B-197856 L/M, MAR 5, 1980

B-197856 L/M, MAR 5, 1980

PRECIS-UNAVAILABLE

S. I. HAYAKAWA, UNITED STATES SENATE:

IN RESPONSE TO AN INQUIRY YOU RECEIVED FROM MR. W. P. HAGTHROP, PUBLISHER OF THE ORANGE COUNTY REPORTER (THE REPORTER), YOU REQUESTED AN EXPLANATION AND REPORT FROM THE COMPTROLLER GENERAL CONCERNING THE REFUSAL OF THE U.S. INTERNAL REVENUE SERVICE (IRS) TO PAY INTEREST CHARGES ON ITS PAST DUE ACCOUNTS.

THE ENCLOSURES TO YOUR LETTER DISCLOSE THE FACTS IN THE CASE TO BE AS FOLLOWS: THE REPORTER PREPARED AN INVOICE FOR THE IRS, DATED OCTOBER 26, 1979, FOR PUBLICATION SERVICES PERFORMED IN 1975 IN THE PRINCIPAL AMOUNT OF $72.85, PLUS $40.80 IN INTEREST CHARGES COVERING 56 MONTHS AT 1% PER MONTH. THIS WAS APPARENTLY IN ACCORDANCE WITH THE REPORTER'S POLICY, STATED AT THE BOTTOM OF THE INVOICE, THAT "1% PER MONTH WILL BE ADDED TO ACCOUNTS OVER 90 DAYS PAST DUE." THE IRS PAID THE PRINCIPAL AMOUNT OF THE DEBT, BUT STRUCK THE ASSOCIATED INTEREST CHARGES AND TYPED THE FOLLOWING NOTE ON THE BOTTOM OF THE INVOICE: "WE ARE NOT ALLOWED TO PAY PAST DUE INTEREST CHARGES, THEREFORE WE ARE ONLY PAYING THE $72.85 THAT IS DUE." IN RESPONSE TO FURTHER INQUIRIES, AN ACTING DISTRICT DIRECTOR OF THE IRS STATED THAT "IN VARIOUS DECISIONS, THE COMPTROLLER GENERAL HAS STATED THAT THERE IS NO STATUTORY PROVISION AUTHORIZING PAYMENT OF PENALTIES, INTEREST, OR LATE CHARGES ON GOVERNMENT ACCOUNTS AND CONTRACTS, AND THEREFORE, GOVERNMENT AGENCIES CANNOT PAY SUCH CHARGES."

WE SUPPORT THE IRS IN THIS MATTER. IT HAS LONG BEEN WELL SETTLED THAT THE UNITED STATES MAY NOT PAY INTEREST ON ITS UNPAID ACCOUNTS UNLESS THE PAYMENT OF INTEREST IS AUTHORIZED BY STATUTE OR PROVIDED FOR IN A LAWFUL CONTRACT. UNITED STATES V. THAYER-WEST POINT HOTEL CO., 329 U.S. 585 (1947); UNITED STATES EX REL. ANGARICA V. BAYARD, 127 U.S. 251 (1888); 58 COMP.GEN. 5 (1978); 51 COMP.GEN. 251 (1971); 45 COMP.GEN. 169 (1965). IN THE ABSENCE OF STATUTORY AUTHORIZATION, INTEREST CAN BE PAID ONLY WHEN A CONTRACT PROVIDES AFFIRMATIVELY, CLEARLY, AND UNAMBIGUOUSLY THAT THE UNITED STATES WILL PAY INTEREST. UNITED STATES V. THAYER-WEST POINT HOTEL CO., SUPRA, AT 590. IN PARTICULAR, INTEREST IS NOT AUTHORIZED TO BE PAID WHERE THE FIRST NOTICE OF INTEREST CHARGES APPEARS ON CLAIMANT'S INVOICE AND NO LAW REQUIRES PAYMENT. MATHEWS FURNITURE COMPANY, B-195123, JULY 11, 1979, 79-2 CPD 131.

IN THIS CASE, WE ARE AWARE OF NO STATUTE WHICH WOULD AUTHORIZE THE IRS TO PAY INTEREST ON THE THESE OVERDUE PUBLICATION ACCOUNTS NOR WAS THERE A CONTRACT UNDER WHICH THE UNITED STATES OBLIGATED ITSELF IN THE REQUIRED MANNER TO PAY INTEREST. ACCORDINGLY, REGARDLESS OF THE LONG DELAY IN THE PAYMENT OF THE PUBLICATION DEBT BY THE IRS, WE KNOW OF NO BASIS ON WHICH THE INTEREST CHARGES MAY BE PAID BY THE IRS.

WE TRUST THAT THE FOREGOING WILL BE OF ASSISTANCE IN RESPONDING TO MR. HAGTHROP. YOUR ENCLOSURES ARE RETURNED HEREWITH AS REQUESTED.