B-165325, SEP. 22, 1969

B-165325, SEP. 22, 1969

CIVIL PAY - RELOCATION EXPENSES - STATE INCOME TAX WITHHOLDING DECISION TO AGRICULTURE EMPLOYEE CONCERNING REVIEW OF SETTLEMENT ACTION ON CLAIM FOR RELOCATION EXPENSES INCIDENT TO TRANSFER OF EMPLOYEE FROM HELENA TO BOZMAN, MONTANA. EMPLOYEE WHO INCIDENT TO TRANSFER CLAIMS ADDITIONAL PAYMENT OF $33.40 IS LIABLE FOR OVERPAYMENT RESULTING FROM DUPLICATE PAYMENTS FOR REAL ESTATE EXPENSES. DEDUCTIONS FROM REAL ESTATE EXPENSE PAYMENTS FOR STATE OF MONTANA INCOME TAX WERE PROPER UNDER ACT OF JULY 17, 1952, AND IMPLEMENTING REGULATIONS SINCE COSTS INCURRED IN PURCHASE OR SALE OF PROPERTY ARE MOVING EXPENSES FOR WHICH INCOME TAX WITHHOLDING IS PROPER.

TO MR. LEROY W. BERGSTROM:

YOUR LETTER OF AUGUST 9, 1969, CONCERNING UNRESOLVED GRIEVANCES TO MR. KENNETH E. GRANT, ADMINISTRATOR OF THE SOIL CONSERVATION SERVICE, CONSTITUTES IN PART AN APPEAL FROM THE CLAIMS SETTLEMENT ACTIONS OF OUR OFFICE DATED OCTOBER 9, 1968, AND APRIL 15, 1969, AND ACCORDINGLY HAS BEEN REFERRED IN PERTINENT PART TO OUR OFFICE FOR DIRECT REPLY TO YOU. THE SETTLEMENT ACTION INVOLVED A TRAVEL EXPENSE CLAIM INCIDENT TO YOUR TRANSFER OF OFFICIAL STATION FROM HELENA TO BOZEMAN, MONTANA. YOU ASSERT IN YOUR LETTER THAT THERE IS STILL $33.42 DUE ON YOUR CLAIM AND THAT NO STATE TAXES SHOULD HAVE BEEN WITHHELD ON THE CLAIMS SETTLEMENT ACTION.

ON THE RECORD NOW BEFORE US IT APPEARS THAT YOU HAVE BEEN OVERPAID IN THE AMOUNT OF $77.20. INCIDENT TO YOUR TRANSFER FROM HELENA TO BOZEMAN YOU HAVE CLAIMED A TOTAL OF $3,514.03 AND RECEIVED A TOTAL PAYMENT OF $3,480.61 (CONSISTING OF PAYMENTS OF $1,056.91 AND $36.50 BY THE SOIL CONSERVATION SERVICE AND $1,550.13 AND $837.07 ON SETTLEMENTS BY OUR OFFICE). APPARENTLY IT IS THE DIFFERENCE OF $33.42 BETWEEN THE TOTAL CLAIMED, $3,514.03, AND THE TOTAL PAID, $3,480.61, THAT YOU CLAIM IS STILL DUE. HOWEVER, WE SEE NO BASIS FOR ALLOWANCE OF SUCH ADDITIONAL AMOUNT. ON THE CONTRARY WE FIND YOU HAVE BEEN OVERPAID $77.20, AS SET FORTH BELOW. AN ANALYSIS OF THE FOUR PAYMENTS SHOWS THAT THREE ITEMS OF REAL ESTATE EXPENSES HAVE BEEN INCLUDED TWICE IN THE ABOVE PAYMENTS, I.E., $40 FOR ABSTRACT; $29.70 FOR REVENUE STAMPS; AND $7.50 FOR PREPARATION OF DEED.

