B-213895, APRIL 25, 1984, 63 COMP.GEN. 322

B-213895, APRIL 25, 1984, 63 COMP.GEN. 322

UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT - RETIRED OR RETAINER PAY - APPORTIONMENT - TAX WITHHOLDINGS - PROPRIETY IN COMPUTING THE AMOUNT OF THE NET MONTHLY MILITARY "DISPOSABLE RETIRED OR RETAINER PAY" WHICH IS SUBJECT TO APPORTIONMENT UNDER THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT, IN THE ABSENCE OF SPECIFIC DIRECTIONS IN THE ACT OR REGULATIONS, THE DEDUCTIONS OF REGULAR AND ADDITIONAL FEDERAL INCOME TAX WITHHOLDINGS FROM GROSS RETIRED PAY MAY NOT BE FIXED AT A COMBINED PERCENTAGE RATE EXCEEDING THE RETIREE'S PROJECTED EFFECTIVE TAX RATE, THAT IS, THE RATIO OF THE RETIREE'S ANTICIPATED TOTAL INCOME TAXES TO HIS ANTICIPATED TOTAL GROSS INCOME FROM ALL SOURCES. UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT - RETIRED OR RETAINER PAY - APPORTIONMENT - TAX WITHHOLDINGS - PROPRIETY IF RETIRED MILITARY PERSONNEL REQUEST ADDITIONAL INCOME TAX WITHHOLDINGS BEYOND THE REGULARLY REQUIRED WITHHOLDINGS IN THE COMPUTATION OF THE NET OR "DISPOSABLE" MILITARY RETIRED PAY WHICH IS SUBJECT TO APPORTIONMENT UNDER THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT, THEY ARE REQUIRED BY STATUTE TO PRESENT FACTUAL EVIDENCE DEMONSTRATING THE EXISTENCE OF A TAX OBLIGATION WARRANTING THE ADDITIONAL WITHHOLDINGS. CONSEQUENTLY, NO ADDITIONAL TAX WITHHOLDING MAY BE ALLOWED IN THE COMPUTATION OF DISPOSABLE RETIRED PAY IN THE CASE OF A RETIRED AIR FORCE COLONEL WHO GAVE ONLY A ROUGH ESTIMATE OR OPINION OF HIS PROJECTED TAX OBLIGATIONS AND PRESENTED NO FINANCIAL RECORDS AS EVIDENCE IN SUPPORT OF THE ESTIMATE. TAXES - FEDERAL - INCOME - JURISDICTION - INTERNAL REVENUE ALTHOUGH THE COMPTROLLER GENERAL HAS JURISDICTION TO RESOLVE QUESTIONS RELATING TO THE COMPUTATION OF NET MILITARY "DISPOSABLE RETIRED OR RETAINER PAY" UNDER THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT, REVENUE RULINGS CONCERNING THE WITHHOLDING OF FEDERAL TAXES FROM INCOME, AS WELL AS RULINGS CONCERNING THE INCOME TAX LIABILITIES AND WITHHOLDING CREDITS OF INDIVIDUAL TAXPAYERS, ARE RESERVED BY STATUTE FOR DETERMINATION PRIMARILY BY THE DEPARTMENT OF THE TREASURY, INTERNAL REVENUE SERVICE. THUS, EVEN THOUGH A RETIRED AIR FORCE COLONEL MAY NOT HAVE THE ADDITIONAL TAX WITHHOLDINGS HE REQUESTED INCLUDED IN THE COMPUTATION OF DISPOSABLE RETIRED PAY TO BE APPORTIONED UNDER THE ACT, THE CONCERNED REVENUE AUTHORITIES MAY WELL DETERMINE THAT ADDITIONAL WITHHOLDINGS SHOULD BE PLACED ON THE RETIRED PAY REMAINING TO HIS CREDIT FOLLOWING THE APPORTIONMENT.

MATTER OF: UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT, APRIL 25, 1984:

THE GENERAL ISSUE PRESENTED IN THIS CASE IS WHETHER A RETIRED AIR FORCE COLONEL MAY HAVE NEARLY ALL OF HIS RETIRED PAY WITHHELD FOR FEDERAL INCOME TAXES THUS REDUCING THE AMOUNT OF RETIRED PAY AVAILABLE FOR APPORTIONMENT BETWEEN HIM AND HIS FORMER SPOUSE UNDER THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT. /1/ WE CONCLUDE THAT IN THE CIRCUMSTANCES OF THIS CASE, THIS IS IMPERMISSIBLE.

BACKGROUND

IN 1981 THE UNITED STATES SUPREME COURT HELD THAT IN THE ABSENCE OF SPECIFIC AUTHORITY GRANTED BY FEDERAL STATUTE, STATE COURTS COULD NOT PROPERLY TREAT MILITARY RETIRED PAY AS MARITAL COMMUNITY PROPERTY IN DIVORCE PROCEEDINGS. MCCARTY V. MCCARTY, 453 U.S. 210.

