Teresita Lorenzo v. Department of Defense (Education Activity) 01A61644 9-13-06 . Teresita Lorenzo, Complainant, v. Donald H. Rumsfeld, Secretary, Department of Defense (Education Activity), Agency. Appeal No. 01A61644 Agency No. DEFY9301 DECISION On January 12, 2006, Teresita Lorenzo (complainant) filed an appeal from the December 13, 2005, final decision of the Department of Defense (Education Activity) (agency) denying her claim for reimbursement of her increased federal tax liability incurred when the agency paid her lump sum amounts of back pay. The appeal is timely filed (see 29 C.F.R. § 1614.402(a)) and is accepted in accordance with 29 C.F.R. § 1614.405. In EEOC Request No. 05950931 (November 6, 1997), the Commission directed the Department of Defense (Education Activity) (agency) to redress complainant following a finding that agency officials had discriminated against her on the basis of race/national origin (Asian/Phillippines) in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq. The Commission found that the agency discriminated against petitioner when she was not selected for a teaching position as a 'CONUS' employee in 1989, to teach in Japan, and directed the agency, in relevant part, to pay petitioner "back pay, interest, and other benefits" retroactive to August 1, 1989. According to the agency, in 1998 and 1999, it paid petitioner back pay. Subsequently, in EEOC Petition No. 04A40035 (September 29, 2005), the Commission found that the agency was liable to complainant for her increased federal tax burden as a result of her receipt of back pay in a lump sum.<1> We noted, however, that complainant "bears the burden to prove the amount to which s/he claims entitlement" and that the agency's liability extended only to her "proven adverse federal income tax consequences." [Emphasis supplied.] We informed complainant, in addition, that the letter from her accountant, written in November 1999, would likely not suffice and that a more detailed record would be required to support her claim for adverse federal tax consequences as a result of a lump sum payment. We noted that courts have demanded detailed probative calculations to support such claims and cited Barbour v. Medlantic Management Corp., 952 F.Supp. 857, 865 (D.C. 1997), which denied an award due to the claimant's failure to provide evidence on the difference between taxes paid on a lump sum payment and the amount of taxes that would have been paid had the salary been earned over time.<2> Having found that the agency was liable to complainant for her proven increased federal income tax liability, we remanded the question of complainant's entitlement to reimbursement to the agency. We ordered that the agency take action, i.e., to request that complainant submit her claim, to allow complainant 90 days to do so, and to issue a decision on the matter within 40 days after receipt of her submission. Our Order reminded complainant that "the burden of proof to establish the amount of additional tax liability, if any, is on the Petitioner. The calculation of additional tax liability must be based on the taxes the Petitioner would have paid had she received the back pay in the form of regular salary during the back pay period, versus the additional taxes she paid due to receiving the back pay lump sum awards in 1998-1999." After issuance of the above decision, complainant submitted her claim to the agency, demanding reimbursement for excess tax payments of $108,222. She stated that she did not include other income information, including her rental properties, because they "did not play a part in the calculations." Letter, October 25, 2005. On December 13, 2005, the agency issued its final agency decision (FAD), finding complainant's submission "grossly inflated and unsupported." Complainant filed an appeal on January 12, 2006, responding to the agency's FAD. Also on January 12, 2006, complainant sent a letter to the agency submitting a third revision of her claim, with some additional information, and stated: "If you find my computation defective, please correct it."<3> In its FAD, the agency determined that complainant was not entitled to receive reimbursement for her excess tax liability for three reasons, i.e., (1) the doctrine of sovereign immunity; (2) EEOC precedent holding that tax enhancement awards are compensatory damages and thus not available for acts of discrimination that occurred prior to November 21, 1999; and (3) complainant's failure to establish the amount actually due her.<4> In response, in her appeal statement, complainant argued in favor of her most recent methodology and contended that her other income information was "superfluous" to a determination of the agency's liability. Initially, we again remind complainant that her claim for reimbursement of state taxes and any claims for reimbursement of moving costs and travel expenses were previously denied. In EEOC Petition No. 04A40035, the Commission explicitly denied her claims for reimbursement of moving costs and travel expenses, since they had not been incurred, and for state taxes as too speculative. Under the Order in our previous case, complainant was afforded approximately five (5) months from the date of the Order to submit her claim. We note that she chose to make her submission within 30 days, refused to submit her actual income tax returns, and elected to not employ the services of a Certified Public Accountant (CPA).