY.

THERE ARE NUMEROUS CASES WHERE EMPLOYEES HAVE BEEN PURCHASING SAVINGS BONDS FOR CASH, THE BONDS SO PURCHASED BEING INSCRIBED IN THE NAMES OF OTHER PERSONS. FOR INSTANCE, IN SOME CASES THE BOND IS INSCRIBED IN THE NAME OF THE WIFE WITH THE NAME OF A CHILD AS COOWNER OR BENEFICIARY. CASE OF THIS TYPE IS ILLUSTRATED IN A LETTER RECENTLY RECEIVED FROM THE INTERNAL REVENUE AGENT AT OMAHA, NEBRASKA, A COPY OF WHICH IS ENCLOSED.

IN VIEW OF THE FACT THAT THE TREASURY DESIRES TO ENCOURAGE THE ADOPTION OF THE PAY-ROLL ALLOTMENT PLAN BY OTHER DEPARTMENTS OF THE GOVERNMENT, IT WOULD BE APPRECIATED IF YOU WOULD GIVE CONSIDERATION TO A PROCEDURE UNDER WHICH EMPLOYEES COULD PARTICIPATE IN THE PAY-ROLL ALLOTMENT PLAN WITHOUT DEPRIVING THEM OF THE PRIVILEGE OF HAVING THE BONDS INSCRIBED IN THE SAME MANNER AS IF THEY HAD MADE THE PURCHASES FOR CASH. IT WOULD SEEM THAT SUCH A PROCEDURE WOULD BE FEASIBLE, PARTICULARLY WHERE THE ALLOTMENT COVERS THE FULL PURCHASE PRICE OF A BOND ON EACH PAY PERIOD AND WHERE THE EMPLOYEE COULD GIVE A RECEIPT FOR HIS PAY UPON THE DELIVERY OF THE BOND FOR A PORTION AND A CHECK OR CURRENCY FOR THE BALANCE. THIS CONTEMPLATES, OF COURSE, THAT THE BOND WOULD BE DELIVERED SIMULTANEOUSLY WITH A CHECK OR CASH FOR THE BALANCE OF HIS PAY FOR THE PERIOD.

IN ORDER TO ACCOMMODATE THOSE EMPLOYEES WHO ARE UNABLE TO PURCHASE A BOND EACH PAY PERIOD, IT IS BELIEVED THAT EFFECT TO THIS PROCEDURE MIGHT BE GIVEN BY A CHANGE IN THE WORDING ON THE AUTHORIZATION CARD UNDER WHICH THE EMPLOYEE WOULD AGREE THAT THE DEDUCTION ON THE PAY ROLL IN ACCORDANCE WITH THE ALLOTMENT AUTHORIZATION SHALL CONSTITUTE A RECEIPT FOR HIS PAY.

YOUR EARLY CONSIDERATION OF THIS MATTER WOULD BE APPRECIATED.

UNDER THE EXISTING PAYROLL/SAVINGS PLAN OF THE TREASURY DEPARTMENT, FOR THE PURCHASE OF DEFENSE SAVINGS BONDS, PROVIDING FOR VOLUNTARY PARTICIPATION BY THE EMPLOYEES THEREOF, PAYMENT OF SALARY DUE AN EMPLOYEE MAY BE MADE PARTLY BY CHECK AND THE BALANCE BY A SAVINGS BOND ISSUED TO AND IN THE NAME OF THE EMPLOYEE, THE PRIVILEGE BEING GIVEN THE EMPLOYEE OF DESIGNATING A COOWNER OR BENEFICIARY. SINCE THE BOND IS ISSUED TO AND IN THE NAME OF THE EMPLOYEE THE PROCEDURE IS TO BE REGARDED, IN ITS PRACTICAL EFFECT, AS COMPLETE PAYMENT TO THE EMPLOYEE OF THE SALARY DUE. THERE IS NO SPECIFIC STATUTORY AUTHORITY FOR SUCH A PROCEDURE--- THAT IS, THE PAYMENT OF THE ACCRUED SALARY OF A GOVERNMENT EMPLOYEE PARTLY BY A SAVINGS BOND AND PARTLY BY CASH OR A CHECK--- BUT, ON THE OTHER HAND, THERE APPEARS NO LEGAL OBJECTION THERETO WHEN THE EMPLOYEE VOLUNTARILY AGREES TO ACCEPT PAYMENT OF HIS SALARY PARTLY IN THE FORM OF A SAVINGS BOND AND PARTLY IN CASH OR BY A CHECK. CONSEQUENTLY, WHEN THE FIRST SUCH PLAN WAS PRESENTED TO THIS OFFICE, THE SECRETARY OF THE NAVY--- BY WHOM IT WAS PRESENTED--- WAS ADVISED THAT:

