[Code of Federal Regulations]
[Title 32, Volume 1]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR78.5]

[Page 393-394]
 
                       TITLE 32--NATIONAL DEFENSE
 
              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE
 
PART 78--VOLUNTARY STATE TAX WITHHOLDING FROM RETIRED PAY--Table of Contents
 
Sec. 78.5  Procedures.

    (a) The Uniformed Services shall comply with the payment 
requirements of the state, city, or county tax laws. Therefore, the 
payment requirements (biweekly, monthly, or quarterly) of the state, 
city, or county tax laws currently in effect will be observed by the 
Uniformed Services. However, payment will not be made more frequently 
than required by the state, city, or county, or more frequently than the 
payroll is paid by the Uniformed Services. Payment procedures shall 
conform, to the extent practicable, to the usual fiscal practices of the 
Uniformed Services.
    (b) A member may request that the State designated for withholding 
be changed and that the subsequent withholdings be remitted as amended. 
A member may revoke his or her request for withholding at any time. Any 
request for a change in the State designated or any revocation is 
effective on the first day of the month after the month in which the 
request or revocation is processed by the Uniformed Service concerned, 
but in no event later than on the first day of the second month 
beginning after the day on which the request or revocation is received 
by the Uniformed Service concerned.

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    (c) A member may have in effect at any time only one request for 
withholding under this part. A member may not have more than two such 
requests in effect during any one calendar year.
    (d) The agreements with States may not impose more burdensome 
requirements on the United States than on employers generally or subject 
the United States, or any member, to a penalty or liability because of 
such agreements.
    (e) The Uniformed Services shall perform the services under this 
part without accepting payment from States for such services.
    (f) The Uniformed Services may honor a retiree's request for refund 
until a payment has been made to the State. After that, the retiree may 
seek a refund of any State tax overpayment by filing the appropriate 
State tax form with the State that received the voluntary withholding 
payments. The Uniformed Services may honor a retiree's request for 
refund until a payment has been made to the State. State refunds will be 
in accordance with State income tax policy and procedures.
    (g) A member may request voluntary tax withholding by writing the 
retired pay office of his or her Uniformed Service. The request shall 
include: The member's full name, social security number, the fixed 
amount to be withheld monthly from retired pay, the State designated to 
receive the withholding, and the member's current residence address. The 
request shall be signed by the member, or in the case of incompetence, 
his or her guardian or trustee. The amount of the request for State tax 
withholding must be an even dollar amount, not less than $10 or less 
than the State's minimum withholding amount, if higher. The Uniformed 
Services' retired pay office addresses are given as follows:
    (1) Defense Finance and Accounting Service, Attn: DFAS/PRR/CL, 1240 
East Ninth Street, Cleveland, OH 44199-2055.
    (2) Coast Guard: Commanding Officer (RPB), U.S. Coast Guard Human 
Resources Service and Information Center, 444 S. E. Quincy Street, 
Topeka, KS 66683-3591.
    (3) U.S. Public Health Service Compensation Branch, 5600 Fishers 
Lane, Room 4-50, Rockville, MD 20857.
    (4) National Oceanic and Atmospheric Administration, Commanding 
Officer (RPB), U.S. Coast Guard Human Resources Service and Information 
Center, 444 S. E. Quincy Street, Topeka, KS 66683-3591.
    (h) If a member's retired pay is not sufficient to satisfy a 
member's request for a voluntary State tax, then the withholding will 
cease. A member may initiate a new request when such member's retired 
pay is restored in an amount sufficient to satisfy the withholding 
request.
    (i) A State requesting an agreement for the voluntary withholding of 
State tax from the retired pay of members of the Uniformed Services 
shall indicate, in writing, its agreement to be bound by the provisions 
of this part. If the State proposes an agreement that varies from the 
Standard Agreement, the State shall indicate which provisions of the 
Standard Agreement are not acceptable and propose substitute provisions. 
The letter shall be addressed to the Director, Defense Finance and 
Accounting Service, 1931 Jefferson Davis Highway, Arlington, VA 22240. 
To be effective, the letter must be signed by a State official 
authorized to bind the State under an agreement for tax withholding. 
Copies of applicable State laws that authorize employers to withhold 
State income tax and authorize the official to bind the State under an 
agreement for tax withholding shall be enclosed with the letter. The 
letter also shall indicate the title and address of the official whom 
the Uniformed Services may contact to obtain information necessary for 
implementing withholding.
    (j) Within 120 days of the receipt of a letter from a State, the 
Director, Defense Finance and Accounting Service, or designee, will 
notify the State, in writing, that DoD has either entered into the 
Standard Agreement or that an agreement cannot be entered into with the 
State and the reasons for that determination.

[50 FR 47220, Nov. 15, 1985, as amended at 50 FR 49930, Dec. 6, 1985; 68 
FR 36914, June 20, 2003]

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