<5> We agree with the agency that complainant did not bear her burden to prove the amount of additional taxes she paid due to receipt of a lump sum back pay amount. The amount she claimed as income for each year did not, in fact, reflect her actual total income, and she failed to provide her actual income tax returns for the subject years. Instead she devised theoretical income tax returns as if she had been employed by the agency, the agency was her only employer in all years since 1989, and she filed as married filing individually. The result was an artifice of events that did not occur and had no grounding in reality, giving her an annual tax obligation in a much lower tax bracket than she actually paid. Because she did not provide her actual income tax records for 1989-1998 to the agency, it could not perform an independent analysis of her additional taxes, which it was entitled to do Complainant was advised on many occasions of the necessity to submit probative, exacting, and detailed calculations in support of her claim. As she has not met her burden to establish her excess tax liability, we affirm the agency's decision. CONCLUSION Accordingly, the agency's decision was proper and is AFFIRMED. STATEMENT OF RIGHTS - ON APPEAL RECONSIDERATION (M0701) The Commission may, in its discretion, reconsider the decision in this case if the complainant or the agency submits a written request containing arguments or evidence which tend to establish that: 1. The appellate decision involved a clearly erroneous interpretation of material fact or law; or 2. The appellate decision will have a substantial impact on the policies, practices, or operations of the agency. Requests to reconsider, with supporting statement or brief, must be filed with the Office of Federal Operations (OFO) within thirty (30) calendar days of receipt of this decision or within twenty (20) calendar days of receipt of another party's timely request for reconsideration. See 29 C.F.R. § 1614.405; Equal Employment Opportunity Management Directive for 29 C.F.R. Part 1614 (EEO MD-110), 9-18 (November 9, 1999). All requests and arguments must be submitted to the Director, Office of Federal Operations, Equal Employment Opportunity Commission, P.O. Box 19848, Washington, D.C. 20036. In the absence of a legible postmark, the request to reconsider shall be deemed timely filed if it is received by mail within five days of the expiration of the applicable filing period. See 29 C.F.R. § 1614.604. The request or opposition must also include proof of service on the other party. Failure to file within the time period will result in dismissal of your request for reconsideration as untimely, unless extenuating circumstances prevented the timely filing of the request. Any supporting documentation must be submitted with your request for reconsideration. The Commission will consider requests for reconsideration filed after the deadline only in very limited circumstances. See 29 C.F.R. § 1614.604(c). COMPLAINANT'S RIGHT TO FILE A CIVIL ACTION (S0900) You have the right to file a civil action in an appropriate United States District Court within ninety (90) calendar days from the date that you receive this decision. If you file a civil action, you must name as the defendant in the complaint the person who is the official agency head or department head, identifying that person by his or her full name and official title. Failure to do so may result in the dismissal of your case in court. "Agency" or "department" means the national organization, and not the local office, facility or department in which you work. If you file a request to reconsider and also file a civil action, filing a civil action will terminate the administrative processing of your complaint. RIGHT TO REQUEST COUNSEL (Z1199) If you decide to file a civil action, and if you do not have or cannot afford the services of an attorney, you may request that the Court appoint an attorney to represent you and that the Court permit you to file the action without payment of fees, costs, or other security. See Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. §§ 791, 794(c). The grant or denial of the request is within the sole discretion of the Court. Filing a request for an attorney does not extend your time in which to file a civil action. Both the request and the civil action must be filed within the time limits as stated in the paragraph above ("Right to File A Civil Action"). FOR THE COMMISSION: ______________________________ Carlton M. Hadden, Director Office of Federal Operations _____9-13-06_____________ Date 1The Commission has held that where an agency pays back pay and other income payments in a lump sum payment, the agency is responsible for a petitioner's proven increased income tax burden. See Goetze v. Department of the Navy, EEOC Appeal No. 01991530 (August 22, 2001); Holler v Department of the Navy, EEOC Appeal Nos. 01982627 & 01990407 (August 22, 2001). 2The decision in EEOC Petition No. 04A40035, in addition, denied complainant's claim for reimbursement for moving costs and travel expenses and for state taxes. For this reason, this decision will not acknowledge or address complainant's claims on these matters. 3In its FAD, the agency considered complainant's submission of October 25, 2005. We note that the agency had no obligation to address complainant's January 2006, revised claim, submitted after the agency issued the FAD and not within the time periods set out in our Order. 4The Commission will concern itself with No. (3), since the focus of our previous case mandated the agency to consider complainant's claim. By this action, we do not cede to the agency on its arguments in Nos. (1) and (2). 5The Order directed the agency to request complainant's submission within 30 days from the date our Order became final (which occurs 30 days after issuance) and to allow her 90 days more to prepare and submit her claim.