B-201673,B-200520,B-193673 L/M, SEP 23, 1982, OFFICE OF GENERAL COUNSEL

B-201673,B-200520,B-193673 L/M, SEP 23, 1982, OFFICE OF GENERAL COUNSEL

PRECIS-UNAVAILABLE

MR. CALVIN J. DORN, DEPARTMENT OF THE TREASURY:

THIS IS IN RESPONSE TO THREE LETTERS FROM YOUR OFFICE REQUESTING RELIEF UNDER 31 U.S.C. SEC. 82A-1 FOR VARIOUS CUSTOMS OFFICIALS FOR LOSSES RESULTING FROM UNCOLLECTIBLE PERSONAL CHECKS. IN CONNECTION WITH THESE REQUESTS, WE REVIEWED OUR LONGSTANDING TREATMENT OF UNCOLLECTIBLE CHECK CASES IN GENERAL AND CONCLUDED THAT A NEW APPROACH IS NECESSARY. THIS RESPONSE WILL DISCUSS THAT APPROACH IN SOME DETAIL AND WILL THEN DISPOSE OF THE THREE SUBJECT CASES.

BACKGROUND

IN RECENT YEARS, WE HAVE RECEIVED A NUMBER OF REQUESTS FROM THE CUSTOMS SERVICE INVOLVING LOSSES DUE TO UNCOLLECTIBLE PERSONAL CHECKS. IN THE TYPICAL CASE, A CUSTOMS OFFICIAL RECEIVES A PERSONAL CHECK TENDERED IN PAYMENT OF CUSTOMS DUTIES OR PENALTIES OR FOR SOME OTHER OFFICIAL PURPOSE. UPON PRESENTATION TO THE DRAWEE BANK FOR PAYMENT, THE CHECK IS DISHONORED BECAUSE OF INSUFFICIENT FUNDS, FORGED SIGNATURE, ETC. THE CUSTOMS SERVICE IS UNABLE TO LOCATE THE DRAWER OR TO OTHERWISE RECOUP THE FUNDS, AND SEEKS RELIEF FROM THE GENERAL ACCOUNTING OFFICE UNDER 31 U.S.C. SEC. 82A-1. UNDER THIS STATUTE, GAO IS AUTHORIZED TO RELIEVE AN ACCOUNTABLE OFFICER FROM LIABILITY FOR THE "PHYSICAL LOSS OR DEFICIENCY OF GOVERNMENT FUNDS, VOUCHERS, RECORDS, CHECKS, SECURITIES, OR PAPERS IN HIS CHARGE" UPON CONCURRING WITH ADMINISTRATIVE DETERMINATIONS THAT THE LOSS OCCURRED WHILE THE ACCOUNTABLE OFFICER WAS ACTING IN THE DISCHARGE OF OFFICIAL DUTIES AND WITHOUT FAULT OR NEGLIGENCE ON HIS PART. IF RELIEF IS GRANTED, THE LOSS OR DEFICIENCY IS CHARGED TO CURRENT APPROPRIATIONS.

IN DECIDING THESE CASES, OUR APPROACH HAS BEEN TO LOOK AT THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR LOSS, ESPECIALLY THE DEGREE OF COMPLIANCE WITH THE CUSTOMS SERVICE'S REGULATIONS ON THE ACCEPTANCE OF PERSONAL CHECKS, FOUND AT 19 C.F.R. SEC. 24.1. WE HAVE GRANTED RELIEF WHERE THE COGNIZANT OFFICIALS COMPLIED WITH THE REGULATIONS. WE HAVE ALSO GRANTED RELIEF WHERE THE OFFICIALS FAILED TO COMPLY WITH THE REGULATIONS ON VERIFICATION OF IDENTITY SINCE THE NON-COMPLIANCE COULD NOT BE VIEWED AS THE PROXIMATE CAUSE OF THE LOSS WHEN THE CHECK IS SUBSEQUENTLY DISHONORED FOR INSUFFICIENT FUNDS. B-198582, AUGUST 27, 1980; B-195541, AUGUST 20, 1979; B-194069, APRIL 4, 1979; B-188722, OCTOBER 4, 1977. HOWEVER, WE DENIED RELIEF IN B-197324, MARCH 7, 1980, WHEN A CHECK WAS DISHONORED FOR UNAUTHORIZED SIGNATURES, PRECISELY THE SITUATION THE REGULATIONS ARE DESIGNED TO PROTECT AGAINST. WE ALSO DENIED RELIEF IN A SITUATION NOT EXPLICITLY COVERED IN THE REGULATIONS; THAT IS, PERSONAL CHECKS TENDERED FOR PURCHASES MADE AT A CUSTOMS AUCTION. B-193673, MAY 25, 1979.

