R. P. Newsom

• Decision Date: 14 December 1959
• Docket Number: B-141063
• Citation: 39 Comp.Gen. 438
• Parties: R. P. NEWSOM, DEPARTMENT OF THE ARMY
• Court: Comptroller General of the United States

39 Comp.Gen. 438

R. P. NEWSOM, DEPARTMENT OF THE ARMY

No. B-141063

Comptroller General of the United States

December 14, 1959

Contracts - set-off - tax debts - joint ventures a joint venture having the characteristics of a limited partnership, the laws of partnership are for application; therefore, the general rule that, in an action by a partnership to recover a debt, the defendant cannot set off an individual debt due him by one member of the firm, is for application to a federal tax debt of one of the parties to a joint venture engaged in the performance of a government contract which debt arose independently of the contract so that the debt must be regarded as that of the individual rather than the joint venture, and amounts due the joint venture under the contract May not be applied to the tax debt.

Reference is made to a letter dated October 20, 1959, with enclosures from the office of the chief of finance, field division Indianapolis, Indiana, file no. Finxe-b 167, forwarding your request of September 22, 1959, for a decision as to whether the sum of $7, 584.84 due N. Ryan company, Inc., and westbury paving corporation under contract no. Da-31- 075-eng-657, May be set off against the amount owed the government by westbury paving corporation for unpaid withholding and FICA tax assessments.

The contract was entered into on May 26, 1958, between the United States and N. Ryan company, Inc., and westbury paving Corporation, a joint venture, for an outfall ditch at seymour johnson air force base, goldsboro, north Carolina. By letter of May 25, 1959, the internal revenue service advised the department of the army that the westbury paving corporation was indebted to the United States for withholding and FICA tax assessments for the second, third and fourth quarters of 1957 and the first quarter of 1958, in the amount of $6 718.49 PLUS accrued interest computed from the due dates to the date of payment. The internal revenue service requested that the necessary steps be taken to withhold from any moneys determined to be due westbury paving corporation under the contract involved, an amount sufficient to liquidate its unpaid tax liability. There is for consideration the propriety of the withholding of funds due a joint venture to satisfy the independent prior debt of one of the joint venturers.

A joint venture has been characterized as a limited partnership (jones v. Walker, 101 n.Y.S. 22, 23), a...