   Prejudgment Interest Under the Back Pay Act for Refunds of
       Federal Insurance Contributions Act Overpayments


T h e B ack Pay A c t’s a u th o riz a tio n o f p re ju d g m e n t in te re st d o e s n o t a p p ly to the re tu rn o f a F ederal
    In su ran ce C o n trib u tio n s A ct tax o v e rp a y m e n t.


E ven i f the B a c k Pay A c t d id ap p ly to su ch re tu rn s, an a g e n c y ’s sp e c ific e x e m p tio n fro m lia b ility u n ­
    d e r the F e d e ra l In su ra n c e C o n trib u tio n s A ct w o u ld o v e m d e the p ro v isio n s o f the B ack P a y A ct.


                                                                                                                      May 31, 1994


                        M e m o r a n d u m O p in io n f o r t h e A c t in g G e n e r a l C o u n s e l
                                                   D e pa r t m e n t o f D efen se


   This memorandum responds to your Office’s request for our opinion whether
civilian employees of the Department of Defense (“DoD”) who receive from the
Internal Revenue Service (“IRS”) a refund of taxes that were deducted from their
pay pursuant to 26 U.S.C. § 3121(a) of the Federal Insurance Contributions Act, 26
U.S.C. §§ 3101-3128 (“FICA”), as amended, are entitled to receive prejudgment
interest on the refund from DoD pursuant to the Back Pay Act, 5 U.S.C. § 5596, as
amended. We conclude that these DoD employees are not entitled to receive addi­
tional interest from DoD.

                                                            I.
                                                       BACKGROUND

   FICA imposes a tax on the income of every employee, calculated as a percent­
age of wages, for the support of old-age, survivors, disability, and hospital insur­
ance. 26 U.S.C. § 3101. A corresponding payroll tax for the same purpose is
imposed on every employer with respect to each employee. Id. § 3111. Under
FICA, every employer must deduct its employees’ share of the FICA tax from their
wages “as and when paid.” Id. § 3102(a). All sums collected must be paid over to
the IRS. Id. § 3102(b). In 1983, FICA taxation was extended to all subsequently
hired civilian federal employees. See Social Security Act Amendments of 1983,
Pub. L. No. 98-21, § 101(b)(1), 97 Stat. 65, 69 (codified as amended at 26 U.S.C.
§ 3121(b)(5), (6)); S. Rep. No. 98-23, at 5 (1983). Each federal agency is treated
as a separate employer for purposes of FICA. See 26 U.S.C. § 3122.
   Certain civilian DoD employees receive allowances for living quarters and for
temporary lodging costs pursuant to the Overseas Differentials and Allowances
Act, 5 U.S.C. § 5923, as amended (“ODAA allowances”). ODAA allowances have

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always been expressly exempted from income tax. See 26 U.S.C. § 912(1)(C);
Anderson v. United States, 929 F.2d 648, 649 (Fed. Cir. 1991). Because FICA
does not expressly exempt ODAA allowances from taxation, an issue arose as to
whether such payments were taxable for that purpose. DoD concluded that they
were and, accordingly, deducted appropriate sums from its employees’ ODAA
allowances and paid those funds over to the IRS. See Anderson v. United States,
16 Cl. Ct. 530, 532-33 (1989) At least some of the affected employees filed ad­
ministrative claims for refunds, which the IRS denied. Id. at 533-34.
   The IRS’s denial of these claims did not survive judicial scrutiny. In Anderson,
a number of DoD employees brought suit against the United States, seeking a re­
fund of the FICA taxes paid on ODAA allowances for the years 1984 through
1987. The Court of Federal Claims granted them summary judgment, holding that
ODAA allowances are exempt from FICA taxation. 16 Cl. Ct. at 541. The deci­
sion was affirmed on appeal. Anderson v. United States, 929 F.2d 648 (Fed. Cir.
1991). The United States did not petition the Supreme Court for a writ of certio­
rari. As a result of Anderson, certain DoD employees (and other similarly situated
federal employees) will receive refunds of the contested FICA taxes (“Anderson
employees”).

