B-149989, OCT. 1, 1963, 43 COMP. GEN. 311

B-149989, OCT. 1, 1963, 43 COMP. GEN. 311

PAY - READJUSTMENT PAYMENT TO RESERVISTS ON INVOLUNTARY RELEASE - REFUND. PAY - READJUSTMENT PAYMENT TO RESERVISTS ON INVOLUNTARY RELEASE - REFUND. PAY - READJUSTMENT PAYMENT TO RESERVISTS ON INVOLUNTARY RELEASE - ELECTION. PAY - READJUSTMENT PAYMENT TO RESERVISTS ON INVOLUNTARY RELEASE - ELECTION. PAY - READJUSTMENT PAYMENT TO RESERVISTS ON INVOLUNTARY RELEASE - REFUND A RESERVE OFFICER INVOLUNTARILY RELEASED FROM ACTIVE DUTY JUNE 30, 1962, UNDER AN ELECTION MADE IN MAY 1962, WHO IS PAID READJUSTMENT PAY COMPUTED UNDER THE ACT OF JULY 9, 1956 (50 U.S.C. 1016), AND A SUPPLEMENTAL PAYMENT PURSUANT TO THE AMENDATORY ACT OF JUNE 28, 1962, WHICH WHEN COMBINED WITH THE AMOUNT RECEIVED AT THE TIME OF HIS RELEASE EQUALS THE AMOUNT OF THE READJUSTMENT PAY TO WHICH ENTITLED UNDER THE AMENDATORY ACT MAY NOT BE PERMITTED TO RETAIN THE FIRST PAYMENT COMPUTED UNDER THE 1956 ACT AND REFUND THE ADDITIONAL AMOUNT COMPUTED IN ACCORDANCE WITH THE 1962 ACT IN ORDER UPON FUTURE RETIREMENT FROM ACTIVE DUTY AS A MASTER SERGEANT TO BE ENTITLED TO RECEIVE RETIRED PAY WITHOUT ANY DEDUCTION ON ACCOUNT OF THE READJUSTMENT PAY RECEIVED, THE ACT OF JUNE 28, 1962 CONTAINING NO SAVINGS CLAUSE AUTHORIZING THE EXTENSION OF THE PROVISIONS OF THE 1956 ACT BEYOND THE EFFECTIVE DATE OF THE 1962 AMENDATORY ACT, THERE IS NO AUTHORITY OF LAW FOR THE MEMBER TO RETAIN THE PAYMENT RECEIVED UNDER THE 1956 ACT AND REFUND THE ADDITIONAL AMOUNT RECEIVED IN ACCORDANCE WITH THE 1962 AMENDMENT. UNDER 50 U.S.C. 1016 (C), WHICH PROVIDES FOR REIMBURSEMENT OF 75 PERCENT OF THE TOTAL READJUSTMENT PAY RECEIVED BY RESERVE OFFICERS QUALIFYING FOR RETIRED PAY UPON COMPLETION OF 20 YEARS OF ACTIVE SERVICE UNDER ANY PROVISION OF TITLE 10 OR 14, U.S.C. TO AFFORD THEM A REASONABLE ALLOWANCE FOR THE INCOME TAX PAID ON THE READJUSTMENT PAY PRIOR TO QUALIFYING FOR RETIRED PAY, A MEMBER WHO HAS NOT QUALIFIED FOR RETIRED PAY BASED ON 20 YEARS OF SERVICE HAS NOT MET THE REQUIREMENT FOR PRORATING THE REFUND OF READJUSTMENT PAY