THE PAYMENT OF $1,056.91 ON JUNE 7, 1968, MADE BY THE SOIL CONSERVATION SERVICE INCLUDED THE THREE ABOVE-MENTIONED ITEMS TOTALING $77.20. THE $2,420.62 WHICH WAS DISALLOWED AT THE TIME CONSISTED OF $2,310 FOR REALTOR'S COMMISSION AND FOUR ITEMS TOTALING $110.62 INCLUDING $45 FOR PER DIEM; $44.90 FOR SUBSISTENCE EXPENSES; $17.92 FOR NEWSPAPER ADVERTISING AND $2.80 FOR RADIO ADVERTISING. THE VOUCHER DIFFERENCE STATEMENT ATTACHED AS PART OF THE JUNE 7, 1968 VOUCHER SETS FORTH THE JUSTIFICATION FOR THE DISALLOWANCE ACTION. ADDITIONALLY, WE UNDERSTAND THE SOIL CONSERVATION SERVICE IN ITS RESPONSE TO YOUR LETTER OF AUGUST 9, 1969, RESTATES THE JUSTIFICATION FOR ITS DISALLOWANCE ACTIONS.

THE $2,310 FOR REALTOR'S COMMISSION WAS THE SUBJECT OF THE TWO CLAIMS SETTLEMENT ACTIONS BY OUR OFFICE. AT THE TIME EACH ACTION WAS TAKEN HERE THE DETAILS OF THE JUNE 7, 1968 PAYMENT BY THE SOIL CONSERVATION SERVICE WERE NOT PART OF THE RECORD. CONSEQUENTLY OUR SETTLEMENTS TOTALING $2,387.20 INCLUDED THE $77.20 PREVIOUSLY PAID TO YOU. THE SOIL CONSERVATION SERVICE WILL TAKE APPROPRIATE ACTION TO RECOVER THE $77.20 OVERPAYMENT.

THE RECORD SHOWS THAT FROM THE FOUR SEPARATE PAYMENTS TO YOU TOTALING IN GROSS $3,480.61 THERE HAS BEEN WITHHELD $56.80 FOR PURPOSES OF THE MONTANA STATE INCOME TAX. TWO OF THE FOUR PAYMENTS ($1,550.13 AND $837.07) WERE THE RESULT OF DIRECT SETTLEMENTS BY OUR OFFICE AND PERTAIN TO THE REAL ESTATE EXPENSES INVOLVED IN THE SALE OF YOUR RESIDENCE AT YOUR OLD DUTY STATION. ALTHOUGH, STATE TAX DEDUCTIONS OF $31 AND $16.74 WERE NOT AUTHORIZED ON OUR SETTLEMENTS SUCH DEDUCTIONS WERE MADE BY THE MONTANA STATE OFFICE OF THE DEPARTMENT OF AGRICULTURE.

THE SECRETARY OF THE TREASURY ON JUNE 21, 1955, AS AUTHORIZED BY THE ACT OF JULY 17, 1952, 66 STAT. 765, AND EXECUTIVE ORDER NO. 10407, DATED NOVEMBER 6, 1952, MADE A FORMAL AGREEMENT WITH THE STATE OF MONTANA WHICH REQUIRES THE HEAD OF EACH FEDERAL AGENCY TO WITHHOLD THE MONTANA STATE INCOME TAX FROM THE COMPENSATION OF FEDERAL EMPLOYEES EMPLOYED IN MONTANA ON "WAGES" AS DEFINED IN SECTION 3401 (A) OF THE INTERNAL REVENUE CODE OF 1954 AND REGULATION ISSUED THEREUNDER. SECTION 3080 OF THE TREASURY FISCAL REQUIREMENTS MANUAL PROVIDES THAT MOVING EXPENSE REIMBURSEMENTS OR ALLOWANCES ON WHICH INCOME TAX WITHHOLDING IS REQUIRED INCLUDE SUCH ITEMS AS COSTS INCURRED IN THE PURCHASE OR SALE OF PROPERTY. IT WOULD APPEAR THAT THE ABOVE-MENTIONED DEDUCTIONS FOR STATE INCOME TAX ACCORD WITH THE CITED STATUTORY AND REGULATORY PROVISIONS AND THAT OUR CLAIMS DIVISION INADVERTENTLY FAILED TO AUTHORIZE SUCH DEDUCTIONS. ACCORDINGLY, WE FIND NO BASIS WHEREBY A REFUND OF SUCH DEDUCTIONS MAY BE MADE IN ADVANCE OF ADJUSTMENT, IF ANY, AT THE TIME OF FILING YOUR STATE TAX RETURNS.