                                    II.
                         ISSUE FOR CONSIDERATION

   W e have been asked to determine the amount of interest that must be paid on
FICA tax refunds to Anderson employees. Absent a waiver of sovereign immunity,
the United States and its agencies are not liable for prejudgment interest. See, e.g.,
Library o f Congress v. Shaw, 478 U.S. 310, 310, 314-15 (1986); Loefflerv. Frank,
486 U.S. 549, 554, 556-57 (1988). The Internal Revenue Code (“Code”) contains
such a waiver with respect to refunds of FICA tax overpayments. See 26 U.S.C.
§§ 6413(b), 6611(a). The Office of Personnel Management (“OPM”) and DoD
agree that the IRS must pay Anderson employees prejudgment interest on their
FICA tax refunds pursuant to these provisions.
   The Back Pay Act, however, also expressly permits prejudgment interest on an
award of “back pay,” as defined by that Act. See 5 U.S.C. § 5596(b); Brown v.
Secretary o f the Army, 918 F.2d 214, 216-18 (D.C. Cir. 1990), cert, denied, 502
U.S. 810 (1991). OPM believes that Anderson employees are entitled to receive
interest on their refunds under the Back Pay Act. See Letter for Albert V. Conte,
Director, Defense Finance and Accounting Service, Department of Defense, from
Constance Berry Newman, Director, Office of Personnel Management at 1 (Apr.
27, 1992) (“Newman Letter”); Letter for Philip M. Hitch, Deputy General Counsel
(Fiscal), Department of Defense, from Arthur Troilo III, General Counsel, Office
of Personnel Management at 3-4 (Nov. 30, 1992) (“Troilo Letter”). Accordingly,
OPM instructed federal agencies that: “Because IRS computes interest in a manner

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                           F ederal Insurance C ontributions A ct O verpaym ents


that would result in a smaller interest payment to employees, agencies must com­
pute interest due employees under the back pay law (5 U.S.C. 5596).” Attachment
to Memorandum for Directors of Personnel from Claudia Cooley, Associate Di­
rector for Personnel Systems and Oversight at 3 (Dec. 3, 1991). OPM further in­
structed that each agency must add to the IRS’s interest payment an amount
sufficient to make the total equal to the larger amount of interest prescribed under
the Back Pay Act. Newman Letter at 1-2. OPM suggests that agencies failing to
make this payment could be held liable for the additional amount. Troilo Letter at
3, 4. DoD’s position is that it has no legal obligation to pay any additional inter­
est.1

                                              III.
                                        LEGAL ANALYSIS

   We conclude that the Back Pay Act’s authorization of prejudgment interest does
not apply to the return of a FICA tax overpayment. The Back Pay Act was not
intended to remedy this type of injury. Indeed, as discussed below, FICA contains
a provision that exempts employers from liability in these circumstances. Conse­
quently, there is no legal basis for OPM’s instruction to agencies to pay additional
interest computed under the Back Pay Act.

                  A. THE REQUIREMENTS FOR APPLICATION
                     OF THE BACK PAY ACT ARE NOT MET

   The Back Pay Act provides:

            An employee of an agency who, on the basis of a timely appeal
         or an administrative determination . . . is found by appropriate
         authority under applicable law, rule, regulation, or collective bar­
         gaining agreement, to have been affected by an unjustified or un­
         warranted personnel action which has resulted in the withdrawal or
         reduction of all or part of the pay, allowances, or differentials of the
         employee—

            . . . is entitled, on correction of the personnel action, to receive
         for the period for which the personnel action was in effect—




   1    D oD estim ates lhat paying additional interest under the Back Pay A ct w ould c o st approxim ately $7
million M em orandum for Daniel L K offsky A cting A ssistant A ttorney G eneral, O ffice of Legal C ounsel,
D epartm ent o f Justice, from Jam ie S. G orelick, G eneral C ounsel, D epartm ent of D efense at 6 (Ju n e 21,
1993).

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                          O pinions o f the O ffice o f L egal C ounsel


           . . . an amount equal to all or any part of the pay, allowances, or
       differentials, as applicable which the employee normally would
       have earned or received during the period if the personnel action
       had not occurred, less any amounts earned by the employee through
       other employment during that period.