AND, THEREFORE, MAY NOT BE PERMITTED TO REFUND 75 PERCENT AND RETAIN 25 PERCENT OF THE READJUSTMENT PAY RECEIVED BY HIM. A RESERVE OFFICER WHO PRIOR TO THE ACT OF JUNE 28, 1962, AMENDING THE ACT OF JULY 9, 1956 (50 U.S.C. 1016) TO PERMIT MEMBERS TO ELECT NOT TO RECEIVE A READJUSTMENT PAYMENT UPON INVOLUNTARY RELEASE IF DESIRING TO ENLIST IN ORDER TO COMPLETE 20 YEARS OF ACTIVE SERVICE FOR RETIREMENT QUALIFICATION, ELECTED TO RECEIVE READJUSTMENT PAY, AND WHO UPON INVOLUNTARY SEPARATION ON JUNE 30, 1962 IS PAID READJUSTMENT PAY COMPUTED UNDER THE 1962 AMENDATORY ACT WITHOUT A CHOICE TO ELECT NOT TO RECEIVE THE READJUSTMENT PAY MAY REFUND THE ENTIRE AMOUNT OF THE READJUSTMENT PAY RECEIVED AND UPON SUBSEQUENTLY QUALIFYING FOR RETIRED PAY MAY BE PAID RETIRED PAY WITHOUT FURTHER DEDUCTION FOR THE READJUSTMENT PAY, THE 1956 ACT AUTHORIZING REFUND OF READJUSTMENT PAYMENTS TO RESERVISTS ENLISTING TO QUALIFY FOR RETIREMENT WITH 20 YEARS OF ACTIVE SERVICE REMAINING UNAFFECTED BY THE 1962 AMENDATORY ACT. THE ACCEPTANCE OF THE READJUSTMENT PAY AUTHORIZED UNDER THE ACT OF JULY 9, 1956, AS AMENDED, 50 U.S.C. 1016, FOR RESERVE OFFICERS UPON INVOLUNTARY RELEASE IS NOT MANDATORY, 50 U.S.C. 1016 (A) PROVIDING THAT A MEMBER OF A RESERVE COMPONENT WHO IS INVOLUNTARY RELEASED IS ENTITLED TO A LUMP-SUM READJUSTMENT PAYMENT, AND NOTHING IN THE ACT OR LEGISLATIVE HISTORY DEMONSTRATING AN INTENT TO MAKE ACCEPTANCE OF READJUSTMENT PAY MANDATORY. ONCE A RIGHT HAS BEEN EXERCISED THERE IS NOTHING TO WAIVE, AS THE TERM "WAIVER" IS NOT ASSOCIATED WITH AN ACCOMPLISHED PAYMENT, BUT IS AN INTENTIONAL RELINQUISHMENT OR ABANDONMENT OF A KNOWN RIGHT OR PRIVILEGE, THEREFORE, UPON ACCEPTANCE OF READJUSTMENT PAY A MEMBER OF THE UNIFORMED SERVICES HAS NOTHING TO WAIVE; HOWEVER, IF ALLOWED TO REFUND THE AMOUNT OF THE READJUSTMENT PAYMENT RECEIVED, THE MEMBER IS PLACED IN THE SAME POSITION AS IF HE HAD NOT RECEIVED READJUSTMENT PAY INSOFAR AS RETIRED PAY IS CONCERNED, AND THE EFFECT OF SUCH A REFUND WITH RESPECT TO TAXES IS FOR CONSIDERATION BY THE INTERNAL REVENUE SERVICE AND STATE TAX AGENCIES.

