B-121540, OCTOBER 11, 1954, 34 COMP. GEN. 164

B-121540: Oct 11, 1954

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ALLOTMENTS IN SUPPORT OF BASIC ALLOWANCES FOR QUARTERS AND WITHHOLDING TAXES SHOULD FIRST BE DEDUCTED FROM THE MEMBER'S PAY EVEN THOUGH THE AMOUNT AFTER SUCH DEDUCTIONS IS INSUFFICIENT TO PERMIT FULL COLLECTION. SUCH DISCRETION IS LIMITED BY THE REQUIREMENT IN SECTION 1 OF THE ACT THAT COLLECTION SHALL BE EFFECTED OVER A PERIOD NOT GREATER THAN THE ANTICIPATED PERIOD OF ACTIVE DUTY. 1954: REFERENCE IS MADE TO LETTER OF SEPTEMBER 18. SECTION 1 OF WHICH PROVIDES THAT WHEN IT IS DETERMINED BY THE SECRETARY OF THE DEPARTMENT CONCERNED THAT AN EMPLOYEE OF THE UNITED STATES OR ANY MEMBER OF THE NAMED ARMED SERVICES OR THEIR RESERVE COMPONENTS IS INDEBTED TO THE UNITED STATES AS A RESULT OF ANY ERRONEOUS PAYMENT MADE BY THE DEPARTMENT.

B-121540, OCTOBER 11, 1954, 34 COMP. GEN. 164

SET-OFF - DEBT COLLECTION - ERRONEOUS PAYMENTS TO MILITARY PERSONNEL - ACT OF JULY 15, 1954 IN COMPUTING THE TWO-THIRDS PAY OF MILITARY PERSONNEL WHICH, PURSUANT TO THE ACT OF JULY 15, 1954, MAY BE WITHHELD FOR LIQUIDATION OF INDEBTEDNESS TO THE UNITED STATES AS A RESULT OF ERRONEOUS PAYMENTS, ALLOTMENTS IN SUPPORT OF BASIC ALLOWANCES FOR QUARTERS AND WITHHOLDING TAXES SHOULD FIRST BE DEDUCTED FROM THE MEMBER'S PAY EVEN THOUGH THE AMOUNT AFTER SUCH DEDUCTIONS IS INSUFFICIENT TO PERMIT FULL COLLECTION. WHILE THE ACT OF JULY 15, 1954, WHICH AUTHORIZES THE WITHHOLDING OF PAY TO SATISFY INDEBTEDNESS RESULTING FROM ERRONEOUS PAYMENTS, LEAVES TO ADMINISTRATIVE DISCRETION HOW MUCH OF THE TWO-THIRDS PAY OF MILITARY PERSONNEL SHOULD BE WITHHELD, SUCH DISCRETION IS LIMITED BY THE REQUIREMENT IN SECTION 1 OF THE ACT THAT COLLECTION SHALL BE EFFECTED OVER A PERIOD NOT GREATER THAN THE ANTICIPATED PERIOD OF ACTIVE DUTY. UNDER THE ACT OF JULY 15, 1954, WHICH PROVIDES, IN THE CASE OF RETIREMENT, RESIGNATION OR TERMINATION OF ACTIVE DUTY OF A MEMBER OF THE MILITARY SERVICES BEFORE THE DEBT TO THE UNITED STATES HAS BEEN SATISFIED, THAT COLLECTION BE MADE FROM "SUBSEQUENT PAYMENTS, OR WHATEVER NATURE DUE SUCH PERSON," COLLECTION MAY BE MADE FROM AMOUNTS DUE MEMBERS AS SEVERANCE PAY AND AS REIMBURSEMENT FOR TRANSPORTATION OF DEPENDENTS AND HOUSEHOLD EFFECTS; HOWVER, AMOUNTS DUE AS MUSTERING-OUT PAY, ENLISTED MEMBER'S DEPOSITS AND LUMP-SUM LEAVE PAYMENTS MAY NOT BE APPLIED IN LIQUIDATION OF SUCH DEBTS. ENLISTED PERSONNEL OF THE ARMY AND AIR FORCE REMAIN ENTITLED TO THE BENEFITS OF THE ACT OF MAY 22, 1928, CONCERNING ADMINISTRATIVELY ASCERTAINED DEBTS NOTWITHSTANDING THE APPLICATION OF THE UNIFORMED PROCEDURES UNDER THE ACT OF JULY 15, 1954, RELATING TO THE COLLECTION OF ERRONEOUS PAYMENTS.

