In re Matter of Collection of Debts, B-189154

• Citation: 58 Comp.Gen. 501
• Decision Date: 08 May 1979
• Docket Number: B-189154
• Parties: IN THE MATTER OF COLLECTION OF DEBTS-- STATUTE OF LIMITATIONS ON ADMINISTRATIVE SETOFF
• Court: Comptroller General of the United States

58 Comp.Gen. 501

IN THE MATTER OF COLLECTION OF DEBTS-- STATUTE OF LIMITATIONS ON ADMINISTRATIVE SETOFF

No. B-189154

Comptroller General of the United States

May 8, 1979

Compensation - withholding - debt liquidation - withholding prohibited government May not withhold current salary to satisfy general debts owed by employee and May not setoff against employee's retirement account until employee withdraws contribution or claims annuity. Government has right to setoff indebtedness administratively against annuity payments or refund of retirement contribution based upon common law right long recognized by our office and the courts. Set-off - statutes of limitation effect - employee retirement funds government's right to setoff indebtedness against annuity payments or refund of retirement contribution is not subject to statute of limitations on court action by government contained in 28 U.S.C. 2415. Legislative history shows no intention to limit government's right to setoff indebtedness administratively without resort to courts.

The Honorable Alan K. Campbell, Director, Office of Personnel Management (formerly Civil Service Commission), Has Requested Our Opinion as to Whether the Provisions of 28 U.S.C. 2415 (1976), or Any Other General Statute of Limitations, in Any Way Limits An Agency's Authority to Setoff Claims By that Agency or Another Agency Against Money It Holds for An Individual.

In order to answer this question properly, we shall first discuss the general authority of the government to collect its debts and then proceed to the issue of the effect of the statute of limitations.

Debt collection and setoff

Our office is vested with broad authority to settle claims by the government of the United States or against it and to superintend the recovery of debts due the United States. See 31 U.S.C. 71 and 93 (1976). Claims procedures are found in title 4 of the "general accounting office policy and procedures manual for guidance of federal agencies." Addition, under the federal claims collection act of 1966, 31 U.S.C. 951- 953 (1976), the comptroller general and the attorney general are jointly charged with promulgating standards for collecting and compromising claims of the United States. The federal claims collections standards are contained in 4 C.F.R. Parts 101-105 (1978). Agencies are required to take aggressive action to collect all claims of the United States (4 C.F.R. 102.1), including collection by offset as prescribed in 4 C.F.R. 102.3. In collecting claims by offset agencies are instructed to use the cooperative efforts of other agencies, and all agencies are enjoined to cooperate in this endeavor. See 4 C.F.R. 102.3.

Under 5 U.S.C. 5514, a government agency May use the setoff procedure against an employee's current salary to collect a debt which arises from an erroneous payment made by the agency to or on behalf of the employee. Also, under 5 U.S.C. 5705 and 5724(f), agencies May setoff against current salary to collect unused advances for travel and transportation expenses. However, our office has long held that the government cannot withhold current salary of employees to satisfy general debts owed to the government without the employee's consent. 29 Comp.Gen. 99 (1949; 24 Id. 334, 338 (1944). Collection of such debts May be made after the employee's separation by offset against his final salary check or lump-sum payment for leave. See 29 Comp.Gen. 99, supra, and decisions cited therein.

We have also held that monies held in an employee's retirement account are not available for setoff until he is separated and withdraws his contribution or until he qualified for a retirement annuity. 39 Comp.Gen. 203 (1959). However, we have long held that once such funds become payable, the amount May be applied in liquidation of the employee's indebtedness to the United States. 39 Comp.Gen. 203, supra; 27 Id. 703 (1948); 21 Id. 1000 (1942); and 16 Id. 161 (1936). Such action is accomplished by the filing of a request with the office of personnel management under the procedures set forth in federal personnel manual supplement 831-1, subchapter s19.