* * * NOTWITHSTANDING THE FACT THAT THE PROPOSED PLAN MAY ENTAIL A CONSIDERABLE AMOUNT OF OTHERWISE UNNECESSARY CLERICAL AND ACCOUNTING WORK UNDER YOUR DEPARTMENT FOR THE INDIRECT BENEFIT OF THE TREASURY DEPARTMENT, AND WILL IMPOSE SOME ADDITIONAL BURDEN UPON THIS OFFICE, IN VIEW OF THE PURPOSE INTENDED TO BE SERVED BY THE COOPERATION OF YOUR DEPARTMENT WITH THE TREASURY DEPARTMENT UNDER THE PLAN AGREED UPON, I FEEL JUSTIFIED IN NOT INTERPOSING ANY OBJECTION THERETO--- IT BEING UNDERSTOOD, OF COURSE, THAT ADEQUATE ACCOUNTING DATA WILL BE FURNISHED WITH THE ACCOUNTS TO ENABLE A PROPER AUDIT THEREOF BY THIS OFFICE. (B 20620, SEPTEMBER 26, 1941, 21 COMP. GEN. 268.)

FOR THE SAME REASONS THIS OFFICE DID NOT OBJECT TO THE PLAN ADOPTED BY THE TREASURY AND OTHER DEPARTMENTS BUT IN EACH CASE THE PLANS CONTEMPLATED THAT THE BONDS WOULD BE REGISTERED IN THE NAME OF, AND BE ISSUED TO, THE EMPLOYEES WHO HAD MADE ALLOTMENTS FROM THEIR PAY FOR THAT PURPOSE, DELIVERY OF THE BONDS TO THE EMPLOYEES REPRESENTING THE BALANCE DUE IN COMPLETE PAYMENT OF THE SALARY EARNED.

IT NOW APPEARS FROM YOUR LETTER OF APRIL 9, 1942, THAT IT IS DESIRED TO AMEND THE PRESENT REGULATIONS OF THE TREASURY DEPARTMENT SO THAT IT WILL NOT BE NECESSARY THAT THE BONDS SO PURCHASED BE INSCRIBED IN THE NAMES OF THE EMPLOYEES PARTICIPATING IN THE PLAN, BUT THAT THE EMPLOYEES MAY HAVE THE BONDS REGISTERED IN THE SAME MANNER, AND WITH THE SAME FREEDOM, AS THOUGH THEY PAID CASH THEREFOR. TREASURY DEPARTMENT CIRCULAR NO. 530, REVISED APRIL 15, 1941, ENTITLED " REGULATIONS GOVERNING UNITED STATES SAVING BONDS," PROVIDES THAT SUCH BONDS MAY BE REGISTERED IN THE NAME (1) OF ONE PERSON, (2) OF TWO PERSONS IN THE ALTERNATIVE AS COOWNERS, OR (3) IN THE NAME OF ONE PERSON AS OWNER AND ONE PERSON AS BENEFICIARY. THEREFORE, WERE AN EMPLOYEE OF THE TREASURY DEPARTMENT TO PAY CASH FOR A BOND SUCH EMPLOYEE WOULD NOT BE REQUIRED TO HAVE THE BOND REGISTERED IN HIS NAME BUT COULD REQUEST THAT IT BE REGISTERED IN THE NAME OF ANOTHER PERSON AS OWNER, OF TWO OTHER PERSONS AS COOWNERS, OR OF TWO PERSONS, ONE AS OWNER AND THE OTHER AS BENEFICIARY. WHAT NOW IS PROPOSED WOULD REQUIRE THAT THE BONDS BE REGISTERED, IN THE MANNER PROVIDED IN CIRCULAR NO. 530, SUPRA, BUT THE NAMES OF THE EMPLOYEES PURCHASING THE BONDS WOULD NOT NECESSARILY HAVE TO BE INSCRIBED ON THE BONDS. AS A TYPICAL ILLUSTRATION THERE WAS ENCLOSED WITH YOUR LETTER OF APRIL 9, 1942, A LETTER FROM AN INTERNAL REVENUE AGENT AT OMAHA, NEBR., WHEREIN HE REQUESTS THAT HE BE PERMITTED TO PARTICIPATE IN THE PAYROLL/SAVINGS PLAN AND HAVE THE BONDS REGISTERED IN THE NAME OF HIS WIFE AND SON AS COOWNERS.

