RECORD OF PROCEEDINGS


      IN THE CASE OF:


      BOARD DATE:        15 November 2005
      DOCKET NUMBER:  AR20050009197


      I certify that hereinafter is recorded the true and complete record
of the proceedings of the Army Board for Correction of Military Records in
the case of the above-named individual.

|     |Mr. Carl W. S. Chun               |     |Director             |
|     |Ms. Rosa M. Chandler              |     |Analyst              |


      The following members, a quorum, were present:

|     |Mr. Stanley Kelley                |     |Chairperson          |
|     |Mr. John T. Meixell               |     |Member               |
|     |Mr. Robert L. Duecaster           |     |Member               |

      The Board considered the following evidence:

      Exhibit A - Application for correction of military records.

      Exhibit B - Military Personnel Records (including advisory opinion,
if any).

THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:

1.  The applicant requests, in effect, that his debt to the Government in
the amount of $8,869.48, due to the overpayment of hostile fire pay (HFP)
and unpaid federal tax be remitted or cancelled.

2.  The applicant acknowledges he was overpaid, but states, in effect, that
he went above and beyond normal expectation and made numerous attempts to
correct his pay.

3.  The applicant provides a Settlement Certificate (with two enclosures)
from the Defense Office of Hearings and Appeals (DOHA), Arlington,
Virginia.  The enclosures are Claims Appeals Board Decisions dated 31 July
2002 and 2 December 2002.

CONSIDERATION OF EVIDENCE:

1.  The only documents available are those provided by the applicant.  He
appealed his debt and the Defense Finance and Accounting Service (DFAS)
sent his appeal to DOHA recommending approval.  The DOHA Settlement
Certificate shows that, in 2003, the applicant was a captain (CPT) serving
in an active duty status.  In April 2003, he was transferred to Iraq.
Because of the monthly combat pay exclusion, his federal tax liability in
the amount of $915.95 was not required to be deducted from his pay.
However, he elected to have $50.00 withheld from his pay for federal tax
purposes and this amount was deducted through December 2003.

2.  In November 2003, the applicant received orders transferring him from
Iraq to Fort Sam Houston.  As a result, he was no longer entitled to
receive hostile fire pay (HFP).  However due to an administrative error, he
erroneously received this allowance through September 30, 2004, causing an
overpayment of $2,250.00. Additionally, The Defense Finance and Accounting
Service (DFAS) failed to adjust his tax liability from $50.00 back to his
normal tax liability of $903.93.

3.  The DOHA Settlement Certificate accounted for the applicant's debt in
the following manner:

      a.  DFAS paid the applicant HFP through 30 September 2004 resulting
in an overpayment of $2,250.00.

      b.  Between 1 January 2004 and 31 May 2004, DFAS paid the Internal
Revenue Service (IRS) $4,519.65 in taxes on behalf of the applicant, but
did not deduct this amount from the applicant's pay.  Therefore, he was
overpaid $4,519.65.

      c.  In June 2004, the applicant notified DFAS to withhold an extra
$1,000.00 in federal taxes from his pay.  Thus DFAS should have withheld
$1,903.93 in federal taxes ($903.93 regular tax liability + $1,000.00
extra).  Due to an administrative error DFAS erroneously withheld only the
$1,000.00 from the applicant's pay, but sent the IRS $1,903.93 on behalf of
the applicant, therefore he was overpaid $3,615.72 ($903.93 x 4 months)
from 1 June 2004 through 30 September 2004.

4  The DOHA Settlement Certificate placed the total claim against the
applicant at $10,385.37.  However, the applicant's pay and allowances in
the amount of $1,515.89 for the period ending 30 October 2004 was held and
applied to the overpayment amount reducing it to $8,869.48.  This is the
final amount of the applicant's debt.

