B-34335, MAY 18, 1943, 22 COMP. GEN. 1046

B-34335, MAY 18, 1943, 22 COMP. GEN. 1046

LEAVES OF ABSENCE - COMPENSATION ADJUSTMENTS FOR OVERDRAWN LEAVE UPON SEPARATION FROM SERVICE - VICTORY TAX THE AMOUNT OF THE INDEBTEDNESS OF A FORMER EMPLOYEE FOR OVERDRAWN LEAVE UPON SEPARATION FROM SERVICE MAY BE RECREDITED TO THE APPLICABLE SALARY APPROPRIATION BY SET OFF AGAINST HIS RETIREMENT FUND CREDIT--- OTHERWISE AVAILABLE FOR SET OFF--- ONLY TO THE EXTENT OF THE NET AMOUNT OF HIS SALARY (INCLUDING 5 PERCENT CREDITED FOR RETIREMENT), AFTER DEDUCTION OF THE AMOUNT WITHHELD FOR VICTORY TAX, DURING THE PERIOD OF THE OVERDRAWN LEAVE; BUT IN ORDER THAT THE AMOUNT PAID FROM THE SALARY APPROPRIATION FOR THE OVERDRAWN LEAVE MAY BE FULLY RESTORED BY RECREDITING, ALSO, THE AMOUNT WITHHELD FOR VICTORY TAX, THE MATTER SHOULD BE REFERRED TO THE CLAIMS DIVISION OF THIS OFFICE FOR APPROPRIATE ACTION.

COMPTROLLER GENERAL WARREN TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, MAY 18, 1943:

I HAVE YOUR LETTER OF APRIL 30, 1943, AS FOLLOWS:

THERE HAS BEEN PRESENTED TO THE COMMISSION A QUESTION REGARDING A FORMER FEDERAL EMPLOYEE WHO, UPON SEPARATION FROM THE SERVICE, WAS INDEBTED TO THE GOVERNMENT ON ACCOUNT OF OVERDRAWN LEAVE.

IN CONNECTION WITH SALARY ALREADY PAID FOR THE LEAVE PERIOD INVOLVED, THERE WAS DEDUCTED THE VICTORY TAX APPLICABLE THERETO. IN MAKING RECOVERY FOR THE OVERDRAWN LEAVE PAYMENT FROM THE AMOUNT DUE THE SEPARATED EMPLOYEE UNDER THE CIVIL SERVICE RETIREMENT ACT UPON CLAIM BY THE EMPLOYING AGENCY, IT BECOMES NECESSARY TO DETERMINE THE BASIS FOR RECOVERY.

YOUR DECISION IS, THEREFORE, RESPECTFULLY REQUESTED AS TO WHETHER THE COMMISSION SHALL APPROVE SET-OFF COVERING 100 PERCENT OF THE SALARY PAID, OR WHETHER ADJUSTMENT IS NECESSARY TO COVER THE VICTORY TAX WITHHELD. THE LATTER POINT IS ANSWERED IN THE AFFIRMATIVE, INFORMATION IS REQUESTED CONCERNING THE BASIS FOR SUCH ADJUSTMENT AND WHAT RIGHTS THE FORMER EMPLOYEE MAY HAVE BY REASON OF SAID VICTORY TAX.

AS 100 PERCENT OF AN EMPLOYEE'S SALARY IS PAID OUT OF THE APPROPRIATION CHARGEABLE THEREWITH DURING ANY PERIOD OF OVERDRAWN LEAVE, IT FOLLOWS THAT THE APPROPRIATION SO CHARGED IS REQUIRED TO BE RECREDITED WITH 100 PERCENT OF THE SALARY WHEN THE EMPLOYEE UPON HIS SEPARATION FROM SERVICE IS, PURSUANT TO THE LEAVE REGULATIONS, REQUIRED TO ADJUST HIS PAY ACCOUNT BECAUSE OF OVERDRAWN LEAVE. HOWEVER, THE AMOUNT OF THE VICTORY TAX WITHHELD DURING THE PERIOD OF THE OVERDRAWN LEAVE IS NOT PAID OVER TO THE EMPLOYEE BUT IS FOR DEPOSITING IN THE TREASURY OF THE UNITED STATES TO THE CREDIT OF INTERNAL REVENUE COLLECTIONS, PURSUANT TO APPLICABLE REGULATIONS. SEE GENERAL REGULATIONS 96 DATED DECEMBER 15, 1942, AND SUPPLEMENT THERETO NO. 1, DATED APRIL 3, 1943, 22 COMP. GEN. 1168. ACCORDINGLY, THE AMOUNT OF THE CREDIT OF AN EMPLOYEE IN THE RETIREMENT FUND IS AVAILABLE FOR SET OFF ON ACCOUNT OF OVERDRAWN LEAVE OF ONLY 95 PERCENT OF AN EMPLOYEE'S SALARY PAID ON AND AFTER JANUARY 1, 1943 (INCLUDING 5 PERCENT CREDITED FOR RETIREMENT/--- THE VICTORY TAX HAVING BECOME EFFECTIVE JANUARY 1, 1943--- ASSUMING OF COURSE THAT THE EMPLOYEE'S INDIVIDUAL ACCOUNT IS AVAILABLE FOR SET-OFF OF THE INDEBTEDNESS UNDER RULES STATED IN THE DECISION OF MAY 8, 1942, 21 COMP. GEN. 1000. IN SUCH CASES THE FORMER EMPLOYEE HAS NO RIGHT OR TITLE TO ANY PART OF THE AMOUNT OF THE VICTORY TAX WITHHELD FROM HIS SALARY DURING OVERDRAWN LEAVE, THUS LEAVING THE INTERNAL REVENUE COLLECTIONS ENRICHED TO THE EXTENT OF SUCH TAX AND REQUIRING A RETURN OF THE AMOUNT OF THE WITHHELD TAX TO THE APPLICABLE APPROPRIATION.

ANY SUCH CASE INVOLVING THE SITUATION HERE PRESENTED REQUIRING AN ADJUSTMENT OF THE AMOUNT OF AN EMPLOYEE'S SALARY WITHHELD FOR VICTORY TAX SHOULD BE REFERRED TO THE CLAIMS DIVISION OF THIS OFFICE FOR APPROPRIATE ACTION.