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GAO was requested to decide what action should be taken when an agency erroneously deducts social security taxes under the Federal Insurance Contributions Act (FICA) from an employee's salary instead of Civil Service Retirement (CSR). The individual was employed by one Federal agency on a term appointment following her employment with another Federal agency; however, since she was selected from a certificate of eligibles, she was processed as a new appointee with FICA coverage. Based on her prior employment, the employee should have continued to be covered under CSR. When the error was discovered, the agency questioned what corrective action should be taken. First, the agency questioned whether the deductions could be be transferred from FICA to CSR on a retroactive basis. Second, the agency sought a waiver of the difference between the FICA and CSR deductions. GAO held that the erroneous FICA deductions should be recovered and paid into the CSR Fund and determined that the difference between the deductions should be remanded to the agency for its determination as to whether the employee should be granted a waiver.


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