Military Personnel
Actions Needed to Strengthen Management of Imminent Danger Pay and Combat Zone Tax Relief Benefits Gao ID: GAO-06-1011 September 28, 2006Servicemembers who are assigned, deployed, or travel on temporary duty to certain foreign areas are eligible for special pays and benefits including (1) imminent danger pay (IDP) when the Department of Defense (DOD) determines that members are subject to the threat of physical harm or imminent danger and (2) combat zone tax relief (CZTR) benefits, which allow members to exclude earned income from federal taxes. If travel to IDP- or CZTR-designated areas begins during one month and concludes during another (known as cross-month travel), members could receive 2 full months of benefits. GAO conducted this review under the Comptroller General's authority to initiate such reviews. GAO evaluated DOD's (1) process for reviewing IDP areas and (2) internal controls over servicemembers' temporary duty travel to areas designated for IDP and CZTR benefits. GAO is also providing information on the reporting of IDP and CZTR data. GAO analyzed legislation, guidance, travel vouchers, and internal control standards and interviewed appropriate officials.
DOD's processes for reviewing existing IDP areas could be improved. While combatant commanders have taken the initiative periodically to make recommendations to designate or terminate IDP areas, DOD has not conducted annual reviews of existing IDP designations in accordance with its guidance to ensure that conditions in these areas continue to warrant such designation. Also, DOD has not updated its guidance to reflect current responsibilities for initiating annual reviews or to include factors used to determine when conditions in foreign areas pose the threat of physical harm or imminent danger to servicemembers on duty in these locations. DOD conducted 6 annual reviews between 1992 and 2006. When conducting reviews, DOD has queried combatant commanders using a set of factors to determine the nature of threats to servicemembers. However, DOD has not incorporated these factors into its guidance. By conducting annual reviews in accordance with its guidance, DOD could strengthen its oversight of IDP designations to ensure that conditions in designated areas continue to pose the threat of physical harm or imminent danger to servicemembers and that these areas should continue to be designated. Internal controls over servicemembers' temporary duty travel to areas designated for IDP or CZTR benefits need to be strengthened. While two DOD components have instituted policies to regulate and monitor cross-month travel to these areas, there is no similar departmentwide policy to ensure that travel to areas designated for IDP or CZTR benefits needs to cross calendar months. Data limitations prevented GAO from determining the full extent of temporary duty travel to areas designated for IDP and CZTR benefits, as well as how much of this travel crosses calendar months. The U.S. Central Command and U.S. Army, Europe--which collectively account for 62 percent of IDP areas and 86 percent of CZTR benefit areas--have developed policies and controls to monitor and regulate cross-month travel to areas designated for IDP and CZTR benefits to preclude, in their view, the appearance of abuse of these benefits. By establishing internal controls such as a departmentwide policy and periodic audits to monitor cross-month travel, DOD could ensure all areas are covered and further strengthen its management of IDP and CZTR benefits. DOD tracks IDP costs and servicemembers' compensation that qualifies for CZTR benefits. While DOD reports the cost of IDP to Congress as part of its budget request, the department does not report servicemembers' compensation that qualifies for CZTR benefits. Combat zone tax relief benefits could allow servicemembers to exclude a significant portion of their income from federal taxes. Reporting data on CZTR benefits to Congress could provide information on the extent of this benefit and aid Congress in its oversight role.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-1011, Military Personnel: Actions Needed to Strengthen Management of Imminent Danger Pay and Combat Zone Tax Relief Benefits
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2006:
Military Personnel:
Actions Needed to Strengthen Management of Imminent Danger Pay and
Combat Zone Tax Relief Benefits:
Military Personnel:
GAO-06-1011:
GAO Highlights:
Highlights of GAO-06-1011, a report to congressional committees
Why GAO Did This Study:
Servicemembers who are assigned, deployed, or travel on temporary duty
to certain foreign areas are eligible for special pays and benefits
including (1) imminent danger pay (IDP) when the Department of Defense
(DOD) determines that members are subject to the threat of physical
harm or imminent danger and (2) combat zone tax relief (CZTR) benefits,
which allow members to exclude earned income from federal taxes. If
travel to IDP- or CZTR-designated areas begins during one month and
concludes during another (known as cross-month travel), members could
receive 2 full months of benefits.
GAO conducted this review under the Comptroller General‘s authority to
initiate such reviews. GAO evaluated DOD‘s (1) process for reviewing
IDP areas and (2) internal controls over servicemembers‘ temporary duty
travel to areas designated for IDP and CZTR benefits. GAO is also
providing information on the reporting of IDP and CZTR data. GAO
analyzed legislation, guidance, travel vouchers, and internal control
standards and interviewed appropriate officials.
What GAO Found:
DOD‘s processes for reviewing existing IDP areas could be improved.
