B-74820, JULY 14, 1948, 28 COMP. GEN. 17

B-74820, JULY 14, 1948, 28 COMP. GEN. 17

CERTIFYING OFFICERS - LIABILITY - OVERPAYMENTS RESULTING FROM ERRONEOUS COMPUTATIONS UNDER SECTION 2 OF THE ACT OF DECEMBER 29, 1941, AUTHORIZING THE RELIEF OF A CERTIFYING OFFICER WHENEVER THE COMPTROLLER GENERAL FINDS THAT THE OFFICER COULD NOT HAVE ASCERTAINED THE ACTUAL FACTS BY REASONABLE DILIGENCE AND INQUIRY AND THAT THE UNITED STATES RECEIVED VALUE FOR THE PAYMENT, A CERTIFYING OFFICER, BEING SPECIFICALLY RESPONSIBLE BY STATUTE FOR THE CORRECTNESS OF COMPUTATIONS, MAY NOT BE RELIEVED OF LIABILITY FOR AN OVERPAYMENT RESULTING FROM THE ERRONEOUS COMPUTATION OF INTEREST INVOLVED IN AN INCOME TAX REFUND, WHICH ERROR COULD HAVE BEEN DISCOVERED BY THE EXERCISE OF REASONABLE DILIGENCE AND INQUIRY. THE LIABILITY OF A CERTIFYING OFFICER FOR AN IMPROPER PAYMENT MADE FROM PUBLIC FUNDS AND BASED ON HIS CERTIFICATION IS NOT AFFECTED BY THE FACT THAT INSTITUTION OF SUIT BY THE UNITED STATES FOR RECOVERY OF THE IMPROPER PAYMENT IS BARRED BY A STATUTE OF LIMITATIONS.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE TREASURY, JULY 14, 1948.

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF MARCH 23, 1948, FILE REFERENCE IR:IT:CL:ECW, IN WHICH YOU REQUEST THAT RELIEF BE GRANTED UNDER THE ACT OF DECEMBER 29, 1941, 55 STAT. 875, TO ROBERT E. HANNEGAN, FORMER COMMISSIONER OF INTERNAL REVENUE, AGAINST WHOM AN EXCEPTION WAS STATES AS AUTHORIZED CERTIFYING OFFICER ON VOUCHER NO. 1839418, SCHEDULE IT-90114, MARCH 1944 ACCOUNT OF G. F. ALLEN, DUE TO AN ERROR IN COMPUTATION OF INTEREST INVOLVED IN AN INCOME TAX REFUND TO MARLAND OIL COMPANY, NOW CONTINENTAL OIL COMPANY.

YOU STATE THAT THE TAXPAYER WAS REQUESTED TO MAKE REFUND OF $86.35, THE AMOUNT STATED IN THE EXCEPTION, AND IT APPEARS FROM YOUR LETTER THAT THE SAID COMPANY DECLINED TO MAKE PAYMENT OF THE AMOUNT REQUESTED ON THE GROUNDS THAT IT BELIEVED THAT ADDITIONAL INTEREST IN AN AMOUNT GREATER THAN THE SUM INVOLVED IN THE EXCEPTION WAS DUE IT ON ACCOUNT OF A DELAY OF TWO MONTHS AND TWELVE DAYS FROM THE DATE OF ISSUANCE OF THE REFUND CHECK UNTIL IT ACTUALLY WAS RECEIVED BY THE CONTINENTAL OIL COMPANY, AND FURTHER THAT, SINCE THE REFUND OR INTEREST WAS MADE IN MAY 1944, RECOVERY OF THE AMOUNT, EVEN IF ERRONEOUSLY REFUNDED, WAS BARRED BY THE STATUTE OF LIMITATIONS. YOUR LETTER STATES WITH RESPECT TO THE CONTENTIONS OF THE TAXPAYER:

IT IS APPARENT, THEREFORE, THAT THE TAXPAYER IS OF THE OPINION THAT IT IS ENTITLED TO APPROXIMATELY $700 ADDITIONAL INTEREST ON THE REFUND INVOLVED, BUT FOR WHICH THERE IS NO LEGAL AUTHORITY FOR ALLOWANCE, AND, THEREFORE, HAS DECLINED TO MAKE PAYMENT OF THE AMOUNT INVOLVED IN THE ERRONEOUS INTEREST ALLOWED.

