B-168541, FEB 8, 1972

B-168541, FEB 8, 1972

GOVERNMENT TRANSPORTATION REQUESTS - NONAPPROPRIATED FUNDS - OUTSIDE THE UNITED STATES THE DECISION OF MARCH 11, 1970, 49 COMP. GEN. 578 (B-168541), IS APPLICABLE TO NONAPPROPRIATED FUND (NAF) ACTIVITIES OPERATING OUTSIDE THE CONTINENTAL LIMITS OF THE UNITED STATES AND, PARA. 1-46A(4), OF ARMY REGULATION 230-1, CHANGE 4, DATED AUGUST 26, 1971, IS A PROPER APPLICATION OF THAT DECISION. EXCEPT FOR TRAVEL BY MILITARY MEMBERS, WHICH IS NECESSARY FOR COMMAND SUPERVISION, TRAVEL IN CONNECTION WITH NAF ACTIVITIES IS NOT TRAVEL ON OFFICIAL BUSINESS, AND UNLESS BILLS FOR PASSENGER AIR TRANSPORTATION ARE PROPERLY PAYABLE OUT OF APPROPRIATED FUNDS, SUCH TRAVEL CANNOT BE CONSIDERED AS TRAVEL FOR THE ACCOUNT OF THE UNITED STATES, AND GOVERNMENT TRAVEL REQUESTS MAY NOT BE USED.

TO MR. HOWARD A. BERGER:

REFERENCE IS MADE TO YOUR LETTER, DATED NOVEMBER 30, 1971, SUGGESTING THAT OUR DECISION OF MARCH 11, 1970, 49 COMP. GEN. 578 (B-168541), IS NOT APPLICABLE TO NONAPPROPRIATED FUND (NAF) ACTIVITIES OPERATING OUTSIDE THE CONTINENTAL LIMITS OF THE UNITED STATES. IN THE CITED DECISION IT WAS SAID THAT THE USE OF GOVERNMENT TRANSPORTATION REQUESTS (GTRS), STANDARD FORM 1169, WAS NOT AUTHORIZED FOR THE PROCUREMENT OF AIR TRANSPORTATION FOR THE TRAVEL OF CIVILIAN EMPLOYEES OF THE ARMY AND AIR FORCE EXCHANGE SERVICE (AAFES).

THE PROHIBITION OF THE USE OF GTRS AND CATEGORY Z REDUCED-RATE FARES BY NONAPPROPRIATED FUND ACTIVITIES, WHICH IS CONTAINED IN PARAGRAPH 1 46A(4) OF ARMY REGULATION 230-1, CHANGE 4, DATED AUGUST 26, 1971, IS BASED ON 49 COMP. GEN. 578. AS NOTED IN YOUR LETTER, OUR DECISION STATED THAT REIMBURSEMENT OF APPROPRIATION ACCOUNTS WITH NONAPPROPRIATED FUNDS FOR THE DESCRIBED PURPOSE WOULD CONSTITUTE AN EVASION OF APPLICABLE TAX LAWS, AND THAT INITIAL PAYMENT FROM APPROPRIATED FUNDS WOULD VIOLATE 31 U.S.C. 628. YOU POINT OUT THAT THE TAX ON THE TRANSPORTATION OF PERSONS BY AIR IMPOSED BY THE TAX PROVISION THEN IN QUESTION, 26 U.S.C. 4261, APPLIED ONLY WITHIN THE UNITED STATES, AND THAT UNDER A SUSPENSE ACCOUNT ARRANGEMENT (FROM WHICH APPROPRIATED FUNDS USED TO PAY FOR SERVICES FURNISHED ON GOVERNMENT TRANSPORTATION REQUESTS ARE REIMBURSED) NONAPPROPRIATED FUNDS WOULD BE THE SOURCE OF ACTUAL PAYMENT.

THE PURPOSE OF THE ARMY PROPOSAL CONSIDERED IN 49 COMP. GEN. 578 WAS TO TAKE ADVANTAGE OF AN EXEMPTION FROM THE TAX WHICH EXISTED AT THE TIME THE TRANSPORTATION SERVICES WERE PROCURED AND PERFORMED UNDER GTRS. BUT THE QUESTION OF TAX AVOIDANCE BECAME MOOT UPON ENACTMENT OF THE AIRPORT AND AIRWAY REVENUE ACT OF 1970, APPROVED MAY 21, 1970, 84 STAT. 219, 236. SECTION 205(A)(3) OF THE ACT (84 STAT. 241), AMENDED SECTION 4293 OF THE INTERNAL REVENUE CODE, 26 U.S.C. 4293, BY REMOVING AUTHORITY FOR THE EXEMPTION FORMERLY ENJOYED BY THE UNITED STATES WITH RESPECT TO THE TRANSPORTATION OF PERSONS BY AIR. SECTION 203 OF THE ACT (84 STAT. 238) AMENDED 26 U.S.C. 4261 BY INCREASING THE AIR TRANSPORTATION TAX FROM 5 TO 8 PERCENT.