While combatant commanders have taken the initiative periodically to
make recommendations to designate or terminate IDP areas, DOD has not
conducted annual reviews of existing IDP designations in accordance
with its guidance to ensure that conditions in these areas continue to
warrant such designation. Also, DOD has not updated its guidance to
reflect current responsibilities for initiating annual reviews or to
include factors used to determine when conditions in foreign areas pose
the threat of physical harm or imminent danger to servicemembers on
duty in these locations. DOD conducted 6 annual reviews between 1992
and 2006. When conducting reviews, DOD has queried combatant commanders
using a set of factors to determine the nature of threats to
servicemembers. However, DOD has not incorporated these factors into
its guidance. By conducting annual reviews in accordance with its
guidance, DOD could strengthen its oversight of IDP designations to
ensure that conditions in designated areas continue to pose the threat
of physical harm or imminent danger to servicemembers and that these
areas should continue to be designated.
Internal controls over servicemembers‘ temporary duty travel to areas
designated for IDP or CZTR benefits need to be strengthened. While two
DOD components have instituted policies to regulate and monitor cross-
month travel to these areas, there is no similar departmentwide policy
to ensure that travel to areas designated for IDP or CZTR benefits
needs to cross calendar months. Data limitations prevented GAO from
determining the full extent of temporary duty travel to areas
designated for IDP and CZTR benefits, as well as how much of this
travel crosses calendar months. The U.S. Central Command and U.S. Army,
Europe”which collectively account for 62 percent of IDP areas and 86
percent of CZTR benefit areas”have developed policies and controls to
monitor and regulate cross-month travel to areas designated for IDP and
CZTR benefits to preclude, in their view, the appearance of abuse of
these benefits. By establishing internal controls such as a
departmentwide policy and periodic audits to monitor cross-month
travel, DOD could ensure all areas are covered and further strengthen
its management of IDP and CZTR benefits.
DOD tracks IDP costs and servicemembers‘ compensation that qualifies
for CZTR benefits. While DOD reports the cost of IDP to Congress as
part of its budget request, the department does not report
servicemembers‘ compensation that qualifies for CZTR benefits. Combat
zone tax relief benefits could allow servicemembers to exclude a
significant portion of their income from federal taxes. Reporting data
on CZTR benefits to Congress could provide information on the extent of
this benefit and aid Congress in its oversight role.
What GAO Recommends:
GAO recommends that DOD strengthen management of IDP and CZTR benefits,
and added a matter for congressional consideration to improve reporting
DOD generally agreed with two recommendations and disagreed with a
third one to monitor cross-month travel.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-1011].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Sharon Pickup at (202)
512-9619 or pickups@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
DOD's Management of Its Imminent Danger Pay Program Could Benefit from
Additional Oversight:
DOD Does Not Have a Departmentwide Policy to Monitor Cross-Month Travel
to Areas Designated for Imminent Danger Pay or Combat Zone Tax Relief
Benefits:
DOD Tracks Imminent Danger Pay and Combat Zone Tax Relief Benefits and
Reports Some Data to Congress:
Conclusions:
Recommendations for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Areas Currently Designated for Imminent Danger Pay and
Combat Zone Tax Relief Benefits:
Appendix II: Presidentially Designated Combat Zones and Congressionally
Legislated Qualified Hazardous Duty Areas:
Appendix III: Military Service Certified as in Direct Support of Combat
Zone Operations:
Appendix IV: Scope and Methodology:
Appendix V: Comments from the Department of Defense:
Appendix VI: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Summary of Imminent Danger Pay and Combat Zone Tax Relief
Benefits:
Table 2: Number and Duration of Cross-Month Trips Eligible for 1 or 2
Months of Imminent Danger Pay or Combat Zone Tax Relief Benefits,
October 1, 2002, to September 30, 2005:
Table 3: Duration of Cross-Month Trips Eligible for 1 or 2 Months of
Imminent Danger Pay or Combat Zone Tax Relief Benefits by Combatant
Command, October 1, 2002, to September 30, 2005:
Table 4: Duration of Cross-Month Travel to Areas Not Designated for
Imminent Danger Pay or Combat Zone Tax Relief Benefits, October 1,
2002, to September 30, 2005:
Table 5: Port Visits to Areas within the U.S. European Command That Are
Designated for Imminent Danger Pay or Combat Zone Tax Relief Benefits:
Table 6: Summary of Areas Designated for Imminent Danger Pay and Combat
Zone Tax Relief Benefits:
Table 7: Combat Zones as of July 2006:
Table 8: Qualified Hazardous Duty Areas as of July 2006:
Table 9: Areas Certified by DOD Where Military Service Is in Direct
Support of Combat Zone Operations as of July 2006:
Figure:
Figure 1: Terrorist Threat Levels and Associated Number of Designated
Imminent Danger Pay Areas as of July 2006:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 28, 2006:
Congressional Committees:
In recognition of the dangers military servicemembers face and the
sacrifices they make on behalf of the United States, Congress has
established several special pays and benefits. In particular,
servicemembers who are assigned, deployed, or travel on temporary duty
to certain foreign areas are eligible for certain special pays and
benefits. These include (1) imminent danger pay for servicemembers on
duty in foreign areas designated by the Secretary of Defense in which a
servicemember is subject to the threat of physical harm or imminent
danger on the basis of civil insurrection, civil war, terrorism, or
wartime conditions[Footnote 1] and (2) combat zone tax relief benefits
that permit servicemembers to exclude all or a portion of their
compensation from federal taxes while serving in specific areas
designated by the President through Executive Order, known as combat
zones, or in areas designated by Congress, known as qualified hazardous
duty areas (see app. I and II).[Footnote 2]
Servicemembers may also qualify to receive combat zone tax relief
benefits when they are performing military duty outside of a combat
zone or in a congressionally established qualified hazardous duty area
if (1) duty in this area is in direct support of military operations in
a combat zone or qualified hazardous duty area and (2) the duty
qualifies a servicemember for hostile fire or imminent danger pay based
on the risks and dangers related to the combat zone.[Footnote 3] If a
servicemember travels to an area designated for imminent danger pay or
combat zone tax relief benefits, and the travel begins during one month
and concludes during another month (known as cross-month travel), the
servicemember receives 2 full months of the special pay and
benefit.[Footnote 4] Combat zone tax relief benefits can provide
significant financial benefits, especially if a servicemember qualifies
for this benefit on more than one occasion during a calendar year.
