Court Opinion

ID: 4120090
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:45:09.842943+00
Date Added: 2024-06-11T14:46:50.144901
License: Public Domain

Attribution of Outside Earned Income Under the
                        Ethics in Government Act

T he Federal E lection Com m ission rule th at allows federal em ployees to defer receipt of incom e from
   honoraria, so as to avoid the annual ceilin g of $ 2 5 ,0 0 0 im posed by 2 U S .C . § 441 1 , does not apply
   to the provision m the Ethics in G overnm ent Act o f 1978, which limits outside earned incom e for
   presidential appointees to 15 percent o f their salary. For purposes of determ ining w hether this 15
   percent lim it 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 EM O RA N D U M OPINION FO R TH E 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 im posed 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
 im posed by the Ethics in Government Act.
   The opinion o f the Federal Election Com m ission construed a provision adm in­
istered by that Comm ission, 2 U .S .C . § 441i(a)(2). This section applies gener­
ally to governm ent employees an d 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 It was originally enacted in 1974 and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.
   C ongress 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
agreem ent betw een a federal employee and the payor of an honorarium to defer
paym ent in order not to exceed the $25,000 maximum. Payments are counted
toward the m axim um only in the year in which they are actually received. The
opinion was w ritten following th e release of the hostages from Iran when the
dem and for public appearances for them was extremely great.
   The opinion notes that, consistent with the legislative history of the 1977
am endm ent, the F E C ’s regulations were sim ilar 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 appoint­
ed 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 o f5 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. W hen 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 b y ” that other thing. W ebster’s Third
New In t’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 C ong., 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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   S tatu tes on the sam e sub ject sh o u ld , o f course, be construed together.
Sutherland at § 51.02. There is, however, no necessary inconsistency in inter­
preting 5 U .S .C . App. § 210and 2 U .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
em ployees of all branches, elected or appointed. The limit is large enough to
perm it a substantial amount o f outside income which may, in fact, rival the
salaries received from the government. In the Ethics in Government Act, Con­
gress subjected a m uch smaller group, key presidential appointees, to a stricter
rule. The dollar limit is, in practical terms, a much lower figure than that
perm itted by Title 2. Fifteen percent of $60,000 for example, is only $9,000.
This m ight, of course, lead appointees to adopt devices for avoiding this limit.
A lthough one m ight 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 G overnm ent 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 o f § 210. The limit is presum ably intended to prevent them from profiting
from their im portant and visible positions and prevent them from spending a
substantial am ount 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
adm inistering § 210, has taken the position that under 5 U .S.C . App. § 210,
incom e will be attributed to a given year if the personal services relating to it were
perform ed 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   heodore        B. O    lson

                                                                 Assistant Attorney General
                                                                  Office of Legal Counsel

   ♦S ection 210 m ight have been w ritten diffe re n tly to achieve the sam e purpose, focusing perhaps on all outside
activities rath er than incom e T h is provision is, how ever, only one o f m any conflict-of-interest restrictions that apply
to th e activities o f such appointees More o b v io u s problem s, such as bribery or corruption, are dealt with elsew here.

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