TO THE SECRETARY OF DEFENSE, OCTOBER 1, 1963:

REFERENCE IS MADE TO THE LETTER OF APRIL 5, 1963, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER), PRESENTING FOR DECISION THE QUESTIONS CONTAINED IN COMMITTEE ACTION NO. 315 OF THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE RELATIVE TO PAYMENTS OR READJUSTMENT PAY UNDER AUTHORITY OF THE ACT OF JULY 9, 1956, CH. 534, 70 STAT. 517, AS AMENDED, 50 U.S.C. 1016, AS FURTHER AMENDED BY PUBLIC LAW 87-509, AS APPROVED JUNE 28, 1962, 76 STAT. 120. THE QUESTIONS PRESENTED ARE AS FOLLOWS:

1. MAY READJUSTMENT PAY AUTHORIZED AND PAID UNDER 50 U.S.C. 1016 TO A RESERVE MEMBER SEPARATED INVOLUNTARILY AFTER 28 JUNE 62, EFFECTIVE DATE OF PUB.L. 87-509, BE ADJUSTED UNDER THE CIRCUMSTANCES STATED HEREIN?

2. MAY SUCH READJUSTMENT PAY, ONCE PAID, BE WAIVED RETROACTIVELY TO PERMIT RECEIPT, WITHOUT DEDUCTION, OF RETIRED PAY UPON FUTURE RETIREMENT?

3. MAY SUCH READJUSTMENT PAY BE WAIVED PRIOR TO RECEIPT THEREOF TO PERMIT RECEIPT, WITHOUT DEDUCTION, OF RETIRED PAY UPON FUTURE RETIREMENT?

QUESTION 1 INVOLVES A RESERVE OFFICER WHO WAS INVOLUNTARILY RELEASED FROM ACTIVE DUTY ON JUNE 30, 1962, AT WHICH TIME HE WAS PAID READJUSTMENT PAY IN THE AMOUNT OF $4,725, COMPUTED UNDER 50 U.S.C. 1016 IN EFFECT PRIOR TO JUNE 28, 1962, BASED ON AN ELECTION FILED BY HIM IN MAY 1962. WITHOUT BEING GIVEN AN OPPORTUNITY TO MAKE AN ELECTION UNDER THE NEW LAW, THE OFFICER WAS PAID A SUPPLEMENTAL AMOUNT OF $7,875, WHICH, WHEN COMBINED WITH THE AMOUNT RECEIVED AT THE TIME OF HIS RELEASE, IS EQUAL TO THE AMOUNT OF THE READJUSTMENT PAY TO WHICH HE WAS ENTITLED UNDER 50 U.S.C. 1016 AS AMENDED BY PUBLIC LAW 87 509. HE IS NOW SERVING ON ACTIVE DUTY AS A MASTER SERGEANT AND IS CONTEMPLATING FUTURE RETIREMENT UPON POSSIBLE QUALIFICATION IN 1964 BASED ON LENGTH OF SERVICE.

THE MEMBER'S FIRST REQUEST IS THAT HE BE PERMITTED TO RETAIN THE ORIGINAL PAYMENT OF $4,725, REIMBURSE THE GOVERNMENT IN THE AMOUNT OF $7,875, THE AMOUNT OF THE SECOND CHECK, AND BE ENTITLED TO RECEIVE RETIRED PAY IN THE FUTURE WITHOUT ANY DEDUCTION ON ACCOUNT OF READJUSTMENT PAY RECEIVED. APPROVE THAT REQUEST WOULD, IN EFFECT, RECOGNIZE AUTHORITY TO MAKE A PAYMENT, INCIDENT TO A SEPARATION AFTER THE EFFECTIVE DATE OF THE 1962 AMENDING STATUTE, COMPUTED UNDER THE LAW IN EFFECT PRIOR TO THE AMENDMENT. THE ULTIMATE BENEFIT TO SUCH MEMBER, IN THE EVENT HE ACTUALLY QUALIFIES FOR RETIRED PAY IN THE FUTURE BASED ON 20 YEARS OF ACTIVE SERVICE, MAY BE LESS UNDER THE AMENDING STATUTE OF JUNE 28, 1962, THAN IT WOULD HAVE BEEN IF HIS RELEASE HAD OCCURRED PRIOR TO THAT DATE. SINCE THE ACT OF JUNE 28, 1962, CONTAINS NO SAVINGS CLAUSE, HOWEVER, THERE IS NO AUTHORITY FOR EXTENDING THE PROVISIONS OF THE OLD LAW BEYOND THE EFFECTIVE DATE OF THAT AMENDING STATUTE. HENCE, THERE IS NO AUTHORITY OF LAW FOR PERMITTING THE MEMBER TO RETAIN THE PAYMENT RECEIVED COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE 1956 ACT AND TO REFUND THE ADDITIONAL AMOUNT COMPUTED IN ACCORDANCE WITH THE 1962 AMENDMENT.