ALL OF THESE CASES HAVE ONE THING IN COMMON. IN EACH CASE, WE ACCEPTED THE PREMISE THAT 31 U.S.C. SEC. 82A-1 WAS THE PROPER VEHICLE FOR CONSIDERING AND RESOLVING THE LOSS. OUR THEORY WAS THAT WHEN THE CUSTOMS OFFICIAL ACCEPTED THE CHECK, HIS "ACCOUNT" BECAME INCREASED BY THE AMOUNT OF THE CHECK, AND THE SUBSEQUENT DISHONORING CREATED A "DEFICIENCY" IN THE ACCOUNT. WHILE THERE IS A CERTAIN LOGIC TO THIS APPROACH, WE HAVE COME TO REALIZE UPON RECONSIDERATION THAT THIS IS NOT THE PROPER WAY TO TREAT ALL OF THESE CASES.

UNCOLLECTIBLE CHECKS AND ACCOUNTABLE OFFICER RELIEF LEGISLATION

A "COLLECTING OFFICER" IS ONE OF THE TRADITIONAL KINDS OF ACCOUNTABLE OFFICER, AND IT IS WELL-SETTLED THAT THIS INCLUDES CUSTOMS COLLECTORS. E.G., UNITED STATES V. PRESCOTT, 44 U.S. (3 HOW) 578, 588 (1845); UNITED STATES V. THOMAS, 82 U.S. (15 WALL) 337 (1872). THUS, A COLLECTING OFFICER IS HELD TO STRICT ACCOUNTABILITY FOR MONIES COLLECTED ON BEHALF OF THE UNITED STATES. HOWEVER, THIS DOES NOT MEAN THAT HE SHOULD BE PERSONALLY LIABLE FOR ALL TYPES OF COLLECTIONS.

IN 1923, AN OFFICIAL OF THE UNITED STATES LAND OFFICE ASKED WHETHER HE WOULD BE PERSONALLY LIABLE IF CHECKS HE RECEIVED IN PAYMENT OF FEES DUE THE UNITED STATES WERE LATER DETERMINED TO BE UNCOLLECTIBLE. THE RESULTING DECISION, 3 COMP.GEN. 403 (1924), DISCUSSED THE ACCOUNTABLE OFFICER'S LIABILITY FOR UNCOLLECTIBLE CHECKS:

"THE RECEIPT BY YOU OF A CHECK OR DRAFT IS NOT THE RECEIPT OF PAYMENT OF A FEE WHICH YOU ARE REQUIRED BY LAW TO COLLECT, AND SHOULD YOU, UPON RECEIPT OF SUCH DRAFT OR CHECK, ISSUE AN OFFICIAL RECEIPT OR OTHER EVIDENCE OF THE DISCHARGE OF AN OBLIGATION TO THE UNITED STATES YOU WOULD NOT BE PROTECTED FROM LOSS IN THE EVENT OF FAILURE, FROM ANY CAUSE, TO REDUCE THE CHECK OR DRAFT TO CASH.

"IF AN OFFICER AUTHORIZED TO RECEIVE PUBLIC MONEYS ACCEPTS A CHECK OR DRAFT IN DISCHARGE OF AN OBLIGATION DUE THE UNITED STATES AND SUCH CHECK OR DRAFT PROVES WORTHLESS HE WILL BE HELD ACCOUNTABLE AND HIS ONLY RECOURSE WILL BE AGAINST THE REMITTOR. CASE OF DOUBT OR WHERE AN OFFICER IS UNWILLING TO ASSUME THE RESPONSIBILITY OF GIVING FULL CREDIT ON A CHECK OR DRAFT, THE BETTER PROCEDURE IS TO ACCEPT THE CHECK OR DRAFT FOR COLLECTION ONLY, FULL CREDIT AND OFFICIAL RECEIPT TO BE GIVEN WHEN COLLECTION OF THE CHECK OR DRAFT HAS BEEN ACTUALLY ACCOMPLISHED." 3 COMP.GEN. AT 404.