THE CONGRESS RESPONDED IN 1982 BY PASSING THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT. /2/ THIS ACT ADDED SECTION 1408 TO TITLE 10 OF THE U.S.C. WHICH GRANTS STATE COURTS THE AUTHORITY UNDER CERTAIN SPECIFIED CONDITIONS TO TREAT MILITARY "DISPOSABLE RETIRED OR RETAINER PAY" EITHER AS PROPERTY SOLELY OF THE RETIRED SERVICE MEMBER OR AS PROPERTY OF THE MEMBER AND HIS SPOUSE, IN ACCORDANCE WITH THE LAW OF THE JURISDICTION OF THE PARTICULAR STATE COURT CONCERNED. 10 U.S.C. 1408(C). SECTION 1408 ALSO PROVIDES THAT THE DEPARTMENT CONCERNED SHALL, SUBJECT TO PRESCRIBED LIMITATIONS, BEGIN TO MAKE PAYMENTS DIRECTLY TO THE SPOUSE OR FORMER SPOUSE OF THE "DISPOSABLE RETIRED OR RETAINER PAY" PROVIDED FOR IN THE STATE COURT ORDER AS CHILD SUPPORT, ALIMONY, OR A DIVISION OF PROPERTY, WITHIN 90 DAYS OF THE DATE OF EFFECTIVE SERVICE OF THE COURT ORDER ON THE DEPARTMENT. 10 U.S.C. 1408(D).

THE TERM "DISPOSABLE RETIRED OR RETAINER PAY" IS DEFINED IN 10 U.S.C. 1408(A)(4) AS THE TOTAL MONTHLY RETIRED OR RETAINER PAY TO WHICH A MEMBER IS ENTITLED (OTHER THAN DISABILITY RETIRED PAY), LESS CERTAIN DEDUCTIONS INCLUDING THOSE WHICH:

(C) ARE PROPERLY WITHHELD FOR FEDERAL, STATE, OR LOCAL INCOME TAX PURPOSES, IF THE WITHHOLDING OF SUCH AMOUNTS IS AUTHORIZED OR REQUIRED BY LAW AND TO THE EXTENT SUCH AMOUNTS WITHHELD ARE NOT GREATER THAN WOULD BE AUTHORIZED IF SUCH MEMBER CLAIMED ALL DEPENDS TO WHICH HE WAS ENTITLED; (AND)

(D) ARE WITHHELD UNDER SECTION 3402(I) OF THE INTERNAL REVENUE CODE OF 1954 (26 U.S.C. 3402(I)) IF SUCH MEMBER PRESENTS EVIDENCE OF A TAX OBLIGATION WHICH SUPPORTS SUCH WITHHOLDING; UNDER 26 U.S.C. 3402(I) THE SECRETARY OF THE TREASURY IS AUTHORIZED TO PROVIDE BY REGULATION FOR INCREASES IN THE AMOUNT OF FEDERAL INCOME TAX WITHHOLDINGS OTHERWISE REQUIRED IN CASES WHERE CERTAIN TAXPAYERS, INCLUDING RETIRED MILITARY PERSONNEL, REQUEST THE ADDITIONAL WITHHOLDINGS. /3/ THE IMPLEMENTING REGULATIONS PROVIDE THAT AFTER SEPTEMBER 30, 1981, THOSE TAXPAYERS MAY REQUEST THE DEDUCTION AND WITHHOLDING OF AN ADDITIONAL AMOUNT FROM THEIR WAGES OR RETIRED PAY, AND "(THE EMPLOYER MUST COMPLY WITH THE * * * REQUEST * * * TO THE EXTENT THAT THE AMOUNT * * * DOES NOT EXCEED THE AMOUNT THAT REMAINS AFTER THE EMPLOYER HAS DEDUCTED AND WITHHELD ALL AMOUNTS OTHERWISE REQUIRED TO BE DEDUCTED AND WITHHELD BY FEDERAL LAW." /4/

THE DEDUCTIONS DESCRIBED BY THE QUOTED PROVISIONS OF 10 U.S.C. 1408(A)(4)(C) AND (D) PARALLEL COMPARABLE DEDUCTIONS PERMITTED FROM THE GROSS RETIRED PAY OF MILITARY PERSONNEL BEFORE SUBJECTING THEIR NET RETIRED PAY TO GARNISHMENT FOR ALIMONY OR CHILD SUPPORT ARREARAGES UNDER PROVISIONS OF THE SOCIAL SECURITY ACT CODIFIED AT 42 U.S.C. 659 662. STATEMENTS CONTAINED IN THE LEGISLATIVE DOCUMENTS RELATING TO THE PASSAGE OF THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT INDICATE THAT BECAUSE NET MILITARY RETIRED PAY WAS THEN ALREADY SUBJECT TO GARNISHMENT UNDER 42 U.S.C. 659-662, CONGRESS CONCLUDED THAT PARALLEL RULES SHOULD GOVERN THE COMPUTATION OF THE NET "DISPOSABLE RETIRED OR RETAINER PAY" WHICH MAY BE APPORTIONED UNDER 10 U.S.C. 1408 IN DIVORCE PROCEEDINGS. /5/

REQUEST FOR ADDITIONAL FEDERAL INCOME TAX WITHHOLDINGS

IN THE PRESENT CASE, THE COLONEL'S FORMER SPOUSE APPLIED TO THE AIR FORCE ACCOUNTING AND FINANCE CENTER IN APRIL 1983 FOR DIRECT PAYMENT OF 41.37 PERCENT OF THE COLONEL'S RETIRED PAY UNDER 10 U.S.C. 1408(D), BY SERVING A STATE COURT ORDER SO APPORTIONING THAT PAY ON THE COMMANDER OF THE FINANCE CENTER. THE FIRST PAYMENT TO THE FORMER SPOUSE WAS MADE IN JUNE 1983 IN THE AMOUNT OF $900.92. THIS PAYMENT WAS BASED ON 41.37 PERCENT OF $2,177.71 IN DISPOSABLE RETIRED PAY FOR THAT MONTH COMPUTED AS FOLLOWS: GROSS PAY OF $2,204.80, LESS A REGULAR FEDERAL INCOME TAX WITHHOLDING DEDUCTION OF $10.59 AND A NATIONAL SERVICES LIFE INSURANCE PREMIUM DEDUCTION OF $16.50.

