B-100600, DEC. 2, 1955

B-100600, DEC. 2, 1955

TO MR. RUSSELL. T. HARRINGTON:

UNDER DATE OF JULY 29, 1955, WE TRANSMITTED TO THE INTERNAL REVENUE SERVICE THE CLAIM OF MARSHALL C. MOORE, AS LIQUIDATOR OF THE RENIE METAL PRODUCTS CORPORATION, MANSFIELD, OHIO, FOR ADDITIONAL ACCRUED INTEREST ON INCOME TAX REFUNDS DUE THE TAXPAYER FOR THE TAXABLE YEARS 1945 AND 1946, WHICH REFUNDS WERE FORWARDED HERE ON SCHEDULE NO. IT 162757, DATED DECEMBER 12, 1950.

THE BASIC AMOUNTS FOUND TO BE DUE, PLUS INTEREST TO DECEMBER 6, 1950, WERE SCHEDULED TO OUR OFFICE FOR APPROPRIATE ACTION AT THE REQUEST OF THE DEPARTMENT OF THE NAVY, FOR THE PURPOSE OF APPLYING SAID AMOUNTS AGAINST A REPORTED INDEBTEDNESS OF THE RENIE METAL PRODUCTS CORPORATION TO THE UNITED STATES IN THE SUM OF $8,089.97. BY OFFICE SETTLEMENT OF JULY 1, 1952, THE TAX REFUNDS AND INTEREST TOTALING $3,898.70, WERE CERTIFIED FOR ALLOWANCE AND SETOFF IN PARTIAL SATISFACTION OF THE REPORTED OBLIGATION. THEREAFTER, THE COURT HAVING JURISDICTION OVER THE LIQUIDATION PROCEEDINGS OF THE CORPORATION HELD THAT THE GOVERNMENT HAD NO CAUSE OF ACTION WITH RESPECT TO THE INDEBTEDNESS RAISED BY THE DEPARTMENT OF THE NAVY. ACCORDINGLY, WE AUTHORIZED RELEASE OF THE AMOUNT PREVIOUSLY SET OFF, $3,898.70, WHICH WAS PAID TO THE CLAIMANT, AS LIQUIDATOR, UNDER DATE OF MAY 11, 1955. THE FOREGOING ACTION GAVE RISE TO THE PRESENT CLAIM FOR ADDITIONAL INTEREST FROM THE DATE OF ALLOWANCE OF THE REFUNDS TO THE DATE OF PAYMENT, MAY 11, 1955.

THE CLAIM DATED JUNE 3, 1955, AS PREVIOUSLY STATED, WAS REFERRED TO YOUR PREDECESSOR FOR HIS CONSIDERATION AND APPROPRIATE ACTION PURSUANT TO THE PROVISIONS OF 26 U.S.C. 3790, WHICH VESTS IN THE HEAD OF THE BUREAU EXCLUSIVE AUTHORITY TO ALLOW INTEREST ON ANY CREDIT OR REFUND PAYABLE UNDER INTERNAL REVENUE LAWS. HOWEVER, BY LETTER OF OCTOBER 17, 1955, THE DIRECTOR, COLLECTION DIVISION, INTERNAL REVENUE SERVICE, RETURNED THE CLAIM TO US FOR SETTLEMENT, CONTENDING THAT SINCE ULTIMATE PAYMENT OF THE REFUND, WITH APPROVED INTEREST TO DECEMBER 6, 1950, WAS CHARGED TO APPROPRIATION SYMBOL NO. 20X1807, REFUND OF MONEYS ERRONEOUSLY RECEIVED AND COVERED, THE CLAIM FOR ADDITIONAL INTEREST IS NOT ONE FALLING WITHIN THE PURVIEW OF THE REVENUE STATUTES.

THE AMOUNT PREVIOUSLY AUTHORIZED FOR REFUND TO THE CORPORATION'S TRUSTEE WAS CHARGED TO REFUNDING INTERNAL-REVENUE COLLECTIONS, SYMBOL NO. 20X0903, WHEN SETOFF ACTION WAS TAKEN AT THE INSTANCE OF THE DEPARTMENT OF THE NAVY TO PROTECT THE INTERESTS OF THE UNITED STATES, AND CONSEQUENTLY THERE WAS NO LEGAL BASIS FOR CHARGING THAT APPROPRIATION AGAIN WHEN ULTIMATE PAYMENT OF THE ORIGINAL TAX REFUND TO THE CLAIMANT WAS APPROVED HERE. MOREOVER, SINCE THE ORIGINAL FUNDS WERE DEPOSITED BY CHECK DRAWN IN FAVOR OF THE TREASURY OF THE UNITED STATES TO CREDIT OF THE RECEIPT ACCOUNT "173531 RECOVERIES, EXCESS COST OVER CONTRACT PRICE," PAYMENT PROPERLY WAS MADE FROM THE ACCOUNT "REFUND OF MONEYS ERRONEOUSLY RECEIVED AND COVERED.' HOWEVER, SINCE THE ADDITIONAL INTEREST NOW CLAIMED HAS NOT HERETOFORE BEEN SO DEPOSITED, THAT ACCOUNT IS NOT AVAILABLE FOR PAYMENT OF THE INSTANT CLAIM, NOR IS THERE ANY OTHER APPROPRIATION AVAILABLE TO THE GENERAL ACCOUNTING OFFICE FOR SUCH PAYMENT.

