BNUMBER:  B-271052
DATE:  August 6, 1996
TITLE:  Colonel Robert M. Krone, USAF (ret.)-Federal Income Tax
Withholding from Military Retired Pay for Former Spouse
Protection Act Purposes.

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Matter of:Colonel Robert M. Krone, USAF (ret.)-Federal Income Tax 
          Withholding from Military Retired Pay for Former Spouse 
          Protection Act Purposes.

File:     B-271052

Date:August 6, 1996

DIGEST

In calculating the amount of monthly disposable retired pay which is 
subject to apportionment under the Uniformed Services Former Spouses' 
Protection Act, the deductions of regular and additional federal 
income tax withholdings from gross retired pay may not be fixed at a 
combined percentage rate exceeding the retiree's projected effective 
tax rate, that is, the ratio of the retiree's anticipated total income 
tax to his anticipated total gross income from all sources.  63 Comp. 
Gen. 322 (1984).  Accordingly, the Defense Finance and Accounting 
Center was correct in limiting a member's request for additional 
withholding deductions to an amount computed using his projected 
effective tax rate.

DECISION

This is in response to a request for an advance decision regarding the 
calculation of the amount of income tax withholding from the military 
retired pay of Colonel Robert M. Krone, USAF (Ret.), as that amount 
affects the apportionment of the retired pay between Colonel Krone and 
his former spouse.[1] 

BACKGROUND

Colonel Krone and his former spouse were divorced in Nevada in 1976, 
incident to which the court awarded the former spouse a fixed monthly 
amount of Colonel Krone's retired pay as property.  Subsequently, she 
submitted an application to the Defense Finance and Accounting Service 
(DFAS) to have a portion of  Colonel Krone's retired pay paid directly 
to her under the Uniformed Services Former Spouses' Protection Act, 10 
U.S.C.  sec.  1408.  Her request was honored effective December 1994.  
Effective July 1995, her payments were modified from a fixed amount to 
a percentage of disposable retired pay pursuant to a Nevada Court 
order dated March 16, 1995.  Because Colonel Krone was already having 
an additional amount withheld from his retired pay for federal income 
tax purposes, DFAS requested that he provide documentation to justify 
the additional withholding if he wanted the additional withholding to 
be deducted from his gross retired pay to calculate his disposable 
retired pay to which the percentage allocable to his former spouse 
would be applied pursuant to Former Spouses' Protection Act.

Colonel Krone responded with a request that a total of $1,040 be 
withheld from his retired pay for calculation of both his net pay and 
the portion allocable to his former spouse.  In support of his 
request, Colonel Krone submitted a copy of his tax return from 1994 
and information from his accountant indicating that the marginal tax 
rate on his military retired pay was 28 percent and that $1,040 in 
withholding was required to cover his estimated tax liability 
calculated at that rate.  
DFAS based its calculation of Colonel Krone's withholding for Former 
Spouses' Protection Act purposes on our decision B-213895, April 25, 
1984, 63 Comp. Gen. 322.  It calculated his projected effective tax 
rate to be 12.2382 percent and used that rate to determine that 
regular withholding (at 01 married) of $446.65 plus additional 
withholding of $8.48 could be deducted from Colonel Krone's retired 
pay to determine his former spouse's portion of it.  The balance of 
the withholding he requested would be used only to calculate his net 
pay.[2]

Colonel Krone disagrees with the above calculations.  He objects to 
the fact that the amount of additional withholding allowed for Former 
Spouses' Protection Act purposes is based on the effective tax rate 
applicable to his and his current wife's combined income rather than 
his highest marginal tax rate.

