B-194793.OM, AUG 25, 1980
Highlights
THE FICA AMOUNT WAS INCLUDED IN THE TOTAL INDEBTEDNESS SINCE FICA SHOULD NOT HAVE BEEN WITHHELD FROM HIS SALARY AS A REEMPLOYED ANNUITANT. THE FEDERAL INSURANCE CONTRIBUTIONS ACT IMPOSES A TAX ON EMPLOYEES WHICH IS COLLECTED BY EMPLOYERS BY PAYROLL DEDUCTIONS. THE AMOUNT DEDUCTED IS TREATED AS PAID TO THE EMPLOYEE AT THE TIME OF THE DEDUCTION. AN EMPLOYER IS REQUIRED OR PERMITTED TO DEDUCT ANY AMOUNT FROM THE REMUNERATION OF AN EMPLOYEE AND TO PAY THE AMOUNT DEDUCTED TO THE UNITED STATES. THEN FOR PURPOSES OF THIS CHAPTER THE AMOUNT SO DEDUCTED SHALL BE CONSIDERED TO HAVE BEEN PAID TO THE EMPLOYEE AT THE TIME OF SUCH DEDUCTIONS.". LEAVENS RECEIVED CONSTRUCTIVE PAYMENT OF THE FICA TAX AT THE TIME IT WAS DEDUCTED FROM HIS SALARY.
B-194793.OM, AUG 25, 1980
PRECIS-UNAVAILABLE
DONALD C. LEAVENS:
RETURNED, TOGETHER WITH YOUR FILE Z-2801150. MR. DONALD C. LEAVENS HAS REQUESTED A REFUND OF $1,952.65 IN FICA PAYMENTS ERRONEOUSLY WITHHELD FROM HIS PAY BY THE DEPARTMENT OF TRANSPORTATION. THIS OFFICE WAIVED MR. LEAVENS INDEBTEDNESS OF $25,666 UNDER THE AUTHORITY OF 5 U.S.C. SEC. 5584 (1976), IN OUR DECISION OF AUGUST 14, 1979. THE FICA AMOUNT WAS INCLUDED IN THE TOTAL INDEBTEDNESS SINCE FICA SHOULD NOT HAVE BEEN WITHHELD FROM HIS SALARY AS A REEMPLOYED ANNUITANT.
THE FEDERAL INSURANCE CONTRIBUTIONS ACT IMPOSES A TAX ON EMPLOYEES WHICH IS COLLECTED BY EMPLOYERS BY PAYROLL DEDUCTIONS. SEE 26 U.S.C. SECS. 3101, 3102 (1976). THE AMOUNT DEDUCTED IS TREATED AS PAID TO THE EMPLOYEE AT THE TIME OF THE DEDUCTION. SECTION 3123 OF TITLE 26, UNITED STATES CODE, PROVIDES:
"3123. DEDUCTIONS AS CONSTRUCTIVE PAYMENTS. WHENEVER UNDER THIS CHAPTER OR ANY ACT OF CONGRESS, OR UNDER THE LAW OF ANY STATE, AN EMPLOYER IS REQUIRED OR PERMITTED TO DEDUCT ANY AMOUNT FROM THE REMUNERATION OF AN EMPLOYEE AND TO PAY THE AMOUNT DEDUCTED TO THE UNITED STATES, A STATE, OR ANY POLITICAL SUBDIVISION THEREOF, THEN FOR PURPOSES OF THIS CHAPTER THE AMOUNT SO DEDUCTED SHALL BE CONSIDERED TO HAVE BEEN PAID TO THE EMPLOYEE AT THE TIME OF SUCH DEDUCTIONS."
SEE 26 C.F.R. SEC. 31.3123-1 (1979).
UNDER THE STATUTE, MR. LEAVENS RECEIVED CONSTRUCTIVE PAYMENT OF THE FICA TAX AT THE TIME IT WAS DEDUCTED FROM HIS SALARY. THEREFORE, THE FICA AMOUNT MAY NOT BE PAID TO MR. LEAVENS AND HIS ONLY RECOURSE WOULD BE TO FILE A REQUEST FOR A REFUND WITH THE INTERNAL REVENUE SERVICE. 26 C.F.R. SEC. 31.6402(A)-2(B) (1979). SUCH REQUEST FOR A REFUND IS SUBJECT TO THE 3 YEAR PERIOD OF LIMITATION ON FILING A CLAIM. 26 C.F.R. SEC. 301.6511(A) -1 (1979). SEE JOHN C. EDWARDS, B-184003, JULY 13, 1976.
ACCORDINGLY, MR. LEAVENS' CLAIM FOR THE FICA PAYMENTS SHOULD BE DENIED ON THE BASIS THAT THE FICA DEDUCTIONS CONSTITUTED CONSTRUCTIVE PAYMENTS TO HIM AT THE TIME OF THEIR DEDUCTION BY THE DEPARTMENT OF TRANSPORTATION.
DIGEST
FICA DEDUCTION IS A TAX ON EMPLOYEES AND AS SUCH SUBJECT TO JURISDICTION OF INTERNAL REVENUE SERVICE. UNDER THE PROVISIONS OF 26 U.S.C. 3123, EMPLOYEE IS CONSIDERED PAID AT TIME EMPLOYER DEDUCTS FICA FROM SALARY, THEREFORE EMPLOYEE WAS PAID AT THAT TIME AND REQUEST FOR REFUND MUST BE FILED WITH INTERNAL REVENUE SERVICE, SUBJECT TO TIME LIMITATIONS ON FILING. CLAIM FOR PAYMENT OF FICA DEDUCTIONS SHOULD BE DENIED.