ACTING COMPTROLLER GENERAL WEITZEL TO THE SECRETARY OF DEFENSE, OCTOBER 11, 1954:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 18, 1954, FROM THE ASSISTANT SECRETARY OF DEFENSE REQUESTING DECISION ON FOUR QUESTIONS DISCUSSED IN COMMITTEE ACTION NO. 106, OF THE MILITARY PAY AND ALLOWANCE COMMITTEE, DEPARTMENT OF DEFENSE.

THE QUESTIONS INVOLVE THE PROVISIONS OF THE ACT OF JULY 15, 1954, 68 STAT. 482, SECTION 1 OF WHICH PROVIDES THAT WHEN IT IS DETERMINED BY THE SECRETARY OF THE DEPARTMENT CONCERNED THAT AN EMPLOYEE OF THE UNITED STATES OR ANY MEMBER OF THE NAMED ARMED SERVICES OR THEIR RESERVE COMPONENTS IS INDEBTED TO THE UNITED STATES AS A RESULT OF ANY ERRONEOUS PAYMENT MADE BY THE DEPARTMENT, THE AMOUNT OF THE INDEBTEDNESS MAY BE COLLECTED IN MONTHLY INSTALLMENTS, OR AT REGULAR PAY PERIOD INTERVALS, BY DEDUCTION IN REASONABLE AMOUNTS FROM BASIC COMPENSATION, BASIC PAY, SPECIAL PAY, INCENTIVE PAY, ETC. IT IS PROVIDED FURTHER THAT:

* * * COLLECTION SHALL BE EFFECTED OVER A PERIOD NOT GREATER THAN THE ANTICIPATED PERIOD OF ACTIVE DUTY OR PERIOD OF EMPLOYMENT, AS THE CASE MAY BE. THE AMOUNT DEDUCTED FOR ANY PERIOD SHALL NOT EXCEED AN AMOUNT EQUAL TO TWO-THIRDS OF THE PAY FROM WHICH THE DEDUCTION IS MADE, UNLESS THE DEDUCTION OF A GREATER AMOUNT IS NECESSARY TO EFFECT COLLECTION WITHIN THE PERIOD OR ANTICIPATED PERIOD OF ACTIVE DUTY OR EMPLOYMENT. IF SUCH INDIVIDUAL RETIRE, RESIGNS, OR HIS EMPLOYMENT OR PERIOD OF ACTIVE DUTY IS OTHERWISE TERMINATED BEFORE SUCH ADJUSTMENT HAS BEEN COMPLETED, ADJUSTMENT SHALL BE MADE BY DECREASING SUBSEQUENT PAYMENTS, OF WHATEVER NATURE, DUE SUCH PERSON BY THE DEPARTMENT, AGENCY, OR INDEPENDENT ESTABLISHMENT CONCERNED. NOTHING IN THIS SECTION SHALL MODIFY ANY EXISTING LAW WHICH PROVIDES FOR FORFEITURE OF PAY OR ALLOWANCES.

THE FIRST QUESTION IS WHETHER TWO-THIRDS OF BASIC PAY, SPECIAL PAY, AND INCENTIVE PAY IS THE MAXIMUM AMOUNT THAT MAY BE UTILIZED TO LIQUIDATE AN ERRONEOUS PAYMENT OR PAYMENTS, OR WHETHER SUCH PAY SHOULD FIRST BE REDUCED BY ITEMS SUCH AS ALLOTMENTS IN SUPPORT OF BASIC ALLOWANCE FOR QUARTERS, OTHER DEPENDENCY ALLOTMENTS, INSURANCE ALLOTMENTS, ALLOTMENTS FOR PAYMENT OF HOME LOANS, WITHHOLDING TAXES, AND COURT-MARTIAL FINES AND FORFEITURES, BEFORE COMPUTING THE TWO THIRDS PAY WHICH IS AVAILABLE TO LIQUIDATE THE INDEBTEDNESS.

