Request for Reconsideration Concerning Authority To Withhold Taxes

GAO was asked to reconsider and to modify its decision that GAO is without the authority to deduct, or to direct the deduction of, any amount for taxes from Court of Claims backpay judgments unless the judgment should specifically so provide or the parties involved agree to the deduction of a specified amount of withholding tax. The request was made because the Internal Revenue Service believes that the responsibility of complying with the withholding tax requirements when backpay judgments are obtained against the United States rests with GAO, since GAO is responsible for certifying payment and is in control of the appropriated fund used to pay such judgments. GAO held that, although it agrees that amounts awarded to employees as backpay constitutes taxable wages, it does not agree that it may withhold money from backpay judgments that do not mention withholding. GAO held that, before income tax could be withheld from a particular judgment, a determination would have to be made by the courts that the judgment represents a taxable income subject to withholding. Additionally, it does not control payments of judgments against the United States. Its responsibility to certify judgments rendered by the Court of Claims and district courts is largely ministerial. It has no authority to deviate from the specific provisions of a judgment or to assume that a final judgment's failure to provide for withholding was inadvertent or otherwise without any legal significance. Accordingly, GAO reaffirmed its previous decision.