[Missing data] A PERSONAL CHECK IN PAYMENT OF AN OBLIGATION DUE THE UNITED STATES, HE WILL NOT BE PROTECTED IF THE CHECK PROVES UNCOLLECTIBLE. HOWEVER, HE CAN PROTECT HIMSELF BY THE SIMPLE DEVICE OF MAKING IT CLEAR THAT HE IS ACCEPTING THE CHECK FOR COLLECTION ONLY, AS A MEANS OF EFFECTING PAYMENT, SATISFACTION OF THE OBLIGATION TO OCCUR ONLY WHEN COLLECTION HAS ACTUALLY BEEN MADE ON THE CHECK. THIS DISTINCTION HAD BEEN RECOGNIZED IN PRIOR DECISIONS OF THE COMPTROLLER OF THE TREASURY. 14 COMP.DEC. 565 (1908); 20 COMP.DEC. 490, 494 (1914). THE DISTINCTION HAS A STATUTORY BASIS; SPECIFICALLY, REVISED STATUTES SECS. 3009 AND 3473, NOW FOUND AT 19 U.S.C. SEC. 197 AND 31 U.S.C. SEC. 198, WHICH SPECIFY THE TYPES OF CURRENCY WHICH MAY BE USED TO PAY DEBTS DUE TO THE UNITED STATES. (IN ADDITION, 19 U.S.C. SEC. 198 AUTHORIZES THE CUSTOMS SERVICE TO ACCEPT CERTIFIED CHECKS, SUBJECT TO COLLECTION.)

STRICTLY SPEAKING, THEREFORE, THERE IS NO AUTHORITY TO ACCEPT AN UNCERTIFIED PERSONAL CHECK UNLESS IT IS ACCEPTED FOR COLLECTION ONLY, AND (WITH ONE EXCEPTION TO BE DISCUSSED LATER) AS LONG AS THE COLLECTING OFFICER ACCEPTS THE CHECK WITH THIS QUALIFICATION, HE WILL NOT BE PERSONALLY LIABLE IF IT IS DETERMINED TO BE UNCOLLECTIBLE. THE PRINCIPLE OF 3 COMP.GEN. 403 WAS FOLLOWED AND APPLIED IN SEVERAL OTHER EARLY CASES. E.G., A-27105, JUNE 21, 1929; A-24693, OCTOBER 30, 1929; A-44008, DECEMBER 2, 1936.

THE NEXT POINT TO NOTE IS THAT 31 U.S.C. SEC. 82A-1 WAS ENACTED IN 1947. FOR A LOSS OR DEFICIENCY WITHIN ITS SCOPE, THE ACCOUNTABLE OFFICER IS STRICTLY LIABLE WITHOUT REGARD TO THE PRESENCE OR ABSENCE OF NEGLIGENCE. THE ABSENCE OF NEGLIGENCE IS RELEVANT ONLY IN DETERMINING WHETHER TO GRANT RELIEF; IT DOES NOT AFFECT THE ACCOUNTABLE OFFICER'S BASIC LIABILITY. THE STATUTE WAS NOT, HOWEVER, INTENDED TO EXPAND THE LIABILITY OF ACCOUNTABLE OFFICERS. ITS PURPOSE WAS TO PROVIDE A MECHANISM FOR ADMINISTRATIVE RELIEF IN CASES WHERE THE ACCOUNTABLE OFFICER WOULD OTHERWISE BE STRICTLY LIABLE. SINCE, AS DISCUSSED ABOVE, A COLLECTING OFFICER WAS NOT STRICTLY LIABLE PRIOR TO 1947 FOR AN UNCOLLECTIBLE CHECK ACCEPTED FOR COLLECTION ONLY, IT FOLLOWS THAT THIS IS NOT A "LOSS OR DEFICIENCY" FOR PURPOSES OF SEC. 82A-1.