5 U.S.C. § 5596(b).
    In general, the Back Pay Act grants a cause of action to an employee who has
lost pay as a result of a wrongful personnel action. Its purpose is to permit such an
employee to recover money damages sufficient to make the employee whole.
United States v. Testan, 424 U.S. 392, 407 (1976): Wells v. FAA, 755 F.2d 804,
807 (1 1th Cir. 1985). The need for the Act arises “by the fact that, absent specific
command of statute or authorized regulation, an appointed employee subjected to
unwarranted personnel action does not have a cause of action against the United
States.” United States v. Hopkins, 427 U.S. 123, 128 (1976). The Supreme Court
repeatedly has adhered to a narrow construction of the Back Pay Act, finding that it
authorizes money damages only in the “‘carefully limited circumstances’” ex­
pressly set forth in the statute. United States v. Mitchell, 463 U.S. 206, 217 (1983)
(quoting United States v. Testan, 424 U.S. at 404).
    OPM maintains that the Back Pay Act applies concurrently with the provisions
of the Code as a remedy for an agency’s erroneous deduction of too much FICA
tax from its employees’ earnings. OPM has not, however, cited (nor have we
found) any reported decision applying the Back Pay Act in such circumstances. In
light of the Supreme Court’s strict construction of the Back Pay Act, the absence of
authority suggests that OPM ’s novel application should be approached with skepti­
cism.
    OPM, moreover, has not demonstrated that the specific requirements of a Back
Pay Act action have been met. The first requirement is that an employee must have
been subject to an “unjustified or unwarranted personnel action.” The legislative
history of the Back Pay Act discusses the types of personnel actions falling within
its purview:

           H.R. 1647 does not prescribe the specific types of personnel ac­
       tions covered. Separations, suspensions, and demotions constitute
       the great bulk of cases in which employees lose pay or allowances,
       but other unwarranted or unjustified actions affecting pay or allow­
       ances could occur in the course of reassignments and change from
       full-time to part-time work. If such actions are found to be unwar­
       ranted or unjustified, employees would be entitled to backpay bene­
       fits when the actions are corrected.




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                      F ederal Insurance C ontributions A ct O verpaym ents


S. Rep. No. 89-1062, at 3 (1966); see United States v. Testan, 424 U.S. at 405-06
(quoting this cited legislative history).
   The examples given in the Senate report all involve an alteration of the terms of
employment, such as the downgrading of an employee’s appointed position, that
cause an employee to earn less money. The damages owed to the employee equal
the reduction of earnings arising out of the adverse personnel action. In contrast,
the Anderson employees did not suffer a loss of earnings: they concededly earned
the money that was deducted from their paychecks. Their claim, rather, was that
the United States was indebted lo them to the extent that the FICA deductions ex­
ceeded their actual tax liability. See Stone v. White, 301 U.S. 532, 534-35 (1937)
(claim of tax overpayment is in the nature of one for money had and received);
King v. United States, 641 F.2d 253, 259 (5th Cir. 1981) (same); M issouri Pac.
R.R. Co. v. United States, 338 F.2d 668, 670 (Ct. Cl. 1964) (taxpayer bringing
action for refund must show payment of excess taxes that equitably belong to him
or there can be no recovery). At least one court has held that a claim for money
due is not cognizable under the Back Pay Act:

          Mere failure by a government agency to pay money due is not
       the kind of adverse personnel action contemplated in the Back Pay
       Act. We are not called upon to correct an adverse personnel ac­
       tion. . . . Plaintiffs’ claims are analogous to ones for unpaid salary
       for time actually worked.

Bell v. United States, 23 Cl. Ct. 73, 77 (1991). Thus, we conclude that DoD’s er­
roneous deduction of too much FICA tax was not an adverse personnel action
within the contemplation of the Back Pay Act. OPM has not called our attention
to, and we have not discovered, any decision that might compel a different conclu­
sion.
    A second essential element under the Back Pay Act is that the personnel action
must have caused the “withdrawal or reduction of all or part of the pay, allow­
ances, or differentials of the employee.” OPM suggests that an agency’s deduction
of too much FICA tax constitutes a reduction in pay (or, in this case, allowances).
Section 3123 of FICA, however, provides:

          Whenever under . . . [FICA] . . . an employer is required or per­
       mitted to deduct any amount from the remuneration of an employee
       and to pay the amount deducted to the United States, . . . then for
       purposes of [FICA] the amount so deducted shall be considered to
       have been paid to the employee at the time o f such deduction.