APPROPRIATE STEPS HAVE BEEN TAKEN WITH A VIEW TO OFFSETTING THE AMOUNT OF THE EXCESS INTEREST PAYMENT AGAINST ANY FUTURE ALLOWANCE WHICH MAY BE MADE OF AN OVERPAYMENT OF INCOME TAXES FOR OTHER YEARS. THIS POSSIBILITY, HOWEVER, IS, OF COURSE, PROBLEMATICAL.

THE EXCEPTION WAS NOT STATED UNTIL APPROXIMATELY TWO AND ONE-HALF YEARS AFTER THE PAYMENT HAD BEEN MADE. SECTION 3746 OF THE INTERNAL REVENUE CODE PRESCRIBES A LIMITATION OF TWO YEARS UPON THE INSTITUTION OF A SUIT TO RECOVER ERRONEOUS PAYMENTS. IT HAS BEEN HELD THAT THIS LIMITATION OF TWO YEARS APPLIES TO A SUIT FOR THE RECOVERY OF INTEREST. ( UNITED STATES V. STEEL FURNITURE COMPANY, C.C.A. 6, 74 FED. (2D) 744.)

IN SUPPORT OF YOUR REQUEST FOR RELIEF UNDER THE PROVISIONS OF SECTION 2 OF THE SAID ACT OF DECEMBER 29, 1941, 55 STAT. 875, YOU QUOTE A PORTION OF THE REPORT TO THE CONGRESS MADE BY THIS OFFICE FOR THE FISCAL YEAR ENDED JUNE 30, 1940, STATING THAT UNAUTHORIZED PAYMENTS WILL OCCUR IN SOME CASES WITHOUT THE FAULT OR NEGLIGENCE OF CERTIFYING AND DISBURSING OFFICERS AND URGING THE PASSAGE OF LEGISLATION MORE CLEARLY DEFINING THE RESPONSIBILITIES OF SUCH OFFICERS AND VESTING IN THE COMPTROLLER GENERAL AUTHORITY TO GRANT RELIEF IN CASES WHERE FREEDOM FROM FAULT AND NEGLIGENCE IS ESTABLISHED. BY THE SAID ACT OF DECEMBER 29, 1941, THE LEGISLATION PROPOSED THEREIN, WITH CERTAIN CHANGES, WAS ENACTED INTO LAW.

YOU REFER TO THE AMENDMENT TO THE SAID ACT BY THE ACT APPROVED APRIL 28, 1942, 56 STAT. 244, AND YOU STATE THAT AN EXAMINATION OF THE REPORT OF THE HOUSE COMMITTEE ON APPROPRIATIONS WITH RESPECT TO THE PROPOSED AMENDMENT FAILS TO DISCLOSE AN INTENT TO HOLD CERTIFYING OFFICERS UNQUALIFIEDLY ANSWERABLE FOR LOSSES IN CASES NOT DUE TO THEIR OWN FAULT OR NEGLIGENCE OR TO NULLIFY THE PROVISIONS OF THE PRIOR ACT VESTING IN THE COMPTROLLER GENERAL DISCRETIONARY POWER TO GRANT RELIEF IN CASES IN WHICH THE CERTIFYING OFFICER DID NOT KNOW AND BY REASONABLE DILIGENCE AND INQUIRY COULD NOT HAVE ASCERTAINED THE ACTUAL FACTS. YOU STATE FURTHER THAT THE COMMISSIONER IN CERTIFYING THE VAST NUMBER OF AUTHORIZATIONS FOR PAYMENT OF REFUNDS AND INTEREST THEREON MUST, IN THE COURSE OF PRACTICAL ADMINISTRATION OF HIS OFFICE AND THE DUTIES INCUMBENT UPON HIM, RELY UPON COMPUTATIONS AND VERIFICATIONS MADE BY HIS SUBORDINATES, AND YOU SUGGEST THAT CONSIDERATION BE GIVEN TO THE EXERCISE OF THE POWER VESTED IN THE COMPTROLLER GENERAL BY THE ACT APPROVED DECEMBER 29, 1941, SINCE THE PRESENT CASE REPRESENTS ONE OF THE RARE INSTANCES IN WHICH DISCOVERY OF AN ERRONEOUS REFUND OR EXCESS PAYMENT OF INTEREST TO A TAXPAYER WAS NOT MADE UNTIL RECOVERY WAS BARRED BY AN APPLICABLE STATUTE OF LIMITATIONS.