THE NEXT STEP IS TO APPLY THE PRINCIPLES OF 3 COMP.GEN. 403 AND ITS PROGENY TO THE THREE CASES AT HAND.

B-201673 AND B-200250

IN B-201673, A PERSONAL CHECK FOR $703.76 WAS ACCEPTED FROM A MR. ARTURO GRIMALDI ON BEHALF OF A COMPANY CALLED INTERNATIONAL TRADE, INC., IN PAYMENT OF SEVERAL WAREHOUSE ENTRY WITHDRAWALS. CUSTOMS OFFICIALS COMPLIED WITH THE IDENTITY VERIFICATION REQUIREMENTS OF 19 C.F.R. SEC. 24.1(A). THE CHECK SUBSEQUENTLY WAS RETURNED BY THE BANK ON WHICH IT WAS DRAWN BECAUSE OF INSUFFICIENT FUNDS. CUSTOMS THEN ATTEMPTED TO OBTAIN RESTITUTION. HOWEVER, IT WAS DETERMINED THAT THE COMPANY INVOLVED WAS IN RECEIVERSHIP AND LATER WENT OUT OF BUSINESS.

IN B-200520, THE OVERSEAS FRUIT COMPANY MAILED A CHECK FOR $1,133.43 TO THE UNITED STATES CUSTOMS SERVICE, NEW YORK REGIONAL OFFICE, FOR PAYMENT OF EIGHT BILLS FOR ADDITIONAL CUSTOMS DUTIES. THE CHECK WAS RETURNED DUE TO ADDITIONAL CUSTOMS DUTIES. THE CHECK WAS RETURNED DUE TO INSUFFICIENT FUNDS IN THE COMPANY'S ACCOUNT. SUBSEQUENTLY, CUSTOMS CONDUCTED AN UNSUCCESSFUL INVESTIGATION TO LOCATE THE OVERSEAS FRUIT COMPANY TO OBTAIN RESTITUTION. THE NEW YORK REGIONAL COUNSEL FINALLY RECOMMENDED THAT THE $1,133.43 BE WRITTEN OFF AS UNCOLLECTIBLE WITHOUT PREJUDICE TO FURTHER COLLECTIONS.

THE CUSTOMS REGULATIONS (19 C.F.R. PART 24) DO NOT EXPLICITLY STATE THAT PERSONAL CHECKS WILL BE ACCEPTED FOR COLLECTION ONLY. HOWEVER, ABSENT ANY INDICATION TO THE CONTRARY, IT SEEMS REASONABLE TO ASSUME THAT THE REGULATIONS ARE INTENDED TO BE CONSISTENT WITH THE TREASURY DEPARTMENT'S FISCAL REQUIREMENTS MANUAL, WHICH PROVIDES:

"ALL CHECKS RECEIVED BY ANY GOVERNMENT OFFICER ARE ACCEPTED SUBJECT TO COLLECTION. ANY CHECK CANNOT BE COLLECTED IN FULL OR IS LOST OR DESTROYED BEFORE COLLECTION, THE ADMINISTRATIVE AGENCY CONCERNED IS RESPONSIBLE FOR OBTAINING THE PROPER PAYMENT. PAYMENT BY CHECK IS NOT EFFECTIVE UNLESS AND UNTIL THE FULL PROCEEDS HAVE BEEN RECEIVED."

I TFRM SEC. 5-2010.

WE SUGGEST THAT IN THE FUTURE, WHEN ACCEPTING A PERSONAL CHECK, CUSTOMS SHOULD ENSURE THAT IT DOES NOT PROVIDE A RECEIPT PURPORTING TO DISCHARGE THE UNDERLYING OBLIGATION TO THE UNITED STATES EXCEPT UPON ACTUAL COLLECTION ON THE CHECK. 3 COMP.GEN. 403, 404, SUPRA

