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B-244082 1 (1991-12-16)

handle is hein.gao/gaobadnzk0001 and id is 1 raw text is: i -i ', ; ComptroUer General of the United States W&Ahtgton, D,0, 20548 Decision Matter of: Dan C. Sandoval - Backpay Computation - Federal and State Taxes - Waiver File: B-244082 Date: December 16, 1991 DIGEST 1. In making deductions from an employee's backpay award, pursuant to the Office of Personnel Management regulations and instructions, net backpay for the purpose of calculating federal, state, and Medicare taxes is the balance of gross backpay less only interim net outside earnings. Interim net earnings are gross earnings less losses and certain expenses incurred in connection with the interim employment or business, but before income tax withholdings. 2, Where a backpay computation results in a net indebtedness of the employee, the debt may be considered for waiver. While amounts due for taxes and health benefits premiums are not subject to waiver under 5 U.S.C. § 5584, repayment of a lump-sum leave payment is subject to waiver under that authority. Therefore, it is waived to the extent of the employee's net indebtedness in this case. DECISION This decision is in response to a request from the Department of Veterans Affairs (VA) for clarification as to the meaning of net backpay in calculating taxes to be withheld from a backpay award. For the following reasons, we hold that net backpay for the purpose of calculating federal, state, and Medicare taxes is gross backpay less only interim outside earnings. The record shows that effective June 18, 1988, Mr. Dan C. Sandoval was retroactively reinstated after successfully appealing an involuntary jeparation from the VA. Upon reinstatement Mr. Sandoval was entitled to backpay pursuant to the Back Pay Act, 5 U.S.C. § 5596 (1988). In accordance with our decision in Angel F. Riv'era, 64 Comp. Gen. 86 (1984), the VA reduced Mr. Sandoval's gross backpay by refunded retirement contributions, a lump sum leave payment, and deductions for retirement contributions, federal and state taxes, Medicare, and health benefits. The VA

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