B-136413, JULY 7, 1958, 38 COMP. GEN. 12

INTEREST - JUDGMENTS - CONTRARY TO LAW A TAX REFUND JUDGMENT WHICH HAS BECOME FINAL AND WHICH PROVIDES FOR INTEREST TO DATE OF PAYMENT, ALTHOUGH THERE IS NO BASIS AT LAW FOR THE ALLOWANCE OF INTEREST, IS REQUIRED TO BE PAID AS IRECTED; HOWEVER, WITH RESPECT TO SUCH INTEREST IN OTHER CASES, THE INTERNAL REVENUE SERVICE SHOULD CONTINUE TO TAKE TIMELY AND APPROPRIATE ACTION FOR THE PURPOSE OF HAVING THE COURTS AND THE RESPONSIBLE OFFICIALS IN THE DEPARTMENT OF JUSTICE RECONSIDER THEIR ACTIONS IN SUCH SITUATIONS.

TO THE COMMISSIONER OF INTERNAL REVENUE SERVICE, JULY 7, 1958:

YOUR LETTER OF JUNE 5, 1958, O:C:OP-MCL, REQUESTS OUR DECISION CONCERNING PAYMENT OF THE JUDGMENT RENDERED BY THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA, THIRD DIVISION, IN THE CASE OF ST. PAUL FIRE AND MARINE INSURANCE CO. V. UNITED STATES, CIVIL NO. 2806, FILED JANUARY 7, 1958, AND THE CERTIFYING OFFICER'S ACCOUNTABILITY IN CONNECTION THEREWITH. ALSO, YOU REQUEST TO BE ADVISED REGARDING OUR GENERAL POLICY AS IT APPLIES TO OTHER CASES INVOLVING COURT JUDGMENTS AND DEPARTMENT OF JUSTICE SETTLEMENTS, WHERE THE INTERNAL REVENUE SERVICE FINDS NO BASIS AT LAW FOR THE ALLOWANCE OF INTEREST AS DIRECTED.

YOUR ATTENTION IS INVITED TO OUR CIRCULAR LETTER OF DECEMBER 13, 1946, B- 62476, 26 COMP. GEN. 993, CONCERNING REQUESTS FOR ADVANCE DECISIONS BY OTHERS THAN THE HEADS OF EXECUTIVE DEPARTMENTS. HOWEVER, IN VIEW OF THE FACT THAT YOU INDICATE PAYMENT OF THE JUDGMENT WILL BE DEFERRED PENDING OUR REPLY, THE QUESTIONS RAISED WILL BE CONSIDERED AT YOUR REQUEST.

IT APPEARS FROM THE TRANSCRIPT OF THE JUDGMENT WHICH ACCOMPANIED YOUR LETTER THAT THE CAUSE OF ACTION, UPON WHICH THE JUDGMENT WAS RENDERED, WAS FOR THE RECOVERY OF INTEREST COLLECTED AND WITHHELD ON FEDERAL INCOME AND EXCESS PROPERTY TAXES PAID BY THE TAXPAYER. THE MATERIAL PART OF THE JUDGMENT IS AS FOLLOWS:

CONCLUSIONS OF LAW

2. PLAINTIFF IS ENTITLED TO INTEREST AT THE RATE OF 6 PERCENT PER ANNUM ON $52,278.84 FROM DECEMBER 1, 1944 AND ON $31,269.58 FROM DECEMBER 2, 1947 TO DATE OF PAYMENT.

LET JUDGMENT BE ENTERED ACCORDINGLY.

DATED THIS 6TH DAY OF JANUARY, 1958, AT ST. PAUL, MINNESOTA.

NOW, THEREFORE, BY REASON OF THE PREMISES AFORESAID, IT IS CONSIDERED, ORDERED AND ADJUDGED THAT SAID PLAINTIFF, * * * DO HAVE AND RECOVER OF AND FROM SAID DEFENDANT, * * * SAID SUM OF * * * ($59,898.33) DOLLARS TO BE COLLECTED ACCORDING TO LAW.

JANUARY 7, 1958.

AS STATED IN YOUR LETTER, THE COURT BY USE OF THE TERM "DATE OF PAYMENT" AS THE TERMINATING DATE FOR COMPUTING THE AMOUNT OF INTEREST ALLOWABLE, PRESUMABLY HAD IN MIND AN ANTICIPATED DATE, APPROXIMATELY DECEMBER 28, 1957, ON WHICH THE ADJUDGED AMOUNT OF INTEREST WOULD BE PAID TO THE TAXPAYER. MELLON V. UNITED STATES, 50 F./2D) 1007.

