B-143250, B-143685, JUN. 5, 1961

B-143250, B-143685, JUN. 5, 1961

TO THE COMMISSIONER, INTERNAL REVENUE SERVICE:

REFERENCE IS MADE TO A LETTER DATED APRIL 21, 1961, FROM THE CHIEF, OPERATIONS BRANCH, COLLECTION DIVISION (O:C:OP), TO OUR CLAIMS DIVISION, STATING THAT THE TAX LIABILITY OF WINDER AIRCRAFT CORPORATION OF FLORIDA, LAKELAND, FLORIDA, IS IN THE AMOUNT OF $6,046.77, WITH INTEREST COMPUTED TO APRIL 28, 1961. WE WITHHELD THAT AMOUNT UPON ISSUANCE OF A PARTIAL SETTLEMENT RELATING TO CLAIMS OF THE CORPORATION UNDER ARMY CONTRACTS NOS. DA-20-113-ORD-20628 AND DA-20-113-ORD-20931.

THE PARTIAL SETTLEMENT IN THE MATTER WAS ARRANGED AFTER WE HAD BEEN FURNISHED COPIES OF ASSIGNMENTS DATED JULY 7 AND OCTOBER 18, 1956, IN FAVOR OF THE SEMINOLE BANK OF TAMPA, TAMPA, FLORIDA, COVERING AMOUNTS PAYABLE UNDER CONTRACTS NOS. DA-20-113-ORD-20628 AND -20931. SUBSEQUENTLY, THE BANK ADVISED US THAT THE ASSIGNOR, WINDER AIRCRAFT CORPORATION OF FLORIDA, IS STILL INDEBTED TO THE BANK IN THE AMOUNT OF $82,348.85 ON NOTES WHICH WERE COLLATERALIZED BY ASSIGNMENTS OF CONTRACTS WITH THE MILITARY DEPARTMENTS, DATED IN 1956, AND PROPERLY RECORDED AND ACKNOWLEDGED BY THE CONTRACTING OFFICER AND FINANCE OFFICER IN EACH CASE.

THE CONTRACTS WITH THE DEPARTMENT OF THE ARMY CONTAIN "NO SETOFF" PROVISIONS APPLICABLE TO THE EXTENT PROVIDED IN THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED. IN VIEW OF THOSE PROVISIONS OF THE CONTRACTS, AND CONSIDERING THAT THE ASSIGNOR'S INDEBTEDNESS TO THE BANK IS STATED TO BE IN THE AMOUNT WHICH IS IN EXCESS OF THE TOTAL SUM WHICH WE DETERMINED TO BE ALLOWABLE ON THE ARMY CONTRACT CLAIMS, IT IS APPARENT THAT THE WITHHELD AMOUNT OF $6,046.77 CANNOT PROPERLY BE APPLIED AS AN OFFSET TO LIQUIDATE THE CLAIM OF THE INTERNAL REVENUE SERVICE AGAINST THE CONTRACTOR.

ACCORDINGLY, THE BALANCE OF $6,046.77 WHICH IS DUE ON THE TWO ARMY CONTRACT CLAIMS WILL BE CERTIFIED FOR PAYMENT TO THE BANK AS THE CONTRACTOR'S ASSIGNEE.