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B-201164 1 (1981-06-08)

handle is hein.gao/gaobadjla0001 and id is 1 raw text is: O1ECISION THE COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON, 0. C. 201548 FILE:B.201164 DATE: June 8, 1981 MATTER OF: Priority between a Federal Tax Lien and an Assignment under a Government Contract Assignment of claim to proceeds under Federal Government contract must be recognized by con- tracting agency and all other Federal Govern- ment components including Internal Revenue Service, if assignee complied with filing and other requirements of Assignment of Claims Act, 31 U.S.C. § 203, even though assignee failed to perfect assignment under Uniform Comercial Code and similar State provisions. 2. Where IRS (or other Federal entity) has claim against contractor-assignor which arose before assignment was completed under Assignment of Claims Act, amount of Federal claim may be set-off against amounts otherwise due to assignee, assuming absence of no set-off clause in the contract. Assignee stands in shoes of assignor. Government's right to set off tax debts of assignor that were in exist- ence, even if not yet mature, prior to date on which assignment became effective are not extinguished by assignment, although actual set-off cannot be made until tax debt matures. 3. If Government contract contains a no set-off clause, Government cannot set-off tax debt of assignor under any circumstances. The former Administrator of on whether a Federal tax lien or tract pursuant to the Assignment has greater priority. General Services requested a decision an assignment of a Government con- of Claims Act (31 U.S.C. § 203 (1976)) The Administrator's request arose as a result of a disagreement between the Administration (GSA) and the Internal Revenue Service (IRS) over the relative priority of a Federal tax lien against a Gov- ernment contractor and the claim of the bank to which the contractor had assigned his rights under the contract. Specifically, on December 8, 1977, the contractor, PAL Industries Inc., assigned all of the proceeds due under a contract with GSA to the First Pennsylvania Bank. The bank notified GSA of the assignment on February 3, 1978, and otherwise complied with the requirements of 31 U.S.C. S 203, the Assignment of Claims Act of 1940, as amended. However, the bank did , -,, 1 ** . ,- , ,0-, * -~ .~(-.,'~( / ~~~14972(, -~ ~2J~Il DIGEST: i. 'I

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