ANALYSIS

The Uniformed Services Former Spouse Protection Act, 10 U.S.C.  sec.  
1408,[3] gives state courts the authority to treat a member's 
disposable retired pay either as the property of the member or as the 
property of the member and his spouse, in accordance with the law of 
the state concerned.  10 U.S.C.  sec.  1408(c).  Under prescribed 
limitations, the law provides that the department concerned shall make 
payments directly to the spouse or former spouse of a portion of the 
member's disposable retired pay under state court order as child 
support, alimony, or a division of property.  10 U.S.C.  sec.  1408(d).  
The term "disposable retired pay" as defined in 10 U.S.C.  sec.  
1408(a)(4), is the member's total monthly retired pay from which 
certain deductions have been made.  For the purposes of this decision, 
those deductions include the authorized and required amount of 
withholding for federal, state, or local income tax (formerly at 10 
U.S.C.  sec.  1408(a)(4)(C) (1988 ed.)), and additional withholding 
requested by the member if the member presents evidence of a tax 
obligation to support such withholding (formerly at 10 U.S.C.  sec.  
1408(a)(4)(D)(1988 ed.)).[4]

In our decision 63 Comp. Gen. 322, supra, we discussed the issue of 
the amount of additional tax withholding that a member may have 
applied in computing his disposable retired pay for Former Spouses' 
Protection Act purposes.  We said that the tax obligation referred to 
above may properly be expressed in terms of the difference between the 
anticipated ultimate rate of taxation and the ordinary rate of tax 
withholdings prescribed.  We computed the claimant's estimated tax for 
the year from his estimated family income and the Internal Revenue 
Service (IRS) tax table.  Then we compared this anticipated total tax 
to the anticipated total income, which yielded a projected effective 
tax rate for all his income.  We used this rate to calculate his tax 
obligation.  We said that, in the absence of more specific guidance in 
the law or regulations, the use of a single effective tax rate for all 
his anticipated income was the best method available for calculating 
the member's estimated tax obligation to be used to determine 
disposable retired pay.  63 Comp. Gen. at 328.

While Colonel Krone objects to the use of a projected effective tax 
rate, in effect an average rate for all income, we still believe that 
is the fairest method for calculating tax obligations.  At the time 
the matter was submitted to us, Colonel Krone's former spouse was 
receiving $1,578.44 per month.  He argued that under the method of 
calculation used by DFAS he was receiving only $850.56.  It should be 
noted that DFAS sends $1,290 to the appropriate federal and state 
agencies on Colonel Krone's behalf.  Therefore, in effect, he was 
receiving $2,140.56 per month.

As we pointed out in 63 Comp. Gen. 322, supra, the authority to issue 
authoritative revenue rulings on federal income tax withholding rests 
in the IRS.  Our decision concerns Colonel Krone's tax withholdings 
only to the extent that the amounts withheld affect the calculation of 
his disposable retired pay as that term is defined in 10 U.S.C.  sec.  
1408.  DFAS advises that it has applied the method we approved in 63 
Comp. Gen. 322, supra, to determine the maximum withholding amount 
which can be subtracted from Colonel Krone's retired pay to obtain his 
disposable retired pay.  That determination appears correct, and we 
have no basis to disturb it.

/s/Seymour Efros
for Robert P. Murphy
General Counsel                   

1. The request was submitted by the Director, Former Spouse Division, 
Garnishment Operations Directorate, Defense Finance and Accounting 
Service, Cleveland Center.

2. Colonel Krone also requested withholding of $250 for payment of his 
state income tax.  Of that amount DFAS determined that $107 may be 
used in the calculation of his former spouse's share.  The $143 
balance may be used to calculate his net pay.  

3. Pub. L. No. 97-252, Title X,  sec.  1002(a), 96 Stat. 730 (1982).

4. For divorces, dissolutions, annulments, and legal separations that 
become effective after the end of a 90-day period beginning on 
November 5, 1990, the definition in 10 U.S.C.  sec.  1408(a) of "disposable 
retired pay" has been changed to eliminate deductions for income tax 
withholding and additional tax withholding in the computation of 
disposable retired pay.  See Pub. L. No. 101-510,  sec.  555(b)(3), 104 
Stat. 1569 (1990).  Since Colonel Krone's divorce became effective in 
1976, the previous provisions authorizing such deductions remain 
applicable.