Attribution of Outside Earned Income Under the

Ethics in Government Act

The Federal Election Commission rule that allows federal em ployees to defer receipt of income from 

honoraria, so as to avoid the annual ceiling of $25,000 imposed by 2 U S.C . § 4411, does not apply 

to the provision m the Ethics in Governm ent Act of 1978, which limits outside earned income for 

presidential appointees to 15 percent o f their salary. For purposes of determining whether this 15 

percent limit has been m et, income w ill be attributed to the year in which the services relating to it 

were perform ed.

January 28, 1982

M EMORANDUM OPINION FOR THE COUNSEL TO THE PRESIDENT

This responds to your letter concerning Advisory Opinion 1981-10 approved 

by the Federal Election Commission (FEC) on April 9, 1981. You have asked for 

our opinion as to the effect of that opinion on the 15 percent limit on outside 

earned income imposed by the Ethics in Government Act of 1978. 5 U .S.C . App. 

§ 210 (1982). For the reasons set forth below, we conclude that the opinion of the 

Federal Election Commission does not affect the interpretation of the limit 

imposed by the Ethics in Government Act.

The opinion of the Federal Election Commission construed a provision administered by that Commission, 2 U .S .C . § 441i(a)(2). This section applies generally to government employees and prohibits them from accepting honoraria of 

more than $25,000 “ in any calendar year.” It was originally enacted in 1974 and 

was first interpreted to count all payments against the $25,000 limit during the 

year in which the related service was actually performed rather than in the year 

when the money was received.

Congress reversed this interpretation by legislation in 1977. It explicitly 

provided that “ an honorarium shall be treated as accepted only in the year in 

which that honorarium is received.” 2 U .S.C . § 44] i(d). The FEC subsequently 

issued Advisory Opinion 1981-10, concluding that 2 U.S.C. § 441i permitted an 

agreement between a federal employee and the payor of an honorarium to defer 

payment in order not to exceed the $25,000 maximum. Payments are counted 

toward the maximum only in the year in which they are actually received. The 

opinion was written following the release of the hostages from Iran when the 

demand for public appearances for them was extremely great.

The opinion notes that, consistent with the legislative history of the 1977 

amendment, the FE C ’s regulations were similar to those of the Internal Revenue

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Service. The sponsor of the amendment indicated the desire to treat both 

provisions consistently. Thus, income is taxed when it is constructively received. 

See 26 C.F.R. 1.45 l-2(a). The FEC opinion made no reference to the Ethics in 

Government Act.

The Ethics in Government Act includes a somewhat different limit on outside 

earned income that applies only to those government employees who are appointed by the President with the advice and consent of the Senate. Such employees 

“ may not have in any calendar year outside earned income attributable to such 

calendar year which is in excess of 15 percent of their salary.” 5 U.S.C. App. 

§ 210; 5 C.F.R. § 734.501 (emphasis added).

Your letter asks, in effect, whether the rule on receipt of income imposed by 2 

U .S.C. § 441(d) also applies to 5 U .S.C. App. § 210. Although the matter is not 

free from doubt, we do not believe that it should.

We note first that the language of5 U .S .C . App. § 210 is substantially different 

from that in 2 U.S.C. § 441 i. An important distinction is that the 15 percent limit 

imposed by § 210 applies to earned income “ attributable” to a particular year. 

As noted, Congress amended Title 2 in 1977 to change the interpretation so that 

income would only be charged to the statutory limit when it was actually 

received. When Congress enacted the Ethics in Government Act the following 

year, it thus had before it model language which would have enabled it to apply 

the same rule to the 15 percent limit. The difference in language is not in itself 

conclusive. Nevertheless, the fact that the two provisions, enacted within less 

than a year of each other, read so differently, strongly suggests that different 

interpretations are permissible.

The question remains as to what meaning should be given to earned income 

“ attributable” to a given year. In its ordinary sense, one thing is attributed to 

another if it is “ caused or brought about by” that other thing. Webster’s Third 

New Int’l Dictionary 142 (1976); cf. Ogden v. United States, 432 F. Supp. 214, 

216 (S.D. M iss., 1975). Thus, income would appear to be “ attributable” to the 

year in which the services which “ brought about” that income were performed.

The word “ attributable” might be given a different, technical meaning if the 

legislative history or the statutory purpose dictated this result. There seems to be 

no persuasive reason, however, for rejecting the ordinary meaning. 2A C. Sands, 

Sutherland Statutory Construction § 47.28 (4th ed. 1973). The 15 percent limit 

was added to the Ethics in Government Act as an amendment on the floor of the 

House. The legislative history provides no guidance as to its interpretation. 124 

Cong. Rec. 32006-08 (1978); H. R. Conf. Rep. 95-1756, 95th Cong., 2d Sess. 

72 (1978). The Revenue Code provisions which deal with rules for taxable year of 

inclusion of income do not use the word “ attributable,” 26 U.S.C. § 451 et seq.

It cannot therefore be argued that Congress, in using that word, was adopting a 

term of art from the tax code. Although it might make life somewhat easier for an 

appointee to use the same figures for both IRS and ethics purposes, one would not 

normally expect that the problem of income deferral would arise so often or that 

the problems would be so complex that consistency between ethics and IRS rules 

should be a major consideration.

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Statutes on the sam e subject should, of course, be construed together. 

Sutherland at § 51.02. There is, however, no necessary inconsistency in interpreting 5 U .S.C . App. § 210and 2U .S .C . § 441 differently as far as postponing 

receipt of income is concerned. The $25,000 limit in 2 U.S.C. § 4 4 1L applies to 

employees of all branches, elected or appointed. The limit is large enough to 

permit a substantial amount of outside income which may, in fact, rival the 

salaries received from the government. In the Ethics in Government Act, Congress subjected a much smaller group, key presidential appointees, to a stricter 

rule. The dollar limit is, in practical terms, a much lower figure than that 

permitted by Title 2. Fifteen percent of $60,000 for example, is only $9,000. 

This might, of course, lead appointees to adopt devices for avoiding this limit. 

Although one might think that the policy of preventing avoidance should have 

applied equally to 2 U.S.C. § 441i, it must be recognized that the pattern of the 

Ethics in Government Act, in general, was to impose the strictest burdens on key 

Executive Branch officials. It is therefore plausible that Congress intended to 

prevent the use of devices for stretching out receipt of income and weakening the 

effect of § 210. The limit is presumably intended to prevent them from profiting 

from their important and visible positions and prevent them from spending a 

substantial amount of time on activities apart from their official duties. It is for 

the latter reason that the Office of Government Ethics, which is charged with 

administering § 210, has taken the position that under 5 U .S.C. App. § 210, 

income will be attributed to a given year if the personal services relating to it were 

performed in that year.* (This position has not been incorporated in OGE 

regulations or reduced to writing, but we have been informed that they have 

consistently advised affected persons of this view.)

For the reasons stated, we do not believe that Advisory Opinion 1981-10 of the 

FEC applies to 5 U .S.C . App. § 210.

T h e o d o r e B . O l s o n

Assistant Attorney General

Office of Legal Counsel

♦Section 210 m ight have been written differently to achieve the sam e purpose, focusing perhaps on all outside 

activities rather than incom e This provision is, however, only one o f m any conflict-of-interest restrictions that apply 

to the activities of such appointees More obvious problem s, such as bribery or corruption, are dealt with elsewhere.

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