SECTION 2 OF THE ACT APPROVED DECEMBER 29, 1941, 55 STAT. 875, PROVIDES IN PERTINENT PART AS FOLLOWS:

THE OFFICER OR EMPLOYEE CERTIFYING A VOUCHER SHALL (1) BE HELD RESPONSIBLE FOR THE EXISTENCE AND CORRECTNESS OF THE FACTS RECITED IN THE CERTIFICATE OR OTHERWISE STATED ON THE VOUCHER OR ITS SUPPORTING PAPERS AND FOR THE LEGALITY OF THE PROPOSED PAYMENT UNDER THE APPROPRIATION OR FUND INVOLVED * * * AND (3) BE HELD ACCOUNTABLE FOR AND REQUIRED TO MAKE GOOD TO THE UNITED STATES THE AMOUNT OF ANY ILLEGAL, IMPROPER, OR INCORRECT PAYMENT RESULTING FROM ANY FALSE, INACCURATE, OR MISLEADING CERTIFICATE MADE BY HIM, AS WELL AS FOR ANY PAYMENT PROHIBITED BY LAW OR WHICH DID NOT REPRESENT A LEGAL OBLIGATION UNDER THE APPROPRIATION OR FUND INVOLVED. PROVIDED, THAT THE COMPTROLLER GENERAL MAY, IN HIS DISCRETION, RELIEVE SUCH CERTIFYING OFFICER OR EMPLOYEE OF LIABILITY FOR ANY PAYMENT OTHERWISE PROPER WHENEVER HE FINDS (1) THAT THE CERTIFICATION WAS BASED ON OFFICIAL RECORDS AND THAT SUCH CERTIFYING OFFICER OR EMPLOYEE DID NOT KNOW, AND BY REASONABLE DILIGENCE AND INQUIRY COULD NOT HAVE ASCERTAINED, THE ACTUAL FACTS, OR (2) THAT THE OBLIGATION WAS INCURRED IN GOOD FAITH, THAT THE PAYMENT WAS NOT CONTRARY TO ANY STATUTORY PROVISION SPECIFICALLY PROHIBITING PAYMENTS OF THE CHARACTER INVOLVED, AND THAT THE UNITED STATES HAS RECEIVED VALUE FOR SUCH PAYMENT * * *.

THE RESPONSIBILITY AND ACCOUNTABILITY OF CERTIFYING OFFICERS WAS EXTENDED BY THE ACT APPROVED APRIL 28, 1942, 56 STAT. 244, AS FOLLOWS:

PROVIDED, THAT THE RESPONSIBILITY AND ACCOUNTABILITY OF CERTIFYING OFFICERS UNDER THE ACT OF DECEMBER 29, 1941 PUBLIC LAW 389), SHALL BE DEEMED TO INCLUDE THE CORRECTNESS OF THE COMPUTATIONS OF CERTIFIED VOUCHERS AND DISBURSING OFFICERS SHALL NOT BE HELD ACCOUNTABLE UNDER SECTION 1 OF SUCH ACT FOR THE CORRECTNESS OF SUCH COMPUTATIONS.

UNDER THE PROVISIONS OF THE ABOVE-QUOTED ACT THE CERTIFYING OFFICER IS SPECIFICALLY RESPONSIBLE FOR THE CORRECTNESS OF COMPUTATIONS ON VOUCHERS CERTIFIED BY HIM. WHILE IT IS TRUE THAT THE QUOTED PART OF THE ACT OF APRIL 28, 1942, DID NOT IN ANY WAY NULLIFY THE DISCRETIONARY POWERS GRANTED TO THE COMPTROLLER GENERAL UNDER THE PROVISO IN SECTION 2 OF THE PRIOR ACT, NEVERTHELESS THE CONDITIONS AS STATED UNDER PARTS (1) OR (2) OF THE SAID PROVISO MUST BE MET IN ORDER THT RELIEF UNDER THE AUTHORITY PROVIDED THEREIN MAY BE GRANTED IN ANY GIVEN CASE.