ACCORDINGLY, WE CONCLUDE THAT THESE CASES DO NOT PRESENT A PHYSICAL "LOSS OR DEFICIENCY" WITHIN THE SCOPE OF 31 U.S.C. SEC. 82A-1 FOR WHICH RELIEF IS REQUIRED, SINCE THE OFFICER'S ACCOUNT NEVER EFFECTIVELY RECEIVED THE PAYMENT IN QUESTION. IN THE FUTURE, THERE WILL BE NO NEED TO SUBMIT CASES OF THIS TYPE TO GAO. RATHER, IT IS THE RESPONSIBILITY OF THE CUSTOMS SERVICE TO AGGRESSIVELY PURSUE COLLECTION ACTION AGAINST THE DEBTOR UNDER THE FEDERAL CLAIMS COLLECTION ACT (31 U.S.C. SECS. 951 ET SEQ.) AND IMPLEMENTING REGULATIONS (4 C.F.R. PARTS 101-105). IN APPROPRIATE CASES, THIS CAN INCLUDE COMPROMISE, SUSPENSION, OR TERMINATION. PRIOR DECISIONS TREATING CASES OF THIS TYPE AS "SEC. 82A 1 CASES" ARE HEREBY MODIFIED ACCORDINGLY.

THIS IS NOT TO SAY THAT CUSTOMS OFFICIALS ARE FREE TO ESCAPE THE CONSEQUENCES OF THEIR OWN NEGLIGENCE. WE ARE SAYING MERELY THAT THE OFFICIAL IS NOT AUTOMATICALLY LIABLE UNDER THE STRICT STANDARDS APPLICABLE TO ACCOUNTABLE OFFICERS. IN CASES WHERE THE LOSS RESULTS FROM NEGLIGENCE ON THE PART OF A CUSTOMS OFFICIAL (AS, FOR EXAMPLE, IN B-197324, MARCH 7, 1980, NOTED ABOVE), COLLECTION CANNOT BE MADE FROM THE DEBTOR, AND THE CUSTOMS SERVICE IS FORCED TO TERMINATE COLLECTION ACTION, IT IS ENTIRELY WITHIN THE AUTHORITY OF THE CUSTOMS SERVICE TO HOLD THE CUSTOMS OFFICER RESPONSIBLE BY SO STATING IN ITS REGULATIONS. THE GUIDING PRINCIPLE HERE IS THAT A GOVERNMENT OFFICER OR EMPLOYEE MAY BE HELD PECUNIARILY LIABLE FOR LOSSES RESULTING FROM ERROR OR NEGLECT OF DUTY IF THE AGENCY HAS ISSUED ADMINISTRATIVE REGULATIONS TO THAT EFFECT. E.G., 25 COMP.GEN. 299 (1945). THIS IS A MATTER THAT SHOULD BE RESOLVED ADMINISTRATIVELY BY THE CUSTOMS SERVICE AND NOT SUBMITTED TO GAO FOR RELIEF UNDER 31 U.S.C. SEC. 82A-1, HOWEVER.

B-193673

IN THIS CASE, THE CUSTOMS SERVICE HAS ASKED US TO RECONSIDER OUR DECISION B-193673, MAY 25, 1979, DENYING RELIEF FOR UNCOLLECTIBLE PERSONAL CHECKS RECEIVED AT A CUSTOMS AUCTION SALE. WHILE, AS DISCUSSED BELOW, WE HAVE FOUND INDEPENDENT GROUNDS TO MODIFY OUR RESULT IN THIS CASE, WE BELIEVE THE SITUATION IT PRESENTS IS SIGNIFICANTLY DIFFERENT FROM THE CASES PREVIOUSLY DISCUSSED AND THEREFORE WARRANTS SEPARATE TREATMENT.

THE PRINCIPLE IN 3 COMP.GEN. 403, THAT A COLLECTING OFFICER WILL NOT BE LIABLE FOR UNCOLLECTIBLE PERSONAL CHECKS IF HE ACCEPTED THEM FOR COLLECTION ONLY, DOES NOT COVER ALL UNCOLLECTIBLE CHECKS. AS WE STATED IN ANOTHER CASE:

"IF, HOWEVER, THE RECEIPT WERE MADE CONDITIONAL UPON THE COLLECTION OF THE CHECK OR DRAFT COVERED THEREBY, THE REGISTER HAVING TAKEN UP THE AMOUNT THEREOF IN HIS ACCOUNT WHEN RECEIVED AND DEPOSITED FOR COLLECTION MAY BE RELIEVED FROM LIABILITY FOR SAID AMOUNT IN THE EVENT THE CHECK OR DRAFT IS SUBSEQUENTLY DISHONORED, PROVIDED NO LOSS OR DAMAGE TO THE UNITED STATES WILL RESULT." A-24693, OCTOBER 30, 1929.

