BNUMBER:  B-259947
DATE:  November 28, 1995
TITLE:  Federal Executive Board--Appropriations--Employee Tax
Returns--Electronic Filing

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Matter of:Federal Executive Board--Appropriations--Employee Tax 
          Returns--Electronic Filing

File:     B-259947

Date:     November 28, 1995

DIGEST

In the absence of statutory authority, member agencies of the New 
Orleans Federal Executive Board may not use appropriations to provide 
employees with the means to electronically file their personal income 
tax returns because such costs are personal to the employees.  
Exceptions to this rule have been permitted where the expenditure 
primarily benefits the agency.  Absent specific statutory authority, 
in order to use appropriated funds for this purpose, each agency must 
demonstrate that the employee electronic filing program is reasonably 
related to the purpose of the agency's appropriation.

DECISION

The Chair of the New Orleans Federal Executive Board has requested our 
opinion regarding whether federal agencies in New Orleans, other than 
the Internal Revenue Service (IRS), may use their appropriations to 
provide computer hardware and pay related expenses to enable employees 
to electronically file their personal income tax returns.  For the 
reasons discussed below, we conclude that before a federal agency may 
pay for an employee electronic filing program, it must show that the 
program is necessary or incidental to the purpose of its 
appropriation.

Background

The New Orleans Federal Executive Board is a quasi-governmental 
organization composed of the chief federal executives in the New 
Orleans area.  The Board coordinates governmental policy on matters 
impacting the New Orleans federal community and provides leadership in 
the sharing of services between agencies.

The Board has asked us whether its member agencies may provide their 
employees with the means to electronically file their personal income 
tax returns from agency offices at no cost to the employees.  This 
question arose after the Director of the New Orleans District of the 
IRS informed the Board that our Office had authorized IRS to implement 
an agency-wide employee electronic tax return program.  See      71 
Comp. Gen. 28 (1991).  The Director stated that this program should be 
extended to other federal agencies and that IRS would furnish entry 
and communication software to any agency willing to provide the 
computer hardware and telephone lines necessary to electronically 
transmit the employee personal income tax returns to IRS.

Discussion

As a general matter, agency appropriations are not available to pay 
the costs of filing employee income tax returns.  Because the Internal 
Revenue Code imposes the duty on taxpayers to file returns, 26 U.S.C.  
6011, 6012, the cost of electronically filing a tax return is 
considered a personal expense of the employee.  Unless the agency can 
show that the expense primarily benefits the government, personal 
expenses of employees are not payable from appropriated funds absent 
specific statutory authority.  68 Comp. Gen. 502, 505 (1989).

In our decision approving the use of appropriations to implement the 
IRS employee electronic tax return program, we held that IRS overcame 
the personal expense prohibition because it clearly and convincingly 
explained the link between the expenditure and the benefit to the IRS.  
71 Comp. Gen. at 30.  See 68 Comp.     Gen. at 505.  IRS explained 
that the employee electronic filing program would be used to publicize 
the benefits of electronic filing, familiarize IRS employees with the 
Electronic Filing System and permit IRS to evaluate and refine the 
system.          71 Comp. Gen. at 29.  Based on this, we agreed with 
IRS that the employee electronic filing program was reasonably related 
to the purpose of the agency's "processing tax returns" appropriation.  
Although IRS employees received some benefit from the program, we 
concluded that the personal benefit to employees was nominal and 
collateral to overall IRS system improvement.  In accordance with the 
prior decision, we would not object to IRS's use of its "processing 
tax returns" appropriation to pay all reasonable costs of electronic 
filing at other federal agencies.

If other agencies want to use their appropriations for this purpose, 
they must establish, as did IRS, that the expenditure will directly 
support agency responsibilities.  68 Comp. Gen. at 505.  See B-214833, 
Aug. 22, 1984.  The other federal agencies in New Orleans would have 
to show that the use of federal funds to pay for employees' electronic 
filing of tax returns is necessary or incidental to the objects of the 
appropriations to be charged.  Accordingly, in the absence of an 
agency's justification of the availability of its own appropriation 
for this purpose, similar to that provided by IRS, we cannot approve 
of an agency's use of its appropriations to finance employees' 
electronic filing of tax returns.

/s/Robert P. Murphy
for Comptroller General
of the United States