ON JUNE 15, 1983, THE COLONEL SENT A LETTER TO THE AIR FORCE ACCOUNTING AND FINANCE CENTER REQUESTING THAT AN ADDITIONAL $2,000 PER MONTH BE DEDUCTED FROM HIS RETIRED PAY FOR FEDERAL INCOME TAX WITHHOLDING PURPOSES. IN SUPPORT OF HIS REQUEST HE SAID THAT HE AND HIS CURRENT WIFE EXPECT TO FILE A JOINT FEDERAL INCOME TAX RETURN FOR 1983, AND HE ESTIMATED THAT THEIR COMBINED GROSS INCOME FOR THE YEAR WOULD AMOUNT TO ABOUT $132,000, BROKEN DOWN AS FOLLOWS: $26,00 FROM HIS AIR FORCE RETIRED PAY; $60,000 FROM HIS EARNINGS AS AN INVESTMENT BROKER; $10000 IN FEES FOR HIS CONSULTING AND LECTURING SERVICES; AND $36,000 FROM HIS WIFE'S EARNINGS AS A REAL ESTATE AGENT. HE FURTHER ESTIMATED THAT HE AND HIS WIFE WOULD BE ABLE TO SUBTRACT ABOUT $40,000 IN PERSONAL EXEMPTIONS, ADJUSTMENTS, AND ITEMIZED TAX DEDUCTIONS FROM THEIR GROSS INCOME ON THEIR ANNUAL INCOME TAX RETURN, SO THAT THEIR NET TAXABLE INCOME WOULD BE ABOUT $92,000.

THE COLONEL SUGGESTED THAT UNDER THE 1983 FEDERAL PROGRESSIVE INCOME TAX RATE SCHEDULES A PORTION OF THIS NET TAXABLE INCOME WOULD BE INCLUDED IN A 49-PERCENT TAX BRACKET, SO THAT THE GROSS AMOUNT OF THE AIR FORCE RETIRED PAY FOR 1983 SHOULD BE REGARDED AS BEING SUBJECT TO A FEDERAL INCOME TAX OBLIGATION OF 49 PERCENT. HE SAID THAT SINCE IT DID NOT MATTER FROM WHICH SOURCE HE HAD THE MAJORITY OF HIS TAX WITHHOLDINGS TAKEN, UNTIL HIS FORMER WIFE'S CLAIM AGAINST HIS RETIRED PAY AROSE HE HAD EARLIER ARBITRARILY ELECTED TO HAVE MOST OF HIS REGULAR FEDERAL INCOME TAX WITHHOLDINGS TAKEN FROM CIVILIAN EARNINGS RATHER THAN THE MILITARY RETIRED PAY. /6/ HE SUGGESTED THAT THIS HAD RESULTED IN A LARGE UNDERWITHHOLDING OF INCOME TAXES FROM THE MILITARY RETIRED PAY DURING THE FIRST 6 MONTHS OF 1983, IN VIEW OF THE PROJECTED 49-PERCENT INCOME TAX OBLIGATION ON THAT PAY, SO THAT PROPER COVERAGE OF THIS TAX OBLIGATION WOULD REQUIRE THE GROSS RETIRED PAY TO 0E REDUCED BY ABOUT 98 PERCENT, OR $2,000, DURING EACH OF THE LAST 6 MONTHS OF 1983 IN COMPUTING THE NET DISPOSABLE RETIRED PAY APPORTIONABLE BETWEEN HIM AND HIS FORMER SPOUSE UNDER 10 U.S.C. 1408(A)(4)(C) AND (D).

THE AIR FORCE ACCOUNTING AND FINANCE OFFICER OBSERVES THAT GRANTING THE COLONEL'S REQUEST FOR THE ADDITIONAL $2,000 INCOME TAX WITHHOLDING FOR THE MONTH OF JULY 1983 WOULD HAVE THE EFFECT OF REDUCING THE AMOUNT OF THE DISPOSABLE RETIRED PAY APPORTIONABLE BETWEEN HIM AND HIS FORMER SPOUSE THAT MONTH FROM $2,177.71 TO $177.71. THE AMOUNT PAYABLE TO THE FORMER SPOUSE WOULD IN TURN BE REDUCED FROM $900.92 TO $73.52 (THAT IS, TO 41.37 PERCENT OF $177.71). THE VOUCHER PRESENTED FOR DECISION IN THE AMOUNT OF $827.40 IN FAVOR OF THE FORMER SPOUSE REPRESENTS THE BALANCE PAYABLE TO HER FOR THAT MONTH (THAT IS, 41.37 PERCENT OF $2,000), IF IT IS CONCLUDED THAT THE COLONEL'S REQUEST CANNOT PROPERLY BE GRANTED.