IN A DECISION TO THE SECRETARY OF THE NAVY DATED FEBRUARY 11, 1947, 26 COMP. GEN. 578, IT WAS STATED:

AS A GENERAL RULE, IT MAY BE STATED THAT A CERTIFYING OFFICER IS RESPONSIBLE FOR ANY LOSSES RESULTING FROM HIS ERRONEOUS CERTIFICATION OF FACTS ON A GOVERNMENT VOUCHER, AND HE MUST ASSUME RESPONSIBILITY FOR THE CORRECTNESS OF THE STATEMENTS AND COMPUTATIONS OF HIS SUBORDINATES UNLESS IT CAN BE SHOWN THAT NEITHER HE NOR HIS SUBORDINATES, IN THE EXERCISE OF REASONABLE CARE AND DILIGENCE, COULD HAVE KNOWN THE TRUE FACTS. THAT IS TO SAY, A CERTIFYING OFFICER MAY NOT ESCAPE LIABILITY FOR LOSSES RESULTING FROM HIS IMPROPER CERTIFICATION MERELY BY STATING THAT HE WAS NOT IN A POSITION TO ASCERTAIN OF HIS PERSONAL KNOWLEDGE THAT EACH ITEM ON THE PAY ROLL WAS CORRECTLY STATED.

THE OVERPAYMENT IN QUESTION ON VOUCHER NO. 1839418 RESULTED FROM AN ERRONEOUS COMPUTATION OF INTEREST ALLOWANCE ON REFUND OF AN OVERASSESSMENT AS FOLLOWS:

INTEREST ALLOWED ON OVERASSESSMENT OF $74,197.49 - $90,387.86 CORRECT COMPUTATION:

OVERASSESSMENT INTEREST INTEREST

DUE

$27,141.86X1,2269726 EQUAL $33,302.32

47,055.63X1,2113150 EQUAL 56,999.19 90,301.51

OVERPAYMENT $86.35

SINCE BOTH THE AMOUNTS INVOLVED IN THE OVERASSESSMENT AND THE INTEREST FACTORS TO BE USED, AS SHOWN ABOVE, WERE INDICATED ON THE REVERSE SIDE OF FORM 7776A, CERTIFICATE OF OVERASSESSMENT, ATTACHED TO THE VOUCHER, THE ERROR CLEARLY WAS ONE OF COMPUTATION AND DOUBTLESS COULD HAVE BEEN DISCOVERED BY THE EXERCISE OF REASONABLE DILIGENCE AND INQUIRY. SEE 26 COMP. GEN. 718. ACCORDINGLY, RELIEF MAY NOT BE GRANTED THE CERTIFYING OFFICER UNDER THE AUTHORITY VESTED IN ME IN PART (1) OF THE FIRST PROVISO OF SECTION 2 OF THE ACT OF DECEMBER 29, 1941, ABOVE QUOTED, AND SINCE IT CANNOT BE SAID THAT THE UNITED STATES RECEIVED VALUE FOR THE AMOUNT OF THE OVERPAYMENT, THE CONDITIONS UNDER PART (2) OF THE PROVISO HAVE NOT BEEN FULLY MET.

THE FACT THAT INSTITUTION OF SUIT BY THE UNITED STATES FOR RECOVERY OF THAT PORTION OF THE REFUND WHICH WAS ERRONEOUS MAY NOW BE BARRED BY THE PROVISIONS OF SECTION 3746 OF THE INTERNAL REVENUE CODE, DUE TO THE LAPSE OF TIME SINCE THE MAKING OF THE REFUND TO THE TAXPAYER, WOULD NOT AFFECT THE LIABILITY OF THE CERTIFYING OFFICER FOR AN IMPROPER PAYMENT BASED ON HIS CERTIFICATION. WHERE AN UNAUTHORIZED PAYMENT IS MADE FROM PUBLIC FUNDS THE RESPONSIBLE OFFICER IS THE FIRST SOURCE OF RECOVERY OF THE PAYMENT TO THE UNITED STATES. HIS RESPONSIBILITY IS NOT DEPENDENT UPON HIS ABILITY OR LACK OF ABILITY TO RECOUP AN IMPROPER PAYMENT FROM A PAYEE. SEE 19 COMP. GEN. 306, AND DECISIONS THEREIN CITED. UNDER THE PROVISIONS OF THE ACT OF DECEMBER 29, 1941, THE UNITED STATES IS ENTITLED TO LOOK TO THE CERTIFYING OFFICER, AND HOLD HIM RESPONSIBLE UNDER HIS BOND, FOR ANY LOSSES RESULTING FROM HIS ERRONEOUS COMPUTATIONS OR ERRONEOUS CERTIFICATION OF FACTS. 26 COMP. GEN. 578.

IN ACCORDANCE WITH THE FOREGOING, I HAVE TO ADVISE THAT THIS OFFICE IS WITHOUT AUTHORITY TO GRANT THE CERTIFYING OFFICER HERE INVOLVED RELIEF FROM LIABILITY FOR THE OVERPAYMENT ON VOUCHER NO. 1839418.