THE MEMBER'S SECOND REQUEST IS THAT HE BE PERMITTED TO REIMBURSE THE GOVERNMENT 75 PERCENT OF THE TOTAL READJUSTMENT PAY PAID TO HIM, $9,450, WHICH REPRESENTS THE AMOUNT WHICH WOULD HAVE TO BE REPAID BEFORE HE COULD START DRAWING RETIRED PAY IF RETIRED IN THE FUTURE WITH 20 YEARS OF ACTIVE SERVICE. SUBSECTION (C) OF 50 U.S.C. 1016 AS AMENDED BY THE ACT OF JUNE 28, 1962, PROVIDES AS FOLLOWS:

(C) A MEMBER OF A RESERVE COMPONENT WHO HAS RECEIVED A READJUSTMENT PAYMENT UNDER THIS SECTION AFTER THE DATE OF ENACTMENT OF THIS AMENDED SUBSECTION AND WHO QUALIFIES FOR RETIRED PAY UNDER ANY PROVISION OF TITLE 10 OR TILE 14, U.S.C. THAT AUTHORIZES HIS RETIREMENT UPON COMPLETION OF 20 YEARS OF ACTIVE SERVICE, MAY RECEIVE THAT PAY SUBJECT TO THE IMMEDIATE DEDUCTION FROM THAT PAY OF AN AMOUNT EQUAL TO 75 PERCENT OF THE AMOUNT OF THE READJUSTMENT PAYMENT, WITHOUT INTEREST.

SINCE THE MEMBER IN QUESTION HAS NOT QUALIFIED FOR RETIRED PAY BASED ON 20 YEARS OF ACTIVE SERVICE, THERE IS NO PROVISION OF LAW AUTHORIZING THE REFUND AT THIS TIME OF 75 PERCENT AND RETENTION OF 25 PERCENT OF THE READJUSTMENT PAY RECEIVED BY HIM. AS BROUGHT OUT IN THE LEGISLATIVE HISTORY OF THE 1962 ACT, THE REASON FOR REQUIRING REPAYMENT OF ONLY 75 PERCENT RATHER THAN THE TOTAL READJUSTMENT PAY WAS TO AFFORD A REASONABLE ALLOWANCE FOR INCOME TAXES PAID ON THE READJUSTMENT PAY PRIOR TO QUALIFYING FOR RETIRED PAY. SEE H.REPT.NO. 1007, 87TH CONG., 1ST SESS. 6; S.REPT.NO. 1096, 87TH CONG., 1ST SESS. 4, 6. THE AMOUNT OF HIS READJUSTMENT PAY IS FIXED AT $12,600 AND MAY NOT BE PRORATED FOR REFUND SINCE THE MEMBER HAS NOT QUALIFIED FOR RETIRED PAY BASED ON 20 YEARS OF ACTIVE SERVICE. HENCE, THERE IS NO AUTHORITY OF LAW FOR PERMITTING HIM TO REFUND $9,450 AT THIS TIME.

THE MEMBERS'S THIRD REQUEST IS THAT HE BE PERMITTED TO REIMBURSE THE GOVERNMENT THE FULL AMOUNT OF READJUSTMENT PAY HE RECEIVED, ON THE BASIS OF AN ELECTION NOT TO ACCEPT READJUSTMENT PAY. IT IS CLEAR THAT IN MAY 1962 WHEN THE MEMBER FILED CLAIM FOR THE READJUSTMENT PAYMENT THE ONLY READJUSTMENT PAYMENT AUTHORIZED WAS A HALF-MONTH'S PAY FOR EACH YEAR OF ACTIVE SERVICE, IN THE AMOUNT OF $4,725, WHICH UNDER THE LAW IN EFFECT AT THAT TIME WOULD NOT BE DEDUCTED FROM RETIRED PAY. THAT CLAIM THEREFORE DOES NOT DETERMINE HIS RIGHTS UNDER THE NEW LAW. THE MEMBER CONTENDS THAT HAD HE BEEN GIVEN A CHOICE UNDER THE NEW LAW HE WOULD NOT HAVE CLAIMED READJUSTMENT PAY BECAUSE OF THE REFUND REQUIREMENT UPON RETIREMENT AND THE INCOME TAX IMPACT IN HIS CASE. IN THE CIRCUMSTANCES IT IS REASONABLY CLEAR THAT THE MEMBER WOULD NOT HAVE CLAIMED THE READJUSTMENT PAY UNDER THE NEW LAW. ACCORDINGLY, THE MEMBER MAY REFUND THE ENTIRE AMOUNT OF THE READJUSTMENT PAYMENT. COMPARE 41 COMP. GEN. 384; ID. 614.