UNDER THE SUGGESTED FINANCIAL ARRANGEMENT A GOVERNMENT DISBURSING OFFICER WOULD PAY BILLS PRESENTED BY AIR CARRIERS BY ISSUING TREASURY CHECKS PAID OUT OF AN APPROPRIATION ACCOUNT, TO BE REIMBURSED BY FUNDS FROM THE SUSPENSE ACCOUNT. THIS APPROACH, INVOLVING USE OF A SUSPENSE ACCOUNT, IS IMMATERIAL IN THE LIGHT OF OUR DECISIONS IN 50 COMP. GEN. 748 AND 49 COMP. GEN. 578. IN BOTH CASES WE STATED THAT THE USE OF GTRS BY CIVILIAN EMPLOYEES OF AAFES WOULD BE IN CONFLICT WITH OUR DECISIONS AND APPLICABLE LAWS AND REGULATIONS WHETHER PAYMENT FOR SERVICES FURNISHED IS FROM APPROPRIATED FUNDS, NONAPPROPRIATED FUNDS, OR APPROPRIATED FUNDS FOLLOWED BY REIMBURSEMENT.

THE QUESTION IN 50 COMP. GEN. 748 WAS WHETHER OUR DECISION IN 49 COMP. GEN. 578 APPLIED TO NONAPPROPRIATED FUND AGENCIES IN EUROPE, WHICH IS SUBSTANTIALLY THE SAME AS THE QUESTION HERE. THE PURPOSE OF THE PROPOSAL IN 50 COMP. GEN. 748, AS WELL AS THE APPARENT PURPOSE OF THE PROPOSAL HERE, WAS TO OBTAIN THE ADVANTAGES OF REDUCED-FARE AIR TRANSPORTATION WITHIN AND BETWEEN THE UNITED STATES AND OVERSEAS POINTS WHICH IS AVAILABLE TO THE UNITED STATES THROUGH SPECIAL AGREEMENTS WITH AIR CARRIERS FOR TRAVEL ON OFFICIAL BUSINESS AND FOR THE ACCOUNT OF THE UNITED STATES. THE GTR SERVES TO IDENTIFY THE TRAVEL TO THE SPECIAL AGREEMENTS.

AS STATED IN OUR DECISIONS, EXCEPT FOR TRAVEL BY MILITARY MEMBERS WHICH IS NECESSARY FOR COMMAND SUPERVISION, TRAVEL IN CONNECTION WITH NONAPPROPRIATED FUND ACTIVITIES, IS NOT TRAVEL ON OFFICIAL BUSINESS, AND UNLESS BILLS FOR PASSENGER AIR TRANSPORTATION, FURNISHED BY CARRIERS UPON PRESENTATION OF GTRS, ARE PROPERLY PAYABLE OUT OF APPROPRIATED FUNDS, SUCH TRAVEL CANNOT BE CONSIDERED AS TRAVEL FOR THE ACCOUNT OF THE UNITED STATES. SEE 5 GAO 2020.10 AND 2020.80 (4 CFR 51.15 AND 51.22). UNDER THE PROPOSED FINANCIAL ARRANGEMENT, THE SERVICES COULD BE VIEWED, TECHNICALLY, AS FOR THE ACCOUNT OF THE UNITED STATES; HOWEVER, IN REALITY, AND PERHAPS UNKNOWN TO THE CARRIERS INVOLVED, THE GTRS WOULD BE PRESENTED FOR THE ACCOUNT OF THE DEPOSITOR OF THE SUSPENSE ACCOUNT, THAT IS, THE NONAPPROPRIATED FUND ACTIVITY. WE INDICATED IN OUR PREVIOUS DECISION ON THIS SUBJECT THAT THE UNITED STATES FLAG AIRLINES AND THE CIVIL AERONAUTICS BOARD, IN ESTABLISHING THE CATEGORY Z FARES, DID NOT CONTEMPLATE THAT THEY WOULD BE AVAILABLE TO CIVILIAN EMPLOYEES OF NONAPPROPRIATED FUND ACTIVITIES.

WE REAFFIRM THE APPROVAL EXPRESSED IN 50 COMP. GEN. 748 OF THE DEPARTMENT'S RENEWED ENFORCEMENT OF THE PROHIBITION AGAINST THE UNAUTHORIZED USE OF GTRS, AS REFLECTED IN CHANGE 4 OF ARMY REGULATION 230- 1.