26 U.S.C. § 3123 (emphasis added). See Pope v. University o f Washington, 852
P.2d 1055, 1062 (Wash. 1993), cert, denied, 510 U.S. 11 15 (1994); IRS Private

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Ruling 7702012130A, 1977 PRL Lexis 60. Cf. Slodov v. United States, 436 U.S.
238, 243 (1978) (“[o]nce net wages are paid to the employee, the taxes withheld
are credited to the employee regardless of whether they are paid by the employer,
so that the IRS has recourse only against the employer for their payment”). DoD
was “required or permitted” to determine the amount of remuneration subject to tax
and to make the appropriate deduction. See 26 U.S.C. § 3102(b); id. § 3122.
Thus, the deductions at issue here must be considered as having been paid to the
Anderson employees.2
   Finally, the Back Pay Act requires that the employing agency have been found
by an “appropriate authority” to have engaged in a wrongful personnel action.
OPM has defined this term in its regulations: “Appropriate authority means an
entity having authority in the case at hand to correct or direct the correction of an
unjustified or unwarranted personnel action, including . .. the Office of Personnel
M anagement.” 5 C.F.R. § 550.803.
   OPM regards itself as the “appropriate authority” that has found that DoD has
engaged in a wrongful personnel action with respect to the Anderson employees:

              OPM clearly meets the definition [of an “appropriate authority”
           set forth in 5 C.F.R. § 550.803] . . . and, in addition, is specifically
           mentioned as such an authority [in the regulation], . . . In the case
           of the FICA tax issue, OPM, consistent with its mission as the Fed­
           eral personnel administrator, was compelled to issue guidance to
           Federal agencies setting forth instructions on how to implement the
           Anderson decision, including how to correct the erroneous with­
           holdings of FICA taxes.



     2       S ectio n 3123, by its term s, applies only " fo r p u rposes” o f FIC A . Thus, it is possible lhat the deduction
m ight be treated as a n o n -p ay m en t o f wages fo r purposes o f som e other statute. But there is no basis for
doing so here, because ihe B ack Pay Act is p u re ly rem edial: it restores pay lost to an em ployee from the
violation o f a right gran ted un d er another “ a p p licab le law, rule, regulation, or collective bargaining agree­
m ent.'’ 5 U S C . (j 5596(b) T he ' ‘applicable law " in this case— FIC A — expressly authorized D oD to m ake
the c o n te ste d d ed u ctio n s and com m anded th a t they be co n sid ered as a paym ent o f rem uneration Thus,
D o D ’s erro n eo u s FIC A d ed u ctio n s cannot serv e as the predicate for an action under the Back Pay A ct, w hich
requires that the claim ant have suffered a loss o f pay resulting from a w rongful personnel action.
      W e note also that the clash o f assum ptions betw een FICA an d the Back Pay Act concerning w hether an
a g e n c y 's d ed u ctio n o f FIC A tax is a payment o f w ages could ex p o se the A nderson em ployees to unpleasant
tax c o n seq u en ces if, as O PM proposes, the tw o schem es w ere applied concurrently. It is settled law that
aw ards u n d e r the Back Pay A ct are taxable e a rn in g s for FIC A and incom e tax purposes, subject to tax w ith­
holding w hen they are paid to the employee. S e e, e.g., Tanaka v. D epartm ent o f Navy, 788 F.2d 1552, 1553
(Fed. C ir. 1986), A in sw o rth v. U nited Stales, 3 9 9 F 2d 176, 185-86 (C t Cl 1968), K opp v. D epartm ent o f
A ir F orce, 37 M .S P R 434, 4 3 6 (1988) T h is tax treatm ent co m p o rts w ith the theory that the Back Pay Act
provides ‘“ rep aratio n . based upon the loss o f w ages w hich the em ployee has suffered from the em p lo y er’s
w ro n g .’" A in sw o rth , 3 9 9 F 2d at 185 (quoting S o cia l S ecu rity Bd. v. N ierotko, 327 U S 358, 364 (1946)).
T hus, alth o u g h O D A A allo w an ces ordinarily are excluded from FICA and incom e taxation, the A nderson
em p lo y e es’ recovery w ould be taxable as o rd in ary wage earn in g s if they w ere received as an aw ard of back
pay ra th e r th an as a tax refu n d (absent an e q u ita b le adjustm ent). T his anom aly highlights the dubious nature
o f any su g g estio n that the Back Pay Act has a ro le to play in the return o f a tax overpaym ent.

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                           F ederal Insurance C ontributions A ct O verpaym ents


Troilo Letter at 3.

