B-147557, JAN. 2, 1962

B-147557, JAN. 2, 1962

TO THE SECRETARY OF STATE:

IN A LETTER OF NOVEMBER 1, 1961 (HJM:MHH:MAT 46-859), THE ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, DEPARTMENT OF JUSTICE, REQUESTED THAT WE RESOLVE THE CONFLICTING CLAIMS OF THE TREASURY DEPARTMENT, INTERNAL REVENUE SERVICE, AND THE DEPARTMENT OF JUSTICE TO THE COMPENSATION AND OTHER MONIES BEING WITHHELD FROM THOMAS ANTHONY BERTONE, A FORMER FOREIGN SERVICE EMPLOYEE OF THE DEPARTMENT OF STATE. FORWARDED WITH THE LETTER, ALONG WITH OTHER ENCLOSURES, WAS A COPY OF A LETTER DATED SEPTEMBER 6, 1961 (CC:CL-260 A:GP), OF THE CHIEF COUNSEL, INTERNAL REVENUE SERVICE, DISCUSSING THE RESPECTIVE CLAIMS TO THE WITHHELD MONIES AND SUGGESTING THAT THE MATTER BE REFERRED TO OUR OFFICE FOR SETTLEMENT UNDER AUTHORITY OF 31 U.S.C. 71. WE SUBSEQUENTLY RECEIVED A LETTER DATED NOVEMBER 6, 1961, FROM THE ACTING CHIEF, PERSONNEL OPERATIONS DIVISION, DEPARTMENT OF STATE, ADVISING US THAT HE WAS IN RECEIPT OF A COPY OF THE ASSISTANT ATTORNEY GENERAL'S LETTER OF NOVEMBER 1, 1961, AND OFFERING TO FURNISH SUCH ADDITIONAL INFORMATION AS MAY BE NEEDED IN THE DISPOSITION OF THIS MATTER IN WHICH THE ROLE OF THE DEPARTMENT OF STATE IS ESSENTIALLY THAT OF STAKEHOLDER.

THE DEPARTMENT OF JUSTICE SEEKS THE APPLICATION OF THE MONIES WITHHELD, UNDERSTOOD TO BE APPROXIMATELY $3,500, TO A FINE OF $6,000 IMPOSED APRIL 12, 1957, BY A FEDERAL COURT AT NEWARK, NEW JERSEY, FOLLOWING THE INDICTMENT AND CONVICTION OF THOMAS ANTHONY BERTONE ON CHARGES OF SOLICITATION OF BRIBES, EXTORTION, FALSE STATEMENTS, AND CONSPIRACY.

THE INTERNAL REVENUE SERVICE, TREASURY DEPARTMENT, SEEKS THE APPLICATION OF THE WITHHELD MONIES TO A TAX INDEBTEDNESS ASSESSED OCTOBER 2, 1959, IN THE AMOUNT OF $44,713.22, FOR INCOME TAXES COVERING THE PERIOD 1952 THROUGH 1955.

ON MAY 5, 1960, THE DEPARTMENT OF JUSTICE ADDRESSED A LETTER TO THE CHIEF, PERSONNEL OPERATIONS DIVISION, DEPARTMENT OF STATE, REQUESTING THAT ANY MONIES THE DEPARTMENT OF STATE WAS HOLDING TO THE CREDIT OF THOMAS A. BERTONE BE FORWARDED TO THE DEPARTMENT OF JUSTICE FOR APPLICATION TO THE UNPAID FINE IMPOSED BY THE FEDERAL COURT AT NEWARK. SUBSEQUENT TO RECEIPT OF THE DEPARTMENT OF JUSTICE'S LETTER OF MAY 5, 1960, BUT BEFORE ANY ACTION WAS TAKEN THEREON, THE DEPARTMENT OF STATE RECEIVED A NOTICE OF LEVY ISSUED BY THE DISTRICT DIRECTOR OF INTERNAL REVENUE, NEWARK, NEW JERSEY, MAKING DEMAND FOR ANY MONIES DUE THOMAS A. BERTONE, TO BE APPLIED TO HIS INCOME TAX INDEBTEDNESS OF $44,713.22.

THE LETTER OF THE CHIEF COUNSEL, INTERNAL REVENUE SERVICE, STRESSES THE POINT THAT THE FINE, VIEWED AS A JUDGMENT, DID NOT IN THE ABSENCE OF EXECUTION BECOME A PERFECTED LIEN UPON THE MONIES INVOLVED, BUT THAT THE TAX LIEN HAD BEEN PERFECTED WITH THE FILING OF NOTICE OF SUCH LIEN. HOWEVER, THE MONIES INVOLVED ARE IN THE POSSESSION OF THE UNITED STATES NOT BY VIRTUE OF THE TAX LIEN UNDER SECTION 6321, INTERNAL REVENUE CODE OF 1954. NOR ARE THEY AVAILABLE FOR APPLICATION TO DEBTS DUE THE UNITED STATES SOLELY BY VIRTUE OF THAT LIEN. "THE GOVERNMENT HAS THE SAME RIGHT ,WHICH BELONGS TO EVERY CREDITOR, TO APPLY THE UNAPPROPRIATED MONEYS OF HIS DEBTOR, IN HIS HANDS, IN EXTINGUISHMENT OF THE DEBTS DUE TO HIM.' GRATIOT V. UNITED STATES, 15 PET. 336, 370; MCKNIGHT V. UNITED STATES, 98 U.S. 179, 186.' UNITED STATES V. MUNSEY TRUST CO., 332 U.S. 234, 239.

THE TAX AND FINE ARE DUE THE UNITED STATES. MONIES COLLECTED ON EITHER DEBT "SHALL BE PAID BY THE OFFICER OR AGENT RECEIVING THE SAME INTO THE TREASURY.' 31 U.S.C. 484. THE FACT THAT EXECUTION HAS NOT BEEN ISSUED FOR THE COLLECTION OF THE FINE IS NOT VIEWED AS MATERIAL WITH REGARD TO THE APPLICATION OF MONIES OR CREDITS DUE FROM THE UNITED STATES. MOREOVER, WE DO NOT VIEW THE LIEN OR LEVY PROVISIONS OF THE INTERNAL REVENUE CODE, SECTION 6321 ET SEQ. AND SECTION 6331 ET SEQ., AS CONTROLLING THE DETERMINATION OF THE APPLICATION OF MONIES OR CREDITS IN THE POSSESSION OF THE UNITED STATES AND OTHERWISE AVAILABLE FOR APPLICATION TO SEVERAL DEBTS DUE THE GOVERNMENT.

RATHER, IN THIS CASE, THE FINE HAVING BEEN IMPOSED APRIL 12, 1957, AND THE TAX HAVING BEEN ASSESSED OCTOBER 2, 1959, AND THERE APPEARING TO BE NO OVERRIDING EQUITIES, WE PERCEIVE NO REASON WHY THE MONIES DUE FROM THE GOVERNMENT SHOULD NOT BE APPLIED WITH REGARD TO THE PRIORITY IN TIME OF THE INDEBTEDNESS.

ACCORDINGLY, YOU ARE ADVISED WE ARE OF THE OPINION THE MONIES PRESENTLY BEING WITHHELD FROM THOMAS A. BERTONE SHOULD BE RELEASED TO THE DEPARTMENT OF JUSTICE FOR APPLICATION TO THE FINE INDEBTEDNESS.