It is also well recognized that the government has the common-law right which belongs to every creditor to apply the appropriated monies of his debtor, in his hands, to extinguish the debts of that debtor. United States v Cohen, 389 F.2d 689 (5th Cir. 1967). See also United States v. Munsey trust co., 332 U.S. 234, 239 (1947); gratiot v. United States, 40 U.S. 336, 370 (1841); and avant v United States, 165 F.Supp. 802 (e.D. Va. 1958). This principle has been consistently followed by this office as well. See 49 Comp.Gen. 44 (1969); 46 Id. 178, 182 (1966); and 41 Id. 85 (1960).

Statute of limitations

With the enactment of pub. L. 89-505, July 18, 1966, 80 Stat. 304 congress for the first time imposed a general statute of limitations on civil actions brought by the United States. See 28 U.S.C. 2415. The law provides in section 2415(a) that every action for money damages brought by the United States which is founded upon any contract express or implied in law or fact shall be forever barred unless the complaint is filed within 6 years after the right of action accrues. Similarly section 2415(d) imposes a 6-year statute of limitations on actions brought by the United States to recover money erroneously paid to a federal employee or member of the uniformed service.

However the congress preserved the right of offset or counterclaim in section 2415(f) of title 28, U.S.C. Which provides as follows:

(f) the provisions of this section shall not prevent the assertion, in an action against the United States or an officer or agency thereof, of any claim of the United States or an officer or agency thereof, against an opposing party, a co-party, or a third party that arises out of the transaction or occurrence that is the subject matter of the opposing party's claim. A claim of the United States or an officer or agency thereof that does not arise out of the transaction or occurrence that is the subject matter of the opposing party's claim May, if time barred, be asserted only by way of offset and May be allowed in an amount not to exceed the amount of the opposing party's recovery.

Department of justice opinion

With regard to the application of a statute of limitations on setoff actions we have been advised that the department of justice, by letter of September 29, 1978, has sent the office of personnel management a memorandum opinion signed by Mr. John M. Harmon, assistant attorney general, office of legal counsel. The opinion concludes that where judicial enforcement of a debt is barred by 28 U.S.C. 2415, the debt May not be collected by administrative offset. The opinion refers to "administrative offset" as merely a "prejudgment attachment device, " and the opinion states that if there is no possibility of obtaining a judgment on the debt, administrative offset would be inappropriate and could not be USED. The assistant attorney general recognizes that, under the provisions of 28 U.S.C. 2415(f), the government May assert a time-barred claim by way of offset against the claim of an opposing party which does not arise out of the same transaction or occurrence, but such offset May not exceed the recovery of the opposing party on its claim. Furthermore, if the government's time-barred claim arises out of the same transaction or occurrence as the opposing party's claim, the government May assert its claim without any limitation on recovery. However, the opinion states that where a person seeks to dispute an offset, his action does not constitute a claim against the United States.

The justice memorandum opinion states that the statute of limitations was intended to allow repose to stale debts except where the debtor initiates and prevails in a claim against the United States arising out of the same or a different transaction or occurrence, and that allowing administrative setoff of time-barred debts where the debtor has not filed a claim would render the statute completely ineffective. Finally, the opinion refers to two court decisions where the offset of time-barred debts against civil service retirement benefits was at issue. The assistant attorney general agrees with the court's decision in tomakin v. United States, no. C75 1079 (n.D. Cal. 1975)(unpublished order), which holds that administrative setoff is subject to the 6-year statute of limitations contained in 28 U.S.C. 2415(a). However, he disagrees with the decision in Atwater v. Roudebush, 452 F.Supp. 622 (N.D.Ill. 1976) which holds that section 2415 has no application to administrative setoff.

Based upon our review of court decisions, prior decisions of our office, and the legislative history of the statute of limitations, 28 U.S.C. 2415, we disagree with the memorandum opinion of the assistant attorney general and conclude that section 2415 has no application to administrative setoff. Our reasons are as follows.

Discussion

The...