   We do not agree that OPM is an “appropriate authority” under the Back Pay
Act. Whatever OPM’s authority to “issue guidance” to agencies concerning how
to correct the FICA tax treatment of ODAA allowances in light of Anderson, it did
not have authority to correct the improper FICA tax deductions contested in An­
derson, which is “the case at hand.” DoD was vested with initial authority to de­
termine the amount of FICA tax to be deducted from its Anderson employees’ pay.
26 U.S.C. § 3122. That determination was subject to review and correction by the
Secretary of the Treasury. Id. (As noted in § I, supra, the Secretary agreed with
DoD and allowed the deductions to stand.) The Secretary’s decision was final
within the executive branch. See 26 U.S.C. § 6406.3 Judicial review of the Secre­
tary’s decision was available in either the federal district courts or the Court of
Federal Claims. See 26 U.S.C. § 7422; 28 U.S.C. § 1346. (The Anderson em­
ployees proceeded in the Federal Claims Court.) In either case, the decision was
not subject to further review by the executive branch. See H ayburn’s Case, 2 U.S.
(2 Dali.) 409 (1792) (executive branch revision of final judgments of the judicial
branch violates the separation of powers); United States v. O'Grady, 89 U.S. (22
Wall.) 641 (1874) (same). Thus, at no point did OPM have authority to “correct or
direct the correction o f ’ the decision to deduct FICA taxes from the ODAA allow­
ances of the Anderson employees. Therefore, OPM does not meet the criterion set
forth in its own regulation defining an “appropriate authority.”

      B. OPM’S PROPOSED APPLICATION OF THE BACK PAY ACT
           IS INCONSISTENT WITH FICA’S EXPRESS GRANT
        OF AN EXEMPTION FROM LIABILITY FOR EMPLOYERS

    As a general matter, the Code’s remedial provisions have been held to be the
exclusive remedy for those seeking a return of tax overpayments. See, e.g., Bruno
v. United States, 547 F.2d 71 (8th Cir. 1976) (suit for refund of taxes was governed
by the specific limitation period in the Internal Revenue Code and not the general
limitations period for civil actions against the United States in title 28); Michigan
State Employees A ss’n v. Marian, 608 F. Supp. 85, 90-92 (W.D. Mich. 1984) (the
existence of specific remedial procedures in the Internal Revenue Code to redress
tax overpayments foreclosed any possibility of relief under 42 U.S.C. § 1983). In
this case, moreover, Congress provided specific procedures to apply “[i]f more
than the correct amount of [FICA] tax .. . is paid [by an employee] with respect to
any payment of remuneration.” 26 U.S.C. § 6413; see 26 C.F.R. § 31.6413. See
generally Rev. Rul. 81-310, 1981-2 C.B. 241; Rev. Proc. 81-69, 1981-2 C.B. 726;

   3   O rdinarily, 26 U S C. § 6406 perm its review o f the S ecretary’s decisions by the T ax C ourt S uch review
was not available here because the Tax C ourt has no ju risd ictio n to adjudicate FICA tax liability 2 6 U .S.C.
§ 7442

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Atlantic D e p ’t Stores, Inc. v. United States, 557 F.2d 957 (2d Cir. 1977); M acy’s
New York, Inc. v. United States, 484 F. Supp. 181 (S.D.N.Y. 1980); Entenmann’s
Bakery, Inc. v. United States, 465 F. Supp. 1118 (E.D.N.Y. 1979).4 It seems un­
likely that Congress intended the very general remedial provisions of the Back Pay
Act to apply as well, thereby giving federal employees a more generous remedy
than that available to employees in the private sector.
   Even if the Back Pay Act were generally applicable here, OPM’s proposal that
each agency pay additional interest to its Anderson employees is inconsistent with
§ 3102(b) of FICA. That section provides that an employer who has collected
FICA taxes and paid them over to the IRS “shall be indemnified against the claims
and demands of any person for the amount of any such payment.” Id.5 An
“indemnity” is a “legal exemption from liability for damages.” American Heritage
Dictionary of the English Language 917 (3d ed. 1992). Section 3102(b), further­
more, has been held to serve the same purpose as 26 U.S.C. § 3403,6 which applies
to the collection of income taxes. See United States Fidelity & Guaranty Co. v.
United States, 201 F.2d 118, 119 (10th Cir. 1952) (equating 26 U.S.C. § 3102(b)
with § 3403). Section 3403, in turn, invariably has been construed to mandate that
an employer is immune from suit by its employees concerning federal income taxes
that have been withheld by the employer and paid over to the IRS. See, e.g., Edgar
v. Inland Steel Co., 744 F.2d 1276, 1278 (7th Cir. 1984); Pascoe v. IRS, 580 F.
Supp. 649, 654 (E.D. Mich. 1984), a ff’d, 755 F.2d 932 (6th Cir. 1985); Chandler
v. Perini P ow er Constructors, Inc., 520 F. Supp. 1152, 1156 (D.N.H. 1981).
Therefore, we conclude that § 3102 provides an employer with a legal exemption
from liability to the extent of the amount of FICA taxes collected and paid over to
the IRS.7
   OPM ’s proposal that federal agencies pay their Anderson employees additional
interest under the Back Pay Act contravenes this exemption. Under familiar prin­