ISSUES PRESENTED

THE ACCOUNTING AND FINANCE OFFICER NOTES THAT ADDITIONAL INCOME TAX WITHHOLDINGS REQUESTED BY A RETIRED SERVICE MEMBER CAN BE DEDUCTED FROM THE MEMBER'S GROSS PAY IN THE COMPUTATION OF NET "DISPOSABLE RETIRED OR RETAINER PAY" UNDER THE PROVISIONS OF 10 U.S.C. 1408(A)(4)(D), ONLY "IF SUCH MEMBER PRESENTS EVIDENCE OF A TAX OBLIGATION WHICH SUPPORTS SUCH WITHHOLDING." THE ACCOUNTABLE OFFICER GENERALLY QUESTIONS WHETHER, IN THIS CASE, THE COLONEL HAS PRESENTED SUFFICIENT "EVIDENCE" OF A "TAX OBLIGATION," WITHIN THE MEANING OF THOSE TERMS AS THEY APPEAR IN 10 U.S.C. 1408(A)(4)(D), IN SUPPORT OF HIS REQUEST FOR THE ADDITIONAL $2,000 MONTHLY WITHHOLDING.

CONCERNING THE TERM "TAX OBLIGATION," THE ACCOUNTING AND FINANCE OFFICER SPECIFICALLY ASKS, IN ESSENCE, WHETHER THE METHOD PROPOSED BY THE COLONEL USING ANTICIPATED CIVILIAN EARNINGS TO SUGGEST THE EXISTENCE OF A 98- PERCENT FEDERAL INCOME TAX OBLIGATION ON THE RETIRED PAY IS ACCEPTABLE, AND IF NOT, WHAT METHOD SHOULD BE USED INSTEAD.

AS TO THE "EVIDENCE" REQUIRED TO VERIFY A TAX OBLIGATION, THE ACCOUNTING AND FINANCE OFFICER ESSENTIALLY NOTES THAT THE COLONEL'S ESTIMATES OF HIS AND HIS WIFE'S ANTICIPATED GROSS AND NET TAXABLE INCOME FOR 1983 ARE STATED IN BROAD FIGURES, AND THAT THOSE FIGURES ARE NOT SUPPORTED BY ANY VERIFYING DOCUMENTATION. THE ACCOUNTABLE OFFICER ASKS WHETHER VERIFYING DOCUMENTARY EVIDENCE OF A TAX LIABILITY IS REQUIRED UNDER 10 U.S.C. 1408(A)(4)(D), AND IF SO, WHETHER FINANCE CENTER PERSONNEL HAVE ANY DUTY TO REQUEST EMPLOYERS, BANKS, THE INTERNAL REVENUE SERVICE, ETC., TO FURNISH THAT DOCUMENTARY EVIDENCE.

THE TERM "TAX OBLIGATION" IN 10 U.S.C. 1408(A)(4)(D)

THE TERM "TAX OBLIGATION" AS USED IN 10 U.S.C. 1408(A)(4)(D) IS NOT EXPRESSLY DEFINED IN THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT, OR IN THE PROPOSED IMPLEMENTING REGULATIONS PUBLISHED BY THE SECRETARY OF DEFENSE. /7/ IN THE PARTICULAR STATUTORY CONTEXT IN WHICH IT IS USED, HOWEVER, THE TERM OBVIOUSLY REFERS TO A FEDERAL INCOME TAX OBLIGATION WARRANTING ADDITIONAL TAX WITHHOLDINGS FROM MILITARY RETIRED PAY, BEYOND THE REGULAR WITHHOLDINGS AUTHORIZED OR REQUIRED BY LAW WHICH ARE REFERRED TO IN 10 U.S.C. 1408(A)(4)(C). WHILE GENERALLY UNDER 26 U.S.C. 3402(I), AND IMPLEMENTING INTERNAL REVENUE SERVICE REGULATIONS, AN EMPLOYEE IS ENTITLED TO HAVE THE EMPLOYER WITHHOLD ADDITIONAL AMOUNTS FROM HIS WAGES, THE LANGUAGE USED IN 10 U.S.C. 1408(A)(4)(C) AND (D) INDICATES THAT FOR THE PURPOSE OF COMPUTING THE MEMBER'S DISPOSABLE RETIRED PAY THE TAX WITHHOLDING WAS NOT TO BE WITHOUT LIMIT. MOREOVER, WE GENERALLY RECOGNIZE THAT THE PURPOSE OF DEDUCTING TAXES FROM WAGES AT THE SOURCE IS TO CAUSE THE WITHHOLDING OF THE APPROXIMATE AMOUNT OF THE ULTIMATE TAX LIABILITY WHICH WILL BE IMPOSED ON THAT INCOME. THE PROPOSED REGULATIONS OF THE SECRETARY OF DEFENSE ARE CONSISTENT WITH THAT PRINCIPLE IN PROVIDING THAT IN THE COMPUTATION OF NET MONTHLY DISPOSABLE RETIRED OR RETAINER PAY, DEDUCTIONS OF TAX WITHHOLDINGS FROM GROSS RETIRED PAY UNDER 10 U.S.C. 1408(A)(4)(C) AND (D) ARE AUTHORIZED ONLY "TO THE EXTENT THAT THE AMOUNT DEDUCTED IS CONSISTENT WITH THE MEMBER'S TAX LIABILITY." /8/ CONSEQUENTLY, OUR VIEW IS THAT IN COMPUTING MONTHLY "DISPOSABLE RETIRED OR RETAINER PAY," THE DEDUCTIONS OF FEDERAL TAX WITHHOLDINGS FROM GROSS RETIRED PAY UNDER 10 U.S.C. 1408(A)(4)(C) AND (D) MAY NOT BE FIXED AT A COMBINED PERCENTAGE RATE EXCEEDING THE REASONABLY ESTIMATED RATE OF THE FEDERAL INCOME TAX LIABILITY THAT WILL BE IMPOSED ON THE GROSS RETIRED PAY. WE THEREFORE FIND THAT THE ADDITIONAL "TAX OBLIGATION" UNDER 10 U.S.C. 1408(A)(4)(D) MAY PROPERLY BE EXPRESSED IN TERMS OF THE DIFFERENCE BETWEEN THE ANTICIPATED ULTIMATE RATE OF TAXATION AND THE RATE OF THE REGULAR TAX WITHHOLDINGS PRESCRIBED BY 10 U.S.C. 1408(A)(4)(C).