THE FACT THAT PAYMENT OF THE ORIGINAL TAX REFUND ULTIMATELY WAS AUTHORIZED BY THIS OFFICE, AND WAS MADE FROM OTHER THAN AN APPROPRIATION MADE AVAILABLE TO THE INTERNAL REVENUE SERVICE, WOULD APPEAR TO HAVE NO BEARING ON THE NATURE OF THE CLAIM NOW PRESENTED. SUCH DEMAND REMAINS A CLAIM FOR ADDITIONAL INTEREST ON A REFUND MADE PURSUANT TO INTERNAL REVENUE STATUTES, AND THEREFORE, IS PROPERLY FOR CONSIDERATION BY THE COMMISSIONER OF INTERNAL REVENUE SERVICE. ALSO, PAYMENT OF ANY AMOUNT FOUND DUE APPEARS PROPERLY CHARGEABLE TO THE ABOVE-CITED APPROPRIATION "20X0903" SPECIFICALLY MADE AVAILABLE FOR THAT PURPOSE.

IN THE LIQUIDATOR'S CLAIM OF JUNE 3, 1955, FILED IN THE FORM OF A BRIEF, CONSIDERABLE EMPHASIS IS PLACED UPON THE PROVISIONS OF 31 U.S.C. 227, IMPOSING UPON THE COMPTROLLER GENERAL OF THE UNITED STATES THE DUTY OF WITHHOLDING A SUFFICIENT AMOUNT DUE UNDER A FINAL JUDGMENT TO COVER ANY REPORTED DEBT DUE THE UNITED STATES BY THE RESPECTIVE PLAINTIFF. THAT ACT FURTHER PROVIDES THAT IN THE EVENT THE GOVERNMENT FAILS TO PREVAIL IN ITS ACTION TO PERFECT ITS CLAIM AGAINST SUCH PLAINTIFF THE AMOUNT WITHHELD UNDER THE JUDGMENT AWARD SHALL BE PAID TO THE PLAINTIFF, TOGETHER WITH SIX PERCENT INTEREST FOR THE TIME IT WAS WITHHELD. IT IS TO BE NOTED THAT THE FOREGOING STATUTE RELATES ONLY TO JUDGMENTS RECOVERED AGAINST THE UNITED STATES AND PRESENTED TO OUR OFFICE FOR PAYMENT, PURSUANT TO WHICH APPROPRIATIONS ARE MADE BY THE CONGRESS TO SATISFY THOSE JUDGMENTS, AND FROM WHICH OUR OFFICE IS AUTHORIZED TO WITHHOLD AN AMOUNT EQUAL TO ANY REPORTED DEBT OF A PLAINTIFF. IN VIEW OF THE SPECIFIC LANGUAGE OF THAT ACT IT IS APPARENT THAT ITS PROVISIONS HAVE NO APPLICATION TO THIS CASE WHERE NO JUDGMENT HAS BEEN RENDERED AND NO APPROPRIATION MADE AS CONTEMPLATED BY THE STATUTE.

IN VIEW OF THE FOREGOING, AND HAVING REGARD FOR THE TYPE OF CLAIM INVOLVED, TOGETHER WITH THE FACT THAT THE GENERAL ACCOUNTING OFFICE HAS NEVER ASSUMED JURISDICTION IN CONNECTION WITH A CLAIM FOR INTEREST ON A TAX REFUND, THE SUBJECT CLAIM, IN THE FORM OF AN UNSIGNED COPY DATED JUNE 3, 1955, THE ORIGINAL OF WHICH HAS NEVER BEEN LOCATED IN THE FILES OF THIS OFFICE, IS TRANSMITTED HEREWITH FOR APPROPRIATE ACTION BY THE INTERNAL REVENUE SERVICE. WHILE INTEREST IS CLAIMED FOR THE PERIOD FROM APRIL 5, 1950, TO MAY 11, 1955, PAYMENT OF THE PRINCIPAL AMOUNTS DUE INCLUDED INTEREST THEREON TO DECEMBER 6, 1950.