IT APPEARS PROBABLE THAT THE TWO-THIRDS LIMITATION ON INSTALLMENT COLLECTIONS IS BASED ON SOMEWHAT SIMILAR LANGUAGE CONTAINED IN THE ACT OF MAY 22, 1928, 45 STAT. 698, WHICH RELATES TO COLLECTIONS FROM ENLISTED MEN OF THE ARMY OF AMOUNTS ADMINISTRATIVELY ASCERTAINED TO BE DUE THE GOVERNMENT. HOWEVER, THE 1954 ACT CONTAINED NO RESTRICTIONS ON THE AUTHORITY TO COLLECT A FULL TWO-THIRDS OF THE PERSON'S PAY SUCH AS ARE INCLUDED IN THE 1928 ACT, WHICH PROVIDES THAT WHEN THE PAY OF A SOLDIER FOR A CERTAIN MONTH HAS BEEN LEGALLY FORFEITED BY COURT-MARTIAL SENTENCE OR IS OTHERWISE LEGALLY AUTHORIZED TO BE WITHHELD, THEN NO DEDUCTION SHALL BE APPLIED SO AS TO REDUCE THE ACTUAL PAY RECEIVED BELOW ONE-THIRD OF HIS ACTUAL PAY FOR THAT MONTH. SEE IN THIS CONNECTION 23 COMP. GEN. 850 AND 25 ID. 562. THE LEGISLATIVE HISTORY OF THE 1954 ACT CONTAINS NO INFORMATION AS TO WHETHER THE OMISSION OF A SIMILAR RESTRICTIVE PROVISION IN THAT ACT WAS INTENDED AS PLACING THE TWO-THIRDS DEDUCTION AHEAD, IN ORDER OF PRECEDENCE, OF AMOUNTS OTHERWISE AUTHORIZED TO BE WITHHELD. THAT SITUATION, THERE IS FOR APPLICATION THE ESTABLISHED RULE OF STATUTORY CONSTRUCTION REFERRED TO BY THE MILITARY PAY AND ALLOWANCE COMMITTEE THAT A LATER GENERAL STATUTE IS NOT TO BE CONSTRUED AS AFFECTING THE OPERATING OF AN EARLIER SPECIAL STATUTE UNLESS THE SPECIAL STATUTE IS EXPRESSLY REPEALED, OR IS SO WHOLLY INCONSISTENT WITH THE GENERAL STATUTE THAT ITS REPEAL MUST OF NECESSITY BE IMPLIED. SEE 21 COMP. GEN. 273; 24 ID. 544, AND AUTHORITIES THERE CITED.

ONLY TWO OF THE ITEMS MENTIONED IN THE QUESTION--- ALLOTMENTS IN SUPPORT OF BASIC ALLOWANCE FOR QUARTERS AND WITHHOLDING TAXES--- APPEAR REQUIRED TO BE WITHHELD FROM PAY BY EARLIER SPECIAL LEGISLATION. SECTION 302 (H) OF THE CAREER COMPENSATION ACT OF 1949, AS ADDED BY THE DEPENDENTS ASSISTANCE ACT OF 1950, 64 STAT. 794, AUTHORIZES PAYMENT OF A BASIC ALLOWANCE FOR QUARTERS IN OTHERWISE PROPER CIRCUMSTANCES WHEN THE ENLISTED MAN CONCERNED HAS IN EFFECT AN ALLOTMENT FOR THE SUPPORT OF HIS DEPENDENTS IN THE AMOUNT SPECIFIED BY THE STATUTE. WHILE THE ESTABLISHMENT OF SUCH ALLOTMENT MAY BE BY THE ACT OF THE ENLISTED MAN, SECTION 6 OF THE ACT AUTHORIZES THE SECRETARY CONCERNED TO DIRECT PAYMENT OF SUCH ALLOTMENT IN ANY CASE WHEN THE MEMBER FAILS TO TAKE SUCH ACTION. THERE ARE CONSIDERATIONS OF PUBLIC POLICY IN FAVOR OF ALLOTMENTS FOR SUPPORT OF DEPENDENTS AND WHERE, AS HERE, SUCH ALLOTMENTS ARE NOT NECESSARILY VOLUNTARY, A GENERAL STATUTE PROVIDING FOR THE WITHHOLDING OF PAY TO LIQUIDATE AN INDEBTEDNESS TO THE GOVERNMENT SHOULD NOT BE REGARDED AS CONTEMPLATING SUCH WITHHOLDING AHEAD OF THE DEPENDENCY ALLOTMENT.