THUS, WE AGREE WITH THE COLONEL THAT THE ANTICIPATED CIVILIAN EARNINGS OF BOTH HIM AND HIS WIFE ARE TO BE TAKEN INTO ACCOUNT IN DETERMINING THE RATE OF THE ADDITIONAL "TAX OBLIGATION" ON THE GROSS AMOUNT OF THE MILITARY RETIRED PAY UNDER 10 U.S.C. 1408(A)(4)(D), SINCE THE AMOUNTS OF THOSE CIVILIAN EARNINGS WILL AFFECT THE OVERALL RATE OF TAXATION ULTIMATELY IMPOSED ON THE RETIRED PAY. WE ARE UNABLE TO AGREE, HOWEVER, WITH THE METHOD PROPOSED BY THE COLONEL TO SUGGEST THAT THE JULY 1983 RETIRED PAY IN QUESTION MIGHT BE SUBJECT TO FEDERAL INCOME TAXES AT THE RATE OF 98 PERCENT.

IF, AS THE COLONEL STATED HIS AND HIS WIFE'S COMBINED 1983 GROSS INCOME COULD REASONABLY HAVE BEEN ESTIMATED AT $132,000, AND THEIR NET TAXABLE INCOME AT $92,000, THEN THEIR FEDERAL INCOME TAX COMPUTED UNDER THE APPLICABLE 1983 TAX RATE SCHEDULE /9/ COULD HAVE BEEN EXPECTED TO BE $30,342. THEIR PROJECTED EFFECTIVE TAX RATE-- THAT IS, THE RATIO OF THEIR ANTICIPATED TOTAL INCOME TAXES ($30,342) TO THEIR ANTICIPATED TOTAL GROSS INCOME ($132,000)-- COULD THUS HAVE BEEN REASONABLY ESTIMATED AT 22.99 PERCENT.

OUR VIEW IS THAT IN THE ABSENCE OF MORE SPECIFIC GUIDANCE IN THE STATUTE OR REGULATIONS, IN THIS CASE A PROJECTED EFFECTIVE TAX RATE SO ESTIMATED SHOULD BE USED AS THE MAXIMUM LIMIT ON COMBINED FEDERAL INCOME TAX WITHHOLDING DEDUCTIONS WHICH MAY BE ALLOWED FROM GROSS RETIRED PAY IN THE COMPUTATION OF NET "DISPOSABLE RETIRED OR RETAINER PAY" UNDER 10 U.S.C. 1408(A)(4)(C) AND (D). WHILE WE REALIZE THAT THE RETIRED MEMBER MAY BE ENTITLED TO SUBTRACT AMOUNTS APPORTIONED TO THE FORMER SPOUSE AS SEPARATE PROPERTY OR ALIMONY FROM HIS GROSS INCOME ON HIS INCOME TAX RETURN, /10/ WE NEVERTHELESS FIND THAT THE USE OF THE MEMBER'S PROJECTED EFFECTIVE TAX RATE IN THE COMPUTATION IS THE BEST METHOD AVAILABLE OF PROVIDING A REASONABLE ESTIMATE OF THE ULTIMATE FEDERAL INCOME TAX OBLIGATION THAT MAY BE IMPOSED ON THE GROSS RETIRED PAY. WE ALSO FIND THAT THIS METHOD IS CONSISTENT WITH THE POSITION OF THE INTERNAL REVENUE SERVICE AND THE PROVISION OF THE DEPARTMENT OF DEFENSE PROPOSED REGULATIONS THAT TAX WITHHOLDINGS ON RETIRED PAY UNDER THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT ARE TO BE PREDICATED ON THE CONCEPT THAT THE RETIRED PAY CONSTITUTES "WAGES" EARNED SOLELY BY THE MEMBER AND ARE TO BE BASED SOLELY ON THE TAX LIABILITY OF THE MEMBER. SEE FOOTNOTES 4 AND 8. IN THIS CASE, THEREFORE, IF THE EVIDENCE PRESENTED BY THE COLONEL REGARDING HIS AND HIS WIFE'S ANTICIPATED GROSS INCOME AND INCOME TAX LIABILITY FOR 1983 WERE ACCEPTABLE, THEN THE COMBINED DEDUCTIONS OF FEDERAL INCOME TAX WITHHOLDINGS FROM THE JULY 1983 GROSS RETIRED PAY UNDER 10 U.S.C. 1408(A)(4)(C) AND (D) WOULD BE LIMITED TO THE PROJECTED EFFECTIVE TAX RATE AS APPLIED TO THAT PAY, I.E., TO 22.99 PERCENT OF $2,204.80, OR $506.88. SINCE THE COLONEL TOOK NO ACTION FOR THE MONTH OF JULY TO CHANGE THE NUMBER OF WITHHOLDING ALLOWANCES RELATIVE TO THE REGULAR FEDERAL INCOME TAX WITHHOLDINGS REQUIRED OR AUTHORIZED BY LAW, THE AMOUNT OF THE REGULAR INCOME TAX WITHHOLDINGS DEDUCTIBLE UNDER 10 U.S.C. 1408(A)(4)(C) REMAINS THE SAME AS IN THE PREVIOUS MONTH, $10.59. THE DIFFERENCE BETWEEN THE TOTAL PROJECTED TAX OBLIGATION ($506.88) AND THE REGULAR TAX WITHHOLDINGS ($10.59), AMOUNTING TO $496.29, WOULD BE THE MAXIMUM DEDUCTION ALLOWABLE AS AN ADDITIONAL TAX WITHHOLDING UNDER 10 U.S.C. 1408(A)(4)(D) TO COVER THE REMAINING, ADDITIONAL PORTION OF THE TOTAL TAX OBLIGATION. HENCE, IT IS OUR VIEW THAT WHILE THE COLONEL'S REQUEST FOR AN ADDITIONAL MONTHLY INCOME TAX WITHHOLDING IN THE AMOUNT OF $2,000 COULD NOT BE FULLY GRANTED UNDER 10 U.S.C. 1408(A)(4)(D), IT COULD BE ALLOWED TO THE EXTENT THAT HE HAS ASSERTED THE EXISTENCE OF AN ADDITIONAL TAX OBLIGATION IN THE LESSER AMOUNT OF $496.29, PROVIDED IT MAY PROPERLY BE CONCLUDED THAT HE HAS PRESENTED SUFFICIENT EVIDENCE IN SUPPORT OF HIS ASSERTIONS CONCERNING THAT ADDITIONAL $496.29 TAX OBLIGATION.