A 1934 DECISION WAS MORE EXPLICIT:

"IT IS A FUNDAMENTAL PRINCIPLE OF ACCOUNTING THAT ALL COLLECTIONS COMING INTO THE POSSESSION OF AN ACCOUNTABLE OFFICER IN CONNECTION WITH HIS OFFICIAL DUTIES MUST BE PROMPTLY RECORDED AND FULLY ACCOUNTED FOR IMMEDIATELY UPON RECEIPT. NO DISTINCTION CAN BE RECOGNIZED BETWEEN COLLECTIONS REPRESENTED BY CASH AND THOSE REPRESENTED BY NEGOTIABLE CHECKS, ETC., INSOFAR AS THE ACCOUNTING FOR COLLECTIONS IS CONCERNED.

"IN NUMEROUS INSTANCES THIS OFFICE HAS HELD THAT SHOULD ANY CHECK SO RECORDED AND ACCOUNTED FOR SUBSEQUENTLY PROVE TO BE UNCOLLECTIBLE THE DISBURSING OFFICER MAY CLAIM CREDIT THEREFOR IN HIS ACCOUNTS SUBMITTED TO THIS OFFICE, PROVIDED THAT HE MERELY ACCEPTED THE CHECK SUBJECT TO COLLECTION; THAT NONCOLLECTION OF THE CHECK WAS NOT DUE TO NEGLIGENCE ON HIS PART; THAT HE HAS MADE REASONABLE EFFORT TO SECURE REDEMPTION FROM THE PARTY FROM WHOM THE CHECK WAS RECEIVED, AND THAT HE DID NOT PERSONALLY SURRENDER TITLE TO ANY PROPERTY OF THE UNITED STATES IN EXCHANGE FOR SAID CHECK." A-44019, MARCH 15, 1934.

THE REASON FOR THE DISTINCTION SHOULD BE READILY APPARENT. IF A CHECK TENDERED IN PAYMENT OF A FINE, DUTY, OR PENALTY BECOMES UNCOLLECTIBLE, IT MAY BE ARGUED THAT THE GOVERNMENT INCURS A LOSS IN THE SENSE THAT IT DOES NOT HAVE MONEY TO WHICH IT WAS LEGALLY ENTITLED, BUT IT HAS NOT LOST ANYTHING THAT IT ALREADY HAD. WHEN THE CHECK IS IN EXCHANGE FOR PROPERTY, THE GOVERNMENT HAS LOST THE PROPERTY, THE VALUE OF WHICH IS MEASURED BY THE AGREED-UPON SALES PRICE. OF COURSE, RECOVERY OF THE PROPERTY WILL REMOVE OR MITIGATE THE LOSS.