IN VIEW OF THE PROVISIONS OF SECTIONS 3477 AND 3620, REVISED STATUTES, THERE MAY BE SOME DOUBT AS TO THE AUTHORITY OF LAW FOR THE PAYMENT OF THE ACCRUED SALARY OF AN EMPLOYEE PARTLY IN THE FORM OF A CHECK IN FAVOR OF THE EMPLOYEE AND PARTLY IN THE FORM OF A BOND REGISTERED IN THE NAME OF SOME OTHER PERSON. HOWEVER, SINCE IT WOULD APPEAR TO BE DEFINITELY IN THE INTERESTS OF THE GOVERNMENT TO AUTHORIZE PURCHASE OF THE BONDS IN THE MANNER CONTEMPLATED, THERE WOULD APPEAR TO BE SUFFICIENT JUSTIFICATION TO RESOLVE SUCH DOUBT IN THE INTEREST OF THE GOVERNMENT, PROVIDED THE GOVERNMENT CAN GET AN ADEQUATE ACQUITTANCE FOR THE PAYMENT OF THE SALARY OF THE EMPLOYEE.

IN THE TYPE OF CASES REFERRED TO IN THE THIRD PARAGRAPH OF YOUR LETTER OF APRIL 9, 1941, THAT IS, WHERE THE SO-CALLED ALLOTMENT COVERS THE FULL PURCHASE PRICE OF A BOND ON EACH PAY PERIOD, IT WOULD APPEAR THAT THE DELIVERY OF THE BOND TO THE PARTICIPATING EMPLOYEE SIMULTANEOUSLY WITH A CHECK OR CASH FOR THE BALANCE OF HIS PAY FOR THE PERIOD, PURSUANT TO HIS PREVIOUSLY EXECUTED REQUEST AND AUTHORIZATION, AND THE OBTAINING OF A RECEIPT THEREFOR FROM THE EMPLOYEE IN FULL PAYMENT OF HIS SALARY FOR THE PERIOD INVOLVED, WOULD FURNISH THE GOVERNMENT AN ADEQUATE ACQUITTANCE. UNDER THOSE CIRCUMSTANCES AND ON THAT BASIS THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO SUCH A PROCEDURE.

WITH RESPECT TO THOSE CASES WHERE THE SO-CALLED ALLOTMENT EACH PAY PERIOD IS NOT SUFFICIENT TO PURCHASE A BOND THE SITUATION PRESENTED IS A LITTLE MORE DIFFICULT; AND THERE MIGHT BE ROOM FOR DOUBT WHETHER AN ADVANCE AGREEMENT BY THE PARTICIPATING EMPLOYEE, IN HIS REQUEST AND AUTHORIZATION, THAT THE DEDUCTION ON THE PAY ROLL IN ACCORDANCE WITH THE SO-CALLED ALLOTMENT AUTHORIZATION SHALL CONSTITUTE A RECEIPT FOR HIS PAY TO ACCRUE IN THE FUTURE, WOULD NECESSARILY, IN ALL CASES, FURNISH THE GOVERNMENT AN ADEQUATE ACQUITTANCE. HOWEVER, IF IN ADDITION TO SUCH AGREEMENT THE EMPLOYEE BE REQUIRED, WHEN THE BOND IS ISSUED AND DELIVERED TO OR AS DIRECTED TO OR AS DIRECTED BY HIM, TO GIVE A RECEIPT THEREFOR AS IN COMPLIANCE WITH HIS ALLOTMENT AUTHORIZATION AND IN FULL SATISFACTION OF ANY CLAIM HE MAY HAVE AGAINST THE GOVERNMENT FOR DEDUCTIONS FROM HIS SALARY DURING THE PERIOD INVOLVED, IT IS BELIEVED THE INTERESTS OF THE GOVERNMENT WILL BE FULLY PROTECTED AND THIS OFFICE WILL NOT OBJECT TO SUCH PROCEDURE.