[Code of Federal Regulations]
[Title 5, Volume 1, Parts 1 to 699]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR550.808]

[Page 531-532]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
                CHAPTER I--OFFICE OF PERSONNEL MANAGEMENT
 
PART 550--PAY ADMINISTRATION (GENERAL)--Table of Contents
 
                           Subpart H--Back Pay
 
Sec. 550.808  Prohibition against setting aside proper promotions.

    Nothing in section 5596 of title 5, United States Code, or this 
subpart shall be construed as authorizing the setting aside of an 
otherwise proper promotion by a selecting official from a group of 
properly ranked and certified candidates.

[46 FR 58275, Dec. 1, 1981, as amended at 53 FR 18072, May 20, 1988, and 
53 FR 45886, Nov. 15, 1988]

 Appendix A to Subpart H of Part 550--Information on Computing Certain 
                 Common Deductions From Back Pay Awards

    To determine the net back payment owed an employee, an agency must 
make certain required deductions. (See Sec. 550.805(e)(3).) To compute 
these deductions, an agency must determine the appropriate base or 
follow other rules, consistent with applicable law. Some deductions, 
such as tax deductions, are not subject to OPM regulation. To assist 
agencies, this appendix summarizes the rules for certain common 
deductions. For further information on Federal tax deductions from back 
pay awards, please contact the Internal Revenue Service directly or 
review relevant IRS publications.

----------------------------------------------------------------------------------------------------------------
                            Type of deduction                                   How to Compute the deduction
----------------------------------------------------------------------------------------------------------------
(a) Mandatory employee retirement contributions..........................  Compute the deduction based on the
                                                                            basic pay portion of gross back pay
                                                                            before adding interest or applying
                                                                            any offset or deduction.
(b) Life insurance premiums..............................................  Compute the deduction based on the
                                                                            basic pay portion of gross back pay
                                                                            before adding interest or applying
                                                                            any offset or deduction.
(c) Social Security (OASDI) and Medicare taxes...........................  Compute the deduction based on
                                                                            adjusted gross back pay (gross back
                                                                            pay less the offset for outside
                                                                            earnings under Sec.  550.805(e)(1),
                                                                            but before adding interest). The
                                                                            deduction may be reduced dollar-for-
                                                                            dollar by the amount of any Social
                                                                            Security or Medicare taxes that were
                                                                            withheld from erroneous payments
                                                                            made in the same calendar year as
                                                                            the back pay award, but only if--
                                                                              (1) Those erroneous payments were
                                                                               actually recovered by the
                                                                               Government by offsetting the back
                                                                               pay award as provided in Sec.
                                                                               550.805(e)(2); and
                                                                              (2) Those withheld taxes have not
                                                                               already been repaid to the
                                                                               employee.
                                                                           Note: Social Security taxes are
                                                                            subject to the applicable Social
                                                                            Security tax wage base limit. In
                                                                            addition, see IRS guidance regarding
                                                                            possible correction and refunding of
                                                                            Social Security and Medicare taxes
                                                                            withheld from erroneous payments in
                                                                            a prior calendar year.

[[Page 532]]


(d) Federal income tax withholdings......................................  Compute the deduction based on
                                                                            adjusted gross back pay (gross back
                                                                            pay less the offset for outside
                                                                            earnings under Sec.  550.805(e)(1),
                                                                            but before adding interest) less any
                                                                            part of back pay not subject to
                                                                            income tax deductions, such as
                                                                            nonforeign area cost-of-living
                                                                            allowances and contributions to the
                                                                            Thrift Savings Plan that are
                                                                            deducted from the pay of the
                                                                            employee. The deduction may be
                                                                            reduced dollar-for-dollar by the
                                                                            amount of any Federal income taxes
                                                                            withheld from erroneous payments
                                                                            made in the same calendar year as
                                                                            the back pay award, but only if--
                                                                              (1) Those erroneous payments were
                                                                               actually recovered by the
                                                                               Government by offsetting the back
                                                                               pay award as provided in Sec.
                                                                               550.805(e)(2); and
                                                                              (2) Those withheld taxes have not
                                                                               already been repaid to the
                                                                               employee.
                                                                           Note: Additional Federal income tax
                                                                            withholdings from the interest
                                                                            portion of the back pay award may be
                                                                            required by the Internal Revenue
                                                                            Service in certain specific
                                                                            circumstances.
----------------------------------------------------------------------------------------------------------------


[64 FR 69179, Dec. 10, 1999]