CONCERNING THE METHOD ADVANCED BY THE COLONEL, WE FIND THAT HIS ELECTION TO REDUCE THE REGULARLY REQUIRED WITHHOLDINGS ON THE RETIRED PAY TO A MINIMUM DURING THE FIRST HALF OF 1983 MAY NOT SERVE AS A PROPER BASIS FOR DOUBLING THE WITHHOLDING RATE ALLOWABLE UNDER 10 U.S.C. 1408(A)(4)(D) FOR THE REST OF THE TAX YEAR. WHILE WE ARE NOT PREPARED TO SAY THAT MID-YEAR ADJUSTMENTS TO TAX WITHHOLDING MAY NOT BE RECOGNIZED IF THE RETIREE DEMONSTRATES A CHANGE IN HIS PROJECTED TAX LIABILITY, THE SHIFTING OF THE TAX BURDEN TO THAT PART OF THE YEAR WHEN THE FORMER SPOUSE'S WITHHOLDING IS IN EFFECT WOULD INAPPROPRIATELY DEFEAT THE COURT-ORDERED APPORTIONMENT OF RETIRED PAY. THEREFORE, THE DOUBLING OF TAX LIABILITY FOR THE SECOND HALF OF THE TAX YEAR IN THIS CASE SHOULD NOT BE PERMITTED.

EVIDENCE OF A TAX OBLIGATION UNDER 10 U.S.C. 1408(A)(4)(D)

THE EVIDENCE OF A TAX OBLIGATION WHICH 10 U.S.C. 1408(A)(4)(D) REQUIRES A RETIRED SERVICE MEMBER TO PRESENT IN SUPPORT OF A REQUEST FOR ADDITIONAL FEDERAL INCOME TAX WITHHOLDINGS IS NOT SPECIFICALLY DESCRIBED OR DEFINED IN EITHER THE UNIFORMED SERVICES FORMER SPOUSES' , PROTECTION ACT OR IN THE PROPOSED IMPLEMENTING REGULATIONS PUBLISHED BY THE DEPARTMENT OF DEFENSE. AS INDICATED, HOWEVER, OUR VIEW IS THAT THE REQUESTED ADDITIONAL TAX WITHHOLDINGS MAY BE ALLOWED ONLY TO THE EXTENT THE MEMBER IS ABLE TO DEMONSTRATE THAT HIS PROJECTED EFFECTIVE TAX RATE IS IN EXCESS OF THE RATE OF THE REGULAR INCOME TAX WITHHOLDINGS PRESCRIBED BY 10 U.S.C. 1408(A)(4)(C). SINCE THAT EFFECTIVE TAX RATE REPRESENTS THE RATIO OF THE RETIREE'S ANTICIPATED TOTAL FEDERAL INCOME TAXES TO HIS ANTICIPATED TOTAL GROSS INCOME FOR THE YEAR, IT FOLLOWS THAT THE RETIREE HAS A DUTY TO FURNISH STATEMENTS CONCERNING HIS INTENDED FILING STATUS (SINGLE, MARRIED FILING JOINTLY, ETC.), WITH ESTIMATES OF HIS ANTICIPATED TOTAL GROSS INCOME AND NET TAXABLE INCOME FOR THE CURRENT YEAR. FURTHERMORE, BECAUSE THE STATUTE PLAINLY PLACES THE BURDEN ON THE RETIREE TO PRESENT FACTUAL EVIDENCE IN SUPPORT OF HIS REQUEST FOR ADDITIONAL WITHHOLDINGS, THE RETIREE ALSO HAS A DUTY TO FURNISH SUFFICIENT DOCUMENTARY EVIDENCE TO SUBSTANTIATE REASONABLY THESE ESTIMATES UNDERLYING HIS REQUEST. IN THE ABSENCE OF DEFINITIVE REGULATIONS ON THE SUBJECT OUR VIEW IS THAT, AT A MINIMUM, THIS DOCUMENTARY EVIDENCE SHOULD CONSIST OF COPIES OF UNALTERED TAX RECORDS, WAGE STATEMENTS, OR OTHER APPROPRIATE FINANCIAL CERTIFICATES, LEDGERS, OR ACCOUNTS, WHICH THE RETIREE CERTIFIES OR AFFIRMS ARE TRUE AND CORRECT, AND WHICH IN THE SERVICE'S VIEW ARE SUFFICIENT TO SUPPORT THE ADDITIONAL WITHHOLDING REQUESTED. IT IS ALSO OUR VIEW THAT ADDITIONAL WITHHOLDINGS ALLOWED UNDER 10 U.S.C. 1408(A)(4)(D) MAY NOT BE CONTINUED BEYOND THE DATE THE RETIREE IS REQUIRED TO FILE HIS NEXT FEDERAL INCOME TAX RETURN UNLESS THE RETIREE RENEWS HIS REQUEST FOR ADDITIONAL WITHHOLDINGS BY SUBMITTING NEW ESTIMATES AND EVIDENCE CONCERNING HIS THEN CURRENT FINANCIAL SITUATION. FAILURE OF THE RETIREE TO FURNISH ALL OF THE NECESSARY SUPPORTING EVIDENCE WILL REQUIRE THE CONCERNED ACCOUNTABLE OFFICER TO DENY OR TERMINATE ADDITIONAL WITHHOLDINGS UNDER 10 U.S.C. 1408(A)(4)(D). UNDER THE STATUTE'S PROVISIONS OBTAINING THE SUPPORTING EVIDENCE IS THE RETIREE'S RESPONSIBILITY AND NOT THE SERVICE'S.