QUESTIONS 2 AND 3 OF THE COMMITTEE ACTION DEAL WITH POSSIBLE WAIVER OF A MEMBER'S RIGHT TO READJUSTMENT PAY. ORDINARILY THE TERM "WAIVER" IS NOT ASSOCIATED WITH AN ACCOMPLISHED PAYMENT. A WAIVER HAS BEEN DEFINED AS AN INTENTIONAL RELINQUISHMENT OR ABANDONMENT OR A KNOWN RIGHT OR PRIVILEGE. JOHNSON V. ZERBST, 304 U.S. 458, 464. ONCE THE RIGHT HAS BEEN EXERCISED, AS IN THIS CASE ACCEPTANCE OF THE READJUSTMENT PAY, IT WOULD SEEM THAT THE MEMBER OR FORMER MEMBER HAD NOTHING TO WAIVE. HOWEVER, IF THE MEMBER IS ALLOWED TO REFUND THE AMOUNT OF THE READJUSTMENT PAY HE RECEIVED, HE WOULD BE PLACED IN THE SAME POSITION AS IF HE HAD NOT RECEIVED READJUSTMENT PAY INSOFAR AS RETIRED PAY IS CONCERNED. THE EFFECT OF SUCH A REFUND WITH RESPECT TO TAXES IS FOR CONSIDERATION OF THE INTERNAL REVENUE SERVICE AND STATE TAX AGENCIES.

ONE OF THE EXPRESSED PURPOSES OF THE 1962 AMENDMENT INCREASING THE AMOUNT OF READJUSTMENT PAY WAS TO EQUALIZE SUCH PAYMENTS TO RESERVISTS WITH PAYMENTS RECEIVED BY REGULARS WHO ARE INVOLUNTARILY SEPARATED. UNDERSTAND THAT UNDER EXISTING PROCEDURES IN THE DEPARTMENT OF DEFENSE A REGULAR OFFICER SCHEDULED FOR INVOLUNTARY RELEASE WHO DESIRES TO ENLIST IN ORDER TO COMPLETE 20 YEARS OF ACTIVE SERVICE FOR RETIREMENT QUALIFICATION MUST MAKE HIS INTENTION KNOWN PRIOR TO SEPARATION AND THAT IN THOSE CASES THE OFFICER IS NOT RELEASED INVOLUNTARILY BUT RESIGNS. HE RECEIVES NO SEVERANCE PAY. THE LEGISLATIVE HISTORY OF THE ACT OF JUNE 28, 1962, INDICATES THAT THE SAME PROCEDURE HAS BEEN PROPOSED FOR RESERVE OFFICERS WHO DESIRE TO ENLIST IN ORDER TO QUALIFY FOR RETIREMENT AFTER 20 YEARS OF ACTIVE SERVICE. IF A RESERVE OFFICER WHO HAS RECEIVED READJUSTMENT PAY LATER SERVES ON ACTIVE DUTY AS AN ENLISTED MEN AND REFUNDS THE ENTIRE AMOUNT OF READJUSTMENT PAY HE HAD RECEIVED, HE WOULD BE IN THE SAME POSITION AS THE REGULAR OFFICER WHO RESIGNED AND THEN ENLISTED. IF SUCH OFFICER SUBSEQUENTLY QUALIFIES FOR RETIREMENT WITH 20 YEARS OF ACTIVE SERVICE, HIS RETIRED PAY WOULD NOT BE SUBJECT TO A DEDUCTION ON ACCOUNT OF READJUSTMENT PAY, INASMUCH AS AFTER REFUNDING THE READJUSTMENT PAY HE WOULD NO LONGER BE IN RECEIPT OF READJUSTMENT PAY.

