[Request for Reconsideration of Previous Decision Concerning IRS Set-Off Authority]

The Internal Revenue Service (IRS) requested reconsideration and modification of prior GAO decisions concerning IRS set-off authority when a government contract containing a "no set-off clause" is assigned. GAO held that a lender is not protected against set-off by the presence of a no set-off clause in an assigned contract unless the assignment was made to secure the assignee's loan to the assignor and only if the proceeds of that loan were available for use by the assignor in performing the assigned contract. GAO further held that, when a contract containing a no set-off clause is validly assigned, IRS cannot set off the contractor's tax debt against the contract proceeds due to the assignee, even if the tax debt was fully mature prior to the date on which the contracting agency had received notice of the assignment. Accordingly, this decision both clarified and modified several earlier GAO decisions.