IN THE PRESENT CASE, AS INDICATED, THE COLONEL SUBMITTED ESTIMATES OF HIS AND HIS WIFE'S COMBINED GROSS AND NET TAXABLE INCOME FOR THE YEAR WHICH IF ACCEPTABLE WOULD JUSTIFY THE DEDUCTION OF ADDITIONAL TAX WITHHOLDINGS OF $496.29 IN THE COMPUTATION OF NET "DISPOSABLE RETIRED OR RETAINER PAY" UNDER THE PROVISIONS OF 10 U.S.C. 1408(A)(4)(D). HOWEVER, SINCE HE HAS NOT SUBMITTED SUFFICIENT EVIDENCE TO SUPPORT THE ADDITIONAL WITHHOLDING, HIS REQUEST FOR ADDITIONAL TAX WITHHOLDINGS UNDER THE PROVISIONS OF 10 U.S.C. 1408(A)(4)(D) MAY NOT BE ALLOWED.

INCOME TAX CONSEQUENCES

WE WISH TO EMPHASIZE THAT THE CONCLUSIONS REACHED IN THIS DECISION RELATE SOLELY TO THE COMPUTATION OF NET "DISPOSABLE RETIRED OR RETAINER PAY" AS THAT TERM IS DEFINED UNDER 10 U.S.C. 1408(A)(4). AUTHORITATIVE REVENUE RULINGS CONCERNING THE WITHHOLDING OF FEDERAL TAXES FROM INCOME, AS WELL AS RULINGS CONCERNING THE INCOME TAX LIABILITIES AND WITHHOLDING CREDITS OF INDIVIDUAL TAXPAYERS, ARE RESERVED BY STATUTE FOR DETERMINATION PRIMARILY BY THE DEPARTMENT OF THE TREASURY, INTERNAL REVENUE SERVICE, AND ARE NOT WITHIN OUR JURISDICTION. /11/ HENCE, WHILE IN THIS CASE WE HAVE DECIDED THAT THE COLONEL'S REQUEST IS NOT A PROPER BASIS FOR A REDUCTION IN THE AMOUNT OF THE DISPOSABLE RETIRED PAY APPORTIONABLE BETWEEN HIM AND HIS FORMER SPOUSE UNDER THE PROVISION OF THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT, /12/ THE CONCERNED REVENUE AUTHORITIES MAY WELL DETERMINE THAT THE COLONEL'S REQUEST FOR ADDITIONAL INCOME TAX WITHHOLDINGS FROM THE AMOUNT OF RETIRED PAY REMAINING TO HIM AFTER THE APPORTIONMENT TO HIS FORMER SPOUSE SHOULD OTHERWISE BE GRANTED TO THE MAXIMUM EXTENT ALLOWABLE UNDER 26 U.S.C. 3402(I) AND 26 C.F.R. 31.3402(I)- 2.

CONCLUSION

THE QUESTIONS PRESENTED ARE ANSWERED ACCORDINGLY. THE VOUCHER PRESENTED FOR DECISION IS RETURNED FOR PAYMENT, IF OTHERWISE CORRECT.