CONCERNING THE WITHHOLDING TAX, IT WOULD SEEM THAT PAY WHICH IS APPLIED IN LIQUIDATION OF A PERSON'S INDEBTEDNESS TO THE GOVERNMENT CONSTITUTES A "PAYMENT OF WAGES" WITHIN THE MEANING OF SECTION 1622 OF THE INTERNAL REVENUE CODE, TO THE SAME EXTENT AS PAYMENT DIRECT TO HIM AND THAT TAX ON THE AMOUNT WITHHELD ON THE DEBT AS WELL AS ON THE AMOUNT ACTUALLY PAID MUST BE WITHHELD UNDER THAT SECTION. HENCE, IT IS CONCLUDED THAT THE WITHHOLDING TAX AND ALLOTMENTS IN SUPPORT OF BASIC ALLOWANCE FOR QUARTERS SHOULD FIRST BE DEDUCTED BEFORE COMPUTATION OF THE TWO-THIRDS OF PAY WHICH MAY BE WITHHELD TO LIQUIDATE INDEBTEDNESS UNDER THE 1954 ACT.

WHILE THE 1954 ACT APPEARS TO LEAVE TO ADMINISTRATIVE DISCRETION HOW MUCH OF THE TWO-THIRDS PAY SHOULD BE WITHHELD ON THE INDEBTEDNESS (COMPARE 23 COMP. GEN. 850, 854), SUCH DISCRETION APPARENTLY IS LIMITED BY THE REQUIREMENT IN SECTION 1 THAT "1COLLECTION SHALL BE EFFECT OVER A PERIOD NOT GREATER THAN THE ANTICIPATED PERIOD OF ACTIVE DUTY OR PERIOD OF EMPLOYMENT, AS THE CASE MAY BE.'

THE SECOND QUESTION RELATES TO THE SITUATION WHERE TWO-THIRDS OF THE MEMBER'S PAY FOR HIS ANTICIPATED PERIOD OF ACTIVE DUTY IS NOT SUFFICIENT TO PERMIT FULL COLLECTION OF THE INDEBTEDNESS AND DECISION IS REQUESTED AS TO WHETHER THE TOTAL OF ALL BASIC PAY, SPECIAL PAY AND INCENTIVE PAY MAY BE WITHHELD TO LIQUIDATE THE INDEBTEDNESS, WITHOUT REGARD TO WITHHOLDING TAX, COURT-MARTIAL FINES AND FORFEITURES, AND ANY ALLOTMENTS THE MEMBER MAY HAVE IN EFFECT IN SUPPORT OF BASIC ALLOWANCE FOR QUARTERS, OTHER DEPENDENCY ALLOTMENTS, AND ALLOTMENTS FOR PAYMENT OF HOME LOANS AND INSURANCE. WITH THE EXCEPTION THAT THE ADMINISTRATIVE DISCRETION IS CHANGED FROM A DETERMINATION OF HOW MUCH OF THE TWO-THIRDS PAY SHOULD BE WITHHELD, TO HOW MUCH OF ALL PAY SHOULD BE WITHHELD TO SATISFY AN INDEBTEDNESS, THE SAME FACTORS ARE INVOLVED IN BOTH QUESTIONS 1 AND 2. TO QUESTION 2, THE TOTAL OF ALL BASIC PAY, SPECIAL PAY, AND INCENTIVE PAY, LESS WITHHOLDING TAX AND ALLOTMENTS IN SUPPORT OF BASIC ALLOWANCE FOR QUARTERS, MAY BE WITHHELD TO THE EXTENT NECESSARY TO LIQUIDATE THE DEBT DURING THE ANTICIPATED PERIOD OF ACTIVE DUTY.