5.  The DOHA Settlement Certificate agreed to waive $225.00 of the
applicant's debt.  The waiver was based on the fact the applicant did not
receive a LES for December 2003 and reasonably may not have been aware he
erroneously received HFP for that month.  Thus DOHA found he acted in good
faith in accepting this portion of the overpayment.  While acknowledging
the applicant attempted to correct the situation, DOHA denied the waiver of
the overpayment of HFP from 1 January through 30 September 2004 because the
applicant knew he was receiving payment to which he was not entitled and
accepted the same.

6.  The DOHA denied waiver of the applicant's overpayment resulting from
DFAS not properly deducting his federal taxes while paying the same to the
IRS.  The Settlement Certificate noted that, prior to being stationed in
Iraq, the applicant's LES showed that $915.95 was being deducted from his
pay for federal taxes.  After his return from Iraq, his LES only showed his
withholding elections ($50 and $1000), but not his regular tax liability.
Therefore, DOHA believed collection of this portion of the overpayment
would not be against equity and good conscience, nor would it be contrary
to the best interest of the United States.  The applicant was provided a
Comptroller General decision in a similar case where an officer was denied
a waiver of his debt (CG Decision B213216, 1 March 1984).

7.  DOHA held that while DFAS administrative error did occur, the waiver
statute does not apply automatically to relieve the debts of members who,
through no fault of their own, receive erroneous payments from the
Government.  "Waiver action under Title 10 U.S.C. 2774 is a matter of grace
or dispensation and not a matter of right that arises solely by virtue of
an erroneous payment being made by the Government.  If it were merely a
matter of right, then virtually all erroneous payments made by the
Government to Soldiers would be excused from payment."

8.  The DOHA concluded that, under the provisions of Title 10 U.S.C. 2774,
$225.00 of the Government's claim was waived and $8,644.48 was denied.

9.  Section 2774 of Title 10 United States Code (U.S.C.), provides
authority for waiving claims for erroneous payments of pay and certain
allowances made to or on behalf of service members or former service
members of the Uniformed Services, if collection of the claim would be
against equity and good conscience and not in the best interest of the
United States.  Generally, these criteria are met by a finding that the
claim arose from an administrative error with no indication of fraud,
fault, misrepresentation, or lack of good faith on the part of the service
member or any other person having an interest obtaining the waiver.

DISCUSSION AND CONCLUSIONS:

1.  The applicant acknowledged he was aware he was being overpaid.  As any
reasonable person would have done, he should have kept the overpayments of
HFP and federal taxes (through improper withholding) until the problem was
resolved.  He should not have utilized the funds because the monies were
not rightfully his to use.

2.  The applicant has established no basis for remitting or canceling his
$8,869.48 debt to the Government.  Neither has he presented evidence to
substantiate a financial hardship as a result of said repayment.

BOARD VOTE:

________  ________  ________  GRANT FULL RELIEF

________  ________  ________  GRANT PARTIAL RELIEF

________  ________  ________  GRANT FORMAL HEARING

__sk____  __jtm___  __rld___  DENY APPLICATION
BOARD DETERMINATION/RECOMMENDATION:

The evidence presented does not demonstrate the existence of a probable
error or injustice.  Therefore, the Board determined that the overall
merits of this case are insufficient as a basis for correction of the
records of the individual concerned.



                                        Stanley Kelley
                                  ______________________
                                            CHAIRPERSON



                                    INDEX

|CASE ID                 |AR20050009197                           |
|SUFFIX                  |                                        |
|RECON                   |                                        |
|DATE BOARDED            |20051115                                |
|TYPE OF DISCHARGE       |                                        |
|DATE OF DISCHARGE       |                                        |
|DISCHARGE AUTHORITY     |                                        |
|DISCHARGE REASON        |                                        |
|BOARD DECISION          |(DENY)                                  |
|REVIEW AUTHORITY        |                                        |
|ISSUES         1.       |129.0500                                |
|2.                      |                                        |
|3.                      |                                        |
|4.                      |                                        |
|5.                      |                                        |
|6.                      |                                        |


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