Refund Rental Fees Collected From Forest Service Employees for Use of Government-Owned Quarters

The Department of Agriculture (USDA) requested an advance decision concerning whether it may refund part of the rental fees collected from Forest Service employees for their use of Government-owned quarters. The Forest Service provides rental quarters for its employees at many locations inside national forests. The Forest Service rental rates are based on private rates, which include an element representing owners property taxes passed through to tenants in the rental charges. Under California law, California counties impose a tax on the possessory interest and improvements on tax-exempt land. Because the employees paid these rates and also paid the county possessory interest taxes, their economic burden became inflated. Therefore, USDA proposed to refund an amount equal to the possessory interest taxes paid from the date the employees first paid the taxes. Under an Office of Management and Budget (OMB) Circular, rental rates for Government-owned quarters are to be comparable to rates charged for comparable non-Government housing. While owner property taxes may be one of the elements which bear on the establishment of private rental rates, the Circular does not contemplate any deductions from rentals for this element where a county imposes a possessory interest tax on occupants of Government-owned quarters. GAO has held that, although statutory regulations or the administrative policies of housing rentals may be subject to modification under the OMB Circular, they may not be amended to operate retroactively to decrease or increase a tenant's right already vested or fixed. Although there would be no objection to OMB prospectively approving a rental rate scheme which discounts State possessory interest taxes paid by the employees on Government-owned quarters, USDA did not seek a revision of the rental rates for the period in question. Accordingly, GAO held that there was no authority for USDA to make the proposed refunds.