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McKinney: We have received the refund checks you recently sent us [1] and have deposited them in the Treasury for credit to account 20X1741. The account from which the original settlements were paid. (2) the purchase of annuities in "structured settlement" cases. have discussed the matter with our Claims Group and it is our view that the refunds should be credited to the permanent judgment appropriation. There are two reasons for this. We are currently working with the Justice Department and the Office of Management and Budget to standardize the types of information we collect in connection with certifying judgments and settlements for payment. The objective is to produce computer- generated data which will permit a more precise analysis of disbursements from the judgment appropriation.

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B-209849 December 2, 1982

Mr. Roy McKinney Director, Office of Planning, Budget and Evaluation Civil Division Department of Justice

Dear Mr. McKinney:

We have received the refund checks you recently sent us [1] and have deposited them in the Treasury for credit to account 20X1741, the account from which the original settlements were paid.

You ask whether refunds of this nature should be credited to the permanent judgment appropriation, 31 U.S.C. Sec. 1304 (former 31 U.S.C. Sec. 724a), or to "miscellaneous receipts. The refunds result from two situations: (1) the return to the united States of reversionary interests in trusts created as part of tort settlements, and (2) the purchase of annuities in "structured settlement" cases. have discussed the matter with our Claims Group and it is our view that the refunds should be credited to the permanent judgment appropriation.

There are two reasons for this. First, paragraph 2b of Treasury-GAO Joint Regulation No. 1 (copy enclosed) defines "repayments to appropriations" as including-

"Refunds to appropriations which represent amounts collected from outside sources for payments made in error, overpayments, or adjustments for previous amounts disbursed, including returns of authorized advances."

As we understand it, refunds in the annuity cases result from the purchase of an annuity for less than the amount originally estimated, and may thus be viewed as overpayments. At the very least, they would appear to be adjustments directly related to amounts previously disbursed. The trust reversions may be viewed as adjustments in the same manner, since the trust instruments clearly contemplate that some of the money may revert to the United States. Thus, refunds in both situations would qualify as prepayments" to the disbursing appropriation. (The nature of the judgment appropriation precludes any "augmentations problem.)

Second, as you may know, we are currently working with the Justice Department and the Office of Management and Budget to standardize the types of information we collect in connection with certifying judgments and settlements for payment. The objective is to produce computer- generated data which will permit a more precise analysis of disbursements from the judgment appropriation, for example, the total amount of administrative tort settlements paid in a given fiscal year or the total amount attributable to a given agency. Failure to account for refunds of the types in question may result in overstatement of the amounts disbursed. (This is certainly less of a factor in trust cases where the reversion occurs several years after the creation of the trust, but we nevertheless think that crediting to the disbursing appropriation is the better accounting procedure over the long run.)

Therefore, although we recognize that either approach is little more than a device for returning the money to the general fund of the Treasury, we think it is more appropriate to credit the refunds to the judgment appropriation. In the future, refund checks in these cases should be forwarded directly to our Claims Group (Payment Branch). The transmittal should indicate the caption of the case or the name(s) of the claimant(s), as appropriate, and our Claims Group's file designation ("z-number") wherever possible. We will then proceed to make the deposit as soon as we receive the check.

The one exception to this is where a trust was created pursuant to a specific congressional appropriation, i.e., trusts involving more than $100,GOO created before the judgment appropriation was amended in May 1977 to include the larger amounts. Here, our practice has been to deposit the refunds as miscellaneous receipts since the original disbursements were not made from the judgment appropriation. In these cases, you may make the deposit directly and notify our Claims Group of the action taken. If you do not have information readily available to enable you to identify the source of the original disbursement in a given case, you may forward the check to us and we will search our records and make the appropriate disposition.

Should further questions arise, please feel free to contact Robert Centola of this office (275-5544) or Sharon Green of our Claims Group (275-3218).

Sincerely yours,

Harry R. Van Cleve Acting General Counsel

Enclosure

1. Loren F. and Charlotte Blake settlement ($25,692); (2) Estate of Tony Lee Stark trust ($191,850.07); (3) Peggy Leach trust ($2.73). (In the Stark case, the original trust amount was $175,000. Therefore we credited this amount to 20X1741 and the balance to miscellaneous receipts.)

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