QUESTION NO. 3 CONCERNS THE AVAILABILITY UNDER THE 1954 ACT OF MUSTERING- OUT PAY, SOLDIER'S DEPOSITS, TRAVEL PAY ON SEPARATION, REIMBURSEMENT FOR TRANSPORTATION OF DEPENDENTS AND HOUSEHOLD EFFECTS, LUMP-SUM LEAVE PAYMENTS, SEVERANCE PAY, AND "SO-CALLED DISCHARGE GRATUITY" (PRESUMABLY REFERRING TO THE SUM NOT TO EXCEED $25 AUTHORIZED TO BE PAID UNDER THE ACT OF MARCH 4, 1925, 43 STAT. 1274) TO LIQUIDATE AN INDEBTEDNESS IN CASES WHERE THE INDIVIDUAL CONCERNED RETIRES, RESIGNS, OR HIS PERIOD OF ACTIVE DUTY OTHERWISE TERMINATES BEFORE THE DEBT IS COLLECTED. WHILE THE 1954 ACT STATES THAT "SUBSEQUENT PAYMENTS, OF WHATEVER NATURE" MAY BE SO USED, IT IS BELIEVED THAT SUCH PAYMENTS MUST BE PAYMENTS WHICH OTHERWISE LAWFULLY MAY BE WITHHELD TO APPLY ON AN INDEBTEDNESS TO THE GOVERNMENT, SINCE THAT ACT DOES NOT PURPORT TO AMEND OTHER SPECIAL PROVISIONS OF LAW WHICH EXEMPT CERTAIN PAYMENTS FROM LIABILITY FOR PAYMENT OF DEBTS.

SECTION 505 (A) OF THE VETERANS READJUSTMENT ASSISTANCE ACT OF 1952, 66 STAT. 690, PROVIDES THAT MUSTERING-OUT PAYMENTS DUE UNDER THAT ACT "SHALL BE EXEMPT FROM THE CLAIMS OF CREDITORS, INCLUDING ANY CLAIMS OF THE UNITED STATES.' SECTION 3 OF THE ACT OF JULY 15, 1954, 68 STAT. 485, RELATING TO DEPOSITS OF ENLISTED MEMBERS, CONTAINS A SIMILAR EXEMPTION FROM LIABILITY FOR SUCH MEMBERS' DEBTS ,INCLUDING ANY INDEBTEDNESS TO THE UNITED STATES OR TO ANY OF ITS INSTRUMENTALITIES.' SEE ALSO A SIMILAR PROVISION CONTAINED IN SECTION 7 OF THE ARMED FORCES LEAVE ACT OF 1946, 60 STAT. 967, REGARDING LUMP-SUM LEAVE PAYMENTS. IN VIEW OF SUCH PROVISIONS OF LAW, IT IS CONCLUDED THAT MUSTERING-OUT PAY, ENLISTED MEN'S DEPOSITS AND LUMP-SUM LEAVE PAYMENTS MAY NOT BE WITHHELD AND APPLIED UNDER THE 1954 ACT IN LIQUIDATION OF DEBTS TO THE GOVERNMENT.

SECTION 10 OF THE ACT OF MARCH 4, 1925, MENTIONED ABOVE, PROVIDES THAT ENLISTED MEN DISCHARGED FROM THE NAVAL SERVICE IN THE CIRCUMSTANCES THERE STATED MAY BE PAID A SUM NOT TO EXCEED $25, AT THE DISCRETION OF THE SECRETARY OF THE NAVY,"ONLY IN CASES WHERE THE PERSON SO DISCHARGED WOULD OTHERWISE BE WITHOUT FUNDS TO MEET HIS IMMEDIATE NEEDS.' SINCE SUCH PAYMENT IS A GRATUITY RATHER THAN A MATTER OF RIGHT, AND MAY BE PAID ONLY FOR THE PURPOSE OF FURNISHING AN ENLISTED MAN MEANS TO MEET HIS IMMEDIATE NEEDS, IT IS CLEAR THAT SUCH GRATUITY IS NOT AVAILABLE FOR APPLICATION ON HIS INDEBTEDNESS TO THE UNITED STATES. THE SAME CONSIDERATIONS APPLY TO TRAVEL PAY FOR AN ENLISTED MAN ON DISCHARGE WHICH LONG HAS BEEN HELD NOT AVAILABLE FOR SET-OFF AGAINST HIS DEBTS TO THE GOVERNMENT. THE BASIS FOR SUCH CONCLUSION IS THAT CONGRESS DID NOT INTEND AN ENLISTED MAN TO BE DISCHARGED, OFTEN FAR FROM HOME, WITHOUT HAVING SUFFICIENT FUNDS TO OBTAIN TRANSPORTATION TO HIS HOME. SEE 20 COMP. DEC. 707; 8 COMP. GEN. 233. THE OTHER HAND, ITEMS SUCH AS SEVERANCE PAY AND REIMBURSEMENT FOR TRANSPORTATION OF DEPENDENTS AND HOUSEHOLD EFFECTS WHICH ARE NEITHER EXPRESSLY NOR IMPLIEDLY EXEMPT FROM THE CLAIMS OF THE GOVERNMENT MAY BE APPLIED UNDER THE 1954 ACT TO LIQUIDATE DEBTS DUE THE UNITED STATES.