/1/ THIS ACTION IS IN RESPONSE TO A REQUEST FROM LIEUTENANT COLONEL WILLIAM F. FLYNN, JR., USAF, ACCOUNTING AND FINANCE OFFICER, AIR FORCE ACCOUNTING AND FINANCE CENTER, FOR AN ADVANCE DECISION CONCERNING THE PROPRIETY OF APPROVING A VOUCHER IN THE AMOUNT OF $827.40 IN FAVOR OF THE COLONEL'S FORMER SPOUSE, REPRESENTING THE ADDITIONAL AMOUNT DUE HER FOR THE MONTH OF JULY 1983 IF IT IS CONCLUDED THAT THE COLONEL MAY NOT BE ALLOWED ADDITIONAL TAX WITHHOLDINGS IN THE COMPUTATION OF "DISPOSABLE RETIRED OR RETAINER PAY" UNDER THAT ACT. THE REQUEST WAS FORWARDED HERE BY THE HEADQUARTERS, UNITED STATES AIR FORCE, AFTER IT WAS APPROVED AND ASSIGNED SUBMISSION NUMBER DO-AF-1429 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

/2/ TITLE X, PUBLIC LAW 97-252, APPROVED SEPTEMBER 8, 1982, 96 STAT. 730, 10 U.S.C. 1401 NOTE. SEE, GENERALLY, S. REP. NO. 502 97TH CONG., 2D SESS., REPRINTED IN 1982 U.S.C. CONG.& AD NEWS 1596-1625; AND H.R. CONF. REP. NO. 749, 97TH CONG., 2D SESS. 165-168, REPRINTED IN 1982 U.S.C. CONG.& AD.NEWS 1569, 1570-74.

/3/ THIS PROVISION IS DERIVED FROM SECTION 203 OF THE REVENUE ACT OF 1951, PUBLIC LAW 183, 82D CONGRESS, APPROVED OCTOBER 20, 195165 STAT. 480, 26 U.S.C. 3402(A), WHICH WAS DESIGNED TO ENCOURAGE GENERALLY INCREASES IN WITHHOLDING AT THE SOURCE. SEE H.R. REP. NO. 586, 82D CONG., 1ST SESS., REPRINTED IN 1951 U.S.C. CONG.& AD.NEWS 1781, 1891; S. REP. NO. 781 (PART 2), 82D CONG. 1ST SESS. 12.

/4/ 48 FED.REG. 44,072-75 (1983) (ADDING 26 C.F.R. 31.3402(I)-2). IN A LETTER OPINION DATED MAY 31, 1983 (CC:IND:I:1:2-3E9712), THE INTERNAL REVENUE SERVICE ADVISED THE DEPARTMENT OF DEFENSE THAT MILITARY RETIRED PAY SHOULD BE TREATED AS WAGES SOLELY OF THE MEMBER FOR TAX WITHHOLDING, AND AMOUNTS PAID DIRECTLY TO A FORMER SPOUSE UNDER THE UNIFORMED SERVICES FORMER SPOUSES' PROTECTION ACT SHOULD NOT AGAIN BE PROCESSED FOR FEDERAL INCOME TAX WITHHOLDING.

/5/ SEE S. REP. NO. 502, CITED ABOVE (FOOTNOTE 2), AT PAGE 14, REPRINTED IN 1982 U.S.C. CONG.& AD.NEWS AT PAGE 1609.

/6/ THIS ELECTION INVOLVED THE FILING OF WITHHOLDING ALLOWANCE OR EXEMPTION CERTIFICATES (IRS FORMS W-4) IN WHICH HE CLAIMED WITHHOLDING ALLOWANCES FOR ESTIMATED TAX DEDUCTIONS ON THE MILITARY RETIRED PAY RATHER THAN THE CIVILIAN EARNINGS. SEE 26 C.F.R. 3402(F)(1)-1 ET SEQ.; 26 C.F.R. 31.3402(M)-1(C)(2).

/7/ 48 FED.REG. 4003 (1983) (TO BE CODIFIED AT 32 C.F.R.PT. 63) (PROPOSED JANUARY 28, 1983, UNDER THE AUTHORITY OF 10 U.S.C. 1408(H)). LIKEWISE, THE PARALLEL PROVISIONS OF THE FEDERAL GARNISHMENT STATUTES AND REGULATIONS CONTAIN NO EXPRESS DEFINITION OF A "TAX OBLIGATION." U.S.C. 662(G) AND 5 C.F.R. 581.105(C).

/8/ SEE PROPOSED 32 C.F.R. 63.6(E)(2)(IV) AT 48 FED.REG. 4006. THE MILITARY AND NAVAL DEPARTMENTS AT 48 FED.REG. 4004 WERE ORDERED TO FOLLOW THE PROVISIONS OF THE PROPOSED REGULATIONS THROUGHOUT 1983 PENDING THE ISSUANCE OF FINAL REGULATIONS.

/9/ 26 U.S. C. 1(A), "MARRIED INDIVIDUALS FILING JOINT RETURNS."

/10/ SEE, GENERALLY, 26 U.S.C. 61, 62, 71, 215. AS WILL BE DISCUSSED IN GREATER DETAIL, HOWEVER, WE HAVE NO JURISDICTION TO RENDER AUTHORITATIVE DECISIONS CONCERNING TAXPAYERS' ULTIMATE INCOME TAX OBLIGATIONS.

/11/ 26 U.S.C. 3402(A), 3403, 3404, 6301, 6302, 7801, AND 7802. COMPARE, E.G., MATTER OF MARTIN, 58 COMP.GEN. 528 (1979), AND CASES THERE CITED.

/12/ THIS DECISION IS RENDERED UNDER THE AUTHORITY OF 31 U.S.C. 3526(A) AND (D), 3529, AND 3702.