    4 A n em p lo y er has an incentive to calculate the tax co rrectly because its ow n share o f the FICA tax m ir­
rors that o f its em p lo y ees See 26 U S C § 3 1 1 1 . A lso, an em p lo y er who has collected too much FICA tax is
not p erm itted to receiv e a return o f its own overpaym ent u n less it has repaid the affected em ployees (or
form er em p lo y ees) o r has m ade a reasonable e ffo rt to perfect th e ir claim s for a refund See Rev Rul. 8 1-310,
at 242.
    5 S e e also 26 C F.R § 31 .3 1 0 2 - 1(c) (“The e m p lo y e r is in d em n ified against the ctaim s and dem ands o f any
person for the a m o u n t o f any p aym ent of such tax m ade by the em ployer to the district d irecto r ”)
    6 S ectio n 3 4 0 3 p ro v id es
        T h e e m p lo y e r shall be liable for the p a y m e n t o f the [incom e] lax required to be deducted and
        w ith h eld un d er this chapter, and shall n o t be liable to an y person for the am ount o f any such
        paym ent
    7 A n ind em n ity can also b e a “(s]ecurity a g ain st dam age, loss, or injury/* A m erican H eritage D ictionary
o f the E n g lish L an g u ag e at 917 U nder the la tte r definition, § 3 102(b) m ight be read as a prom ise to c o m ­
pensate e m p lo y ers for their liability arising o u t o f the FICA tax collection process rather than as a legal e x ­
em ption from liab ility in the first instance It is, how ever, a recognized rule o f statutory construction that a
w aiver o f so v ereig n im m u n ity m u st be unequivocal. Thus, if tw o readings are plausible, the one that does
not w aiv e so v ereig n im m unity m u st be adopted. See U nited S ta te s v N o rd ic Village, Inc , 503 U S 30, 33-
37 (1 9 9 2 ). C o n seq u en tly , w e read § 3102(b) as conferring a legal exem ption Indeed, § 3102(b) fails to
nam e an in d em n ito r, w hich su p p o rts our read in g and also fatally underm ines any claim that § 3102(b) con­
tains an u n eq u iv o cal w aiv er o f sovereign im m unity

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ciples of statutory construction, the exemption in § 3102(b), which is specifically
applicable to the collection of FICA taxes, must prevail over the more generally
applicable interest provision of the Back Pay Act. See Brown v. Secretary o f
Army, 918 F.2d at 218 (Title VII’s limit of two years on recovery of back pay
would take precedence over the more generous term in the Back Pay Act when
both remedies were facially available to federal employees who had successfully
sued their employer under Title VII). See generally Bulova Watch Co. v. United
States, 365 U.S. 753, 758 (1961) (a provision of the Code specifically addressed to
the computation of interest on carry-back tax refunds would prevail over provision
on computation of interest on tax refunds generally); 2B Norman J. Singer, Suth­
erland Statutory Construction § 51.02 (5th ed. 1992) (“Where a conflict exists the
more specific statute controls over the more general one.”). Thus, even if the Back
Pay Act’s interest provision were facially applicable, it could not be applied in
these circumstances.

                                       CONCLUSION

   We conclude that DoD is not required to pay its Anderson employees any inter­
est under the Back Pay Act. The Back Pay Act does not apply in these circum­
stances. Even if it did, the interest provision of the Back Pay Act must yield to the
legal exemption from liability granted to employers under FICA. Thus, OPM’s
instruction to agencies to pay additional interest has no legal basis.


                                                          WALTER DELLINGER
                                                         Assistant Attorney General
                                                          Office o f Legal Counsel




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