YOU STATE THAT THE AMOUNTS OF $52,278.84 AND $31,269.58 ON WHICH INTEREST WAS ALLOWED WERE INTEGRAL AND OFFSETTING PARTS OF ADJUSTMENTS MADE BY THE BUREAU, IN ACCORDANCE WITH COM-MIMEOGRAPH R.A. NO. 1819 DATED MARCH 16, 1951, AND OTHER STANDARD ADJUSTMENTS, IN THE FINAL DETERMINATIONS OF THE TAXPAYER'S TAX LIABILITY, AND THAT THESE AMOUNTS WERE NOT SCHEDULED BY THE BUREAU AS OVERPAYMENTS. FURTHER, THAT SUCH AMOUNTS WERE NOT REFUNDS ON WHICH SECTION 3771 (B) (2) OF THE 1939 INTERNAL REVENUE CODE, 53 STAT. 465, 26 U.S.C. 3771 (B) (2), AUTHORIZES THE ALLOWANCE OF INTEREST TO A DATE PRECEDING THE DATE OF THE REFUND CHECK BY NOT MORE THAN THIRTY DAYS, AND THAT THE BUREAU CAN SEE NO STATUTORY SANCTION FOR ALLOWING INTEREST TO A DATE AS ORDERED IN THE JUDGMENT.

THE JUDGMENT WAS RENDERED JANUARY 7, 1958, AND IN VIEW OF THE DETERMINATION BY THE SOLICITOR GENERAL THAT NO APPEAL WOULD BE TAKEN THEREON IT HAS, BY LAPSE OF THE STATUTORY PERIOD, BECOME FINAL WITHOUT REVIEW BY AN APPELLATE COURT.

THE MAIN QUESTION HERE INVOLVED APPEARS TO HAVE BEEN SQUARELY DECIDED IN HIGGINSON V. SCHOENEMAN, 190 F.2D 32. IN THAT CASE THE COURT HELD (QUOTING FROM SYLLABUS 9):

WHERE COURT OF CLAIMS' JUDGMENT FOR REFUND OF INCOME TAXES PLAINLY AWARDED INTEREST FROM DATE SET FORTH AT 6 PERCENT PER ANNUM ALTHOUGH STATUTE PROHIBITED PAYMENT OF INTEREST DURING TIME CLAIMANT WAS RESIDENT OF ANOTHER COUNTRY BUT JUDGMENT HAD BECOME FINAL AND HENCE COULD NOT BE MODIFIED, DUTY OF GOVERNMENT OFFICIALS TO PAY JUDGMENT WAS PURELY MINISTERIAL AND MANDATORY ORDER REQUIRING PAYMENT WOULD ISSUE.

IN VIEW OF THE FACTS AND THE LAW OBTAINING IN THIS MATTER, IT WOULD APPEAR THAT THE BUREAU HAS NO ALTERNATIVE BUT TO PAY THE JUDGMENT AS DIRECTED, AND NO QUESTION WILL BE RAISED BY US AS TO THE PROPRIETY OF ITS CERTIFICATION FOR PAYMENT BY THE CERTIFYING OFFICER, IF OTHERWISE FREE FROM OBJECTION.

REGARDING YOUR REQUEST FOR INFORMATION AS TO OUR GENERAL POLICY IN OTHER CASES INVOLVING COURT JUDGMENTS AND DEPARTMENT OF JUSTICE SETTLEMENTS, WHERE THE BUREAU BELIEVES NO LEGAL BASIS EXISTS FOR THE ALLOWANCE OF INTEREST AS DIRECTED, YOU ARE ADVISED THAT SINCE WE HAVE NO JURISDICTION UNDER THE LAW IN SUCH MATTERS, WE HAVE HAD NO OCCASION TO FIX A POLICY THEREON. IN THIS CONNECTION, SEE 26 U.S.C. 3761, AND THE SAME TITLE IN SUPP. V, 6406. WE ASSUME, HOWEVER, THAT YOUR BUREAU HAS TAKEN AND WILL CONTINUE TO TAKE TIMELY AND APPROPRIATE ACTION WITH THE VIEW OF HAVING THE COURTS AND RESPONSIBLE OFFICIALS IN THE DEPARTMENT OF JUSTICE RECONSIDER THEIR ACTIONS IN SUCH SITUATIONS.