[Waiver of Deductions From VA Employee's Back Pay]

The Department of Veterans Affairs (VA) requested clarification regarding the calculation of net backpay for a retroactively reinstated employee who successfully appealed an involuntary separation. GAO held that: (1) for calculating taxes, VA should consider the balance of gross backpay less interim net earnings; and (2) it waived the employee's repayment of the lump-sum leave to the extent of the employee's net indebtedness for the tax deductions. Accordingly, waiver was granted.