THE DISTINCTION IS CONSISTENT WITH THE FACT THAT 31 U.S.C. SEC. 82A 1 LISTS "CHECKS" AS ONE OF THE COVERED ITEMS. ALSO, THE LEGISLATIVE HISTORY OF THE 1955 AMENDMENT TO SEC. 82A-1 (WHICH AUTHORIZED RESTORATION OF THE ACCOUNT AND REIMBURSEMENT TO ACCOUNTABLE OFFICERS WHO HAD MADE RESTITUTION FROM PERSONAL FUNDS) EXPRESSLY REFERS TO DEFICIENCIES RESULTING FROM "BAD CHECKS." S.REP. NO. 1186, 84TH CONG., 1ST SESS., REPRINTED IN (1955) U.S.C. CONG. & AD.NEWS 2881. THUS, CONGRESS CLEARLY INTENDED TO INCLUDE AT LEAST SOME TYPES OF "BAD CHECKS." IN VIEW OF THIS AND OUR PRIOR DECISIONS, WE CONSTRUE THIS AS REFERRING TO BAD CHECKS IN CASES WHERE THE GOVERNMENT SUFFERS AN ACTUAL LOSS OVER AND ABOVE THE PROCEEDS OF THE CHECK ITSELF. THEREFORE, WE WILL CONTINUE TO APPLY THE ACCOUNTABLE OFFICER RELIEF STATUTES IN "BAD CHECK" CASES WHERE THE GOVERNMENT HAS PARTED WITH SOMETHING OF VALUE IN EXCHANGE FOR THE CHECK, AS OPPOSED TO CASES WHERE THE GOVERNMENT IS MERELY COLLECTING REVENUE OR A FINE OR PENALTY. THIS OF COURSE INCLUDES CASES WHERE AN ACCOUNTABLE OFFICER CASHES A PERSONAL CHECK FOR SOMEONE SINCE THIS IS CLEARLY A LOSS OF PUBLIC FUNDS, ALTHOUGH THESE WILL TEND MORE TO BE "IMPROPER PAYMENT" CASES THAN "PHYSICAL LOSS" CASES. UNDER THIS RATIONALE, THE SITUATION IN B-193673 IS PROPERLY COGNIZABLE UNDER 31 U.S.C. SEC. 82A-1.

WE BELIEVE THIS IS AN EQUITABLE INTERPRETATION FOR TWO REASONS. FIRST, THE AGENCY STILL HAS A RESPONSIBILITY TO PURSUE COLLECTION ACTION AGAINST THE DEBTOR, AND ANY RECOVERIES WILL REDUCE THE AMOUNT OF THE LOSS FOR WHICH THE ACCOUNTABLE OFFICER IS LIABLE. SECOND, RELIEF WILL BE DENIED ONLY WHERE THE ACCOUNTABLE OFFICER WAS NEGLIGENT AND THE NEGLIGENCE WAS THE PROXIMATE CAUSE OF THE LOSS.

REVIEWING THE FACTS OF B-193673 AGAIN, HOWEVER, WE NOTE THAT THE LOSS OCCURRED IN 1972 AND RELIEF WAS NOT REQUESTED UNTIL 1978. IN 60 COMP.GEN. 674 (1981), WE HELD THAT THE 3-YEAR STATUTE OF LIMITATIONS CONTAINED IN 31 U.S.C. SEC. 82I APPLIED ONLY TO IMPROPER PAYMENTS AND NOT TO "PHYSICAL LOSS OR DEFICIENCY" CASES. PRIOR TO THAT DECISION, HOWEVER, WE HAD BEEN CONSTRUING SEC. 82I AS APPLICABLE TO PHYSICAL LOSS CASES AS WELL. SEE, E.G., B-198308, MARCH 9, 1981 (OVERRULED BY 60 COMP.GEN. 674). SINCE OUR DECISIONS ARE PROSPECTIVE ONLY, OUR 1979 DECISION SHOULD HAVE BEEN GOVERNED BY THE DECISIONS THEN IN EFFECT. HAD WE RECOGNIZED THE TIME LAPSE IN OUR ORIGINAL CONSIDERATION OF B-193673, WE WOULD HAVE VIEWED OURSELVES AS PRECLUDED BY SEC. 82I FROM DENYING RELIEF. OUR FAILURE TO APPLY THE STATUTE OF LIMITATIONS ISSUE ALTHOUGH, AS NOTED, THE RESULT WOULD BE DIFFERENT IF THE SAME CASE AROSE TODAY - SHOULD NOT OPERATE RETROACTIVELY TO PREJUDICE THE ACCOUNTABLE OFFICER. ACCORDINGLY, NO FURTHER ACTION NEED BE TAKEN ON THE "ARTHUR SPARGUR" LOSS AND ANY AMOUNTS ALREADY COLLECTED FROM THE ACCOUNTABLE OFFICER MAY BE REFUNDED. THE ACCOUNT INVOLVED MAY BE RESTORED FROM CURRENT APPROPRIATIONS IN ACCORDANCE WITH 31 U.S.C. SEC. 1202.

IN THE FUTURE, CASES INVOLVING UNCOLLECTIBLE CHECKS SHOULD BE HANDLED IN ACCORDANCE WITH THE GUIDELINES SET FORTH ABOVE.