SUBSECTION (F) OF 50 U.S.C. 1016, PROVIDED AS FOLLOWS:

(F) REDUCTION BY PRIOR PAYMENTS.

ANY PAYMENT ACCRUING TO A PERSON UNDER THIS SECTION SHALL BE REDUCED BY THE AMOUNT OF ANY PAYMENT PREVIOUSLY RECEIVED BY THAT PERSON UNDER THIS SECTION, UNLESS HE HAS ALREADY REFUNDED THE PRIOR PAYMENT TO THE UNITED STATES. IF HE HAS REFUNDED THE EARLIER PAYMENT, THE PERIOD COVERED BY THE EARLIER PAYMENT SHALL BE CONSIDERED AS A PERIOD FOR WHICH NO PAYMENT HAS BEEN MADE UNDER THIS ACT.

THE ABOVE PROVISION WAS INCLUDED IN THE ORIGINAL ACT AUTHORIZING READJUSTMENT PAYMENTS TO RESERVISTS, 70 STAT. 518, AND WAS CODIFIED IN 10 U.S.C. 687 (D) BY SECTION 102 OF THE ACT OF SEPTEMBER 7, 1962, PUBLIC LAW 87-651, 76 STAT. 507. THE AMENDMENT OF JUNE 28, 1962, DID NOT AFFECT THIS SUBSECTION. SINCE THE LAW THUS PROVIDES FOR REFUNDS OF READJUSTMENT PAY AND DOES NOT LIMIT THE CASES WHEREIN REFUND IS AUTHORIZED TO THOSE INVOLVING A LATER INVOLUNTARY RELEASE, QUESTION 2 IS ANSWERED BY SAYING THAT A PERSON WHO HAS RECEIVED READJUSTMENT PAY MAY REFUND THE AMOUNT THEREOF AND, UPON SUBSEQUENT QUALIFICATION FOR RETIRED PAY, MAY RECEIVE SUCH RETIRED PAY WITHOUT FURTHER DEDUCTION FOR THE READJUSTMENT PAY.

IN THE DISCUSSION ON THE FLOOR OF THE HOUSE OF REPRESENTATIVES OF H.R. 8773, WHICH WAS ENACTED AS PUBLIC LAW 87-509, CONGRESSMAN RIVERS, SPEAKING OF THE READJUSTMENT PAY THEREIN AUTHORIZED, EXPLAINED:

UNDERSTAND, THE MAN DOES NOT HAVE TO ACCEPT IT. HE CAN GO BY WAY OF TITLE II AND STAY ON AS ENLISTED MAN AND THEN RETIRE. HE DOES NOT HAVE TO TAKE THIS. OR, HE CAN GO ON TO 60 AND RETIRE UNDER TITLE III WITH 20 YEARS OF SATISFACTORY FEDERAL SERVICE.

SEE PAGE 16275 OF THE CONGRESSIONAL RECORD FOR AUGUST 29, 1961. SUBSECTION (A) OF 50 U.S.C. 1016, AS AMENDED, PROVIDED THAT "A MEMBER OF A RESERVE COMPONENT WHO IS INVOLUNTARILY RELEASED * * * IS ENTITLED TO A LUMP SUM READJUSTMENT PAYMENT * * *.' THERE IS NOTHING IN THE ACT OR IN THE LEGISLATIVE HISTORY WHICH DEMONSTRATES AN INTENT TO MAKE ACCEPTANCE OF READJUSTMENT PAY THEREUNDER MANDATORY. QUESTION 3 IS ANSWERED IN THE AFFIRMATIVE.