QUESTION 4 HAS TO DO WITH THE APPLICABILITY OF THE 1954 ACT TO ENLISTED PERSONNEL OF THE ARMY AND AIR FORCE IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 4 OF THAT ACT THAT NOTHING IN THE ACT SHALL BE CONSTRUED AS REPEALING, AMENDING, OR MODIFYING IN ANY WAY THE PROVISIONS OF THE ACT OF MAY 22, 1928. THE LATTER ACT, APPLICABLE TO ENLISTED MEN OF THE ARMY AND AIR FORCE, PARALLELS TO A LARGE EXTENT THE 1954 ACT, SINCE THE "ADMINISTRATIVELY ASCERTAINED" DEBTS COVERED BY THE 1928 ACT IN MANY CASES, AND PERHAPS MOST CASES, WILL BE DEBTS ARISING FROM ERRONEOUS PAYMENTS COVERED BY THE 1954 ACT. HOWEVER, WHILE THERE ARE PROVISIONS IN EACH ACT WHICH ARE NOT CONTAINED IN THE OTHER, IT IS CLEAR THAT ENLISTED MEMBERS OF THE ARMY AND AIR FORCE ARE INCLUDED GENERALLY UNDER THE EXPRESS TERMS OF THE 1954 ACT (SECTION 1 SAYS "ANY MEMBER OF THE ARMY, NAVY, AIR FORCE * * *.'' ALSO, SECTION 2 OF THE 1954 ACT NOT ONLY REQUIRES THAT REGULATIONS PRESCRIBED UNDER THAT ACT SHALL BE APPROVED BY THE DIRECTOR OF THE BUREAU OF THE BUDGET BUT PROVIDES THAT REGULATIONS PRESCRIBED BY THE SECRETARIES OF THE ARMY, NAVY, AND AIR FORCE SHALL BE UNIFORM FOR THE MILITARY SERVICES INSOFAR AS PRACTICABLE. DID CONGRESS BY SECTION 4 INTEND THEN IN THE NEXT BREATH TO ELIMINATE THE BULK OF THE ARMY AND AIR FORCE FROM THE COVERAGE OF SUCH UNIFORM REGULATIONS BECAUSE OVERPAYMENTS TO ENLISTED MEN WOULD FALL WITHIN THE SCOPE OF THE 1928 ACT? THAT DOES NOT SEEM CREDITABLE AND NOTHING IS FOUND IN THE LEGISLATIVE HISTORY TO SUPPORT THAT VIEW. ATTEMPTING TO RESOLVE THESE APPARENT INCONSISTENCIES, THE CONCLUSION APPEARS JUSTIFIED, PENDING CLARIFICATION OF THE STATUTE, THAT THE PURPOSE WAS TO AUTHORIZE THE SETTING UP OF UNIFORM PROCEDURES UNDER THE 1954 ACT FOR THE COLLECTION OF DEBTS RESULTING FROM ERRONEOUS PAYMENTS TO ALL MEMBERS OF THE ARMY, NAVY, AND AIR FORCE, BUT TO MAINTAIN AS TO ENLISTED MEMBERS OF THE ARMY AND AIR FORCE THE PROVISIONS OF THE 1928 ACT INSOFAR AS ALL OTHER ADMINISTRATIVELY ASCERTAINED DEBTS ARE CONCERNED. QUESTION 4 IS ANSWERED ACCORDINGLY.

Oct 1, 2020

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