The Department of Defense (DOD) is responsible for designating imminent
danger pay areas and certifying locations where military service is in
direct support of combat zone operations. Over the past few decades,
DOD has designated an increasing number of areas for imminent danger
pay. Since imminent danger pay was first authorized on October 1, 1983,
the number of areas designated for this pay has increased from a few to
54 areas due primarily to the global security environment, according to
DOD.[Footnote 5] DOD has stated that a goal is to limit imminent danger
pay to only those servicemembers who face the threat of physical harm
or imminent danger,[Footnote 6] and DOD's guidance requires at least
annual reviews of designated areas to determine whether conditions
warrant the continued designation. In addition, since September 2001,
DOD has certified military service in several countries as directly
supporting combat operations in Afghanistan and Iraq. Currently, these
locations include Djibouti, Jordan, Pakistan, the Philippines, and
Yemen, among others (see app. III).
We have previously reported that clear policies, procedures, criteria,
and management oversight are needed to help agencies use resources
effectively and efficiently to meet organizational and program
objectives.[Footnote 7] We also previously reported that the federal
government's total costs to provide military compensation are
substantial and rising and that the nation's growing fiscal concerns
will require DOD and the federal government to consider difficult trade-
offs in the years ahead.[Footnote 8] According to DOD, since the
beginning of the Global War on Terrorism, military basic pay has
increased approximately 25 percent. DOD has reported paying more than
$2 billion in hostile fire and imminent danger pay to servicemembers
assigned, deployed, or traveling on temporary duty.[Footnote 9]
Furthermore, the Defense Finance and Accounting Service calculated that
between tax years 2003 and 2005, active duty servicemembers
collectively qualified to exclude more than $26 billion of their
compensation as a result of performing duty that qualified for combat
zone tax relief benefits. This amount includes servicemembers who
performed duty in areas that DOD has designated as in direct support of
military operations in combat zones.
Because of broad congressional interest in military pay and
compensation, we prepared this report under the authority of the
Comptroller General to conduct evaluations at his own
initiative.[Footnote 10] Our objectives were to evaluate DOD's (1)
process for reviewing imminent danger pay area designations and (2)
internal controls over servicemembers' temporary duty travel to areas
designated for imminent danger pay and combat zone tax relief benefits.
We are also providing information on DOD's tracking and reporting of
imminent danger pay and combat zone tax relief benefits to Congress. We
are addressing this report to you because of your jurisdiction over the
issues discussed in this report.
To evaluate DOD's process for reviewing imminent danger pay area
designations, to understand how servicemembers become eligible for
combat zone tax relief benefits, and to understand how DOD reports data
associated with this pay and benefit, we analyzed legislation,
regulations, and DOD guidance. We compared this guidance to the
objectives and fundamental concepts of internal control defined in
Standards for Internal Control in the Federal Government.[Footnote 11]
We also held discussions with knowledgeable officials from the Office
of the Under Secretary of Defense (Personnel and Readiness), the Joint
Chiefs of Staff, each of the services, and the geographic combatant
commands.[Footnote 12] We also reviewed questionnaires completed by
commanders at unified combatant commands with geographic responsibility
and used by the Office of the Under Secretary of Defense (Personnel and
Readiness) to evaluate area designations and the threat of imminent
danger. To understand the extent to which DOD has internal controls in
place to monitor servicemembers' temporary duty travel to foreign areas
designated for imminent danger pay or combat zone tax relief benefits,
we reviewed DOD's Foreign Clearance Guide that establishes DOD policy
for military personnel traveling overseas as well as combatant
commands' travel policies. We discussed these with officials
responsible for approving travel in accordance with the Foreign
Clearance Guide. We also obtained and analyzed 28,404 travel vouchers
processed by individual servicemembers using the Defense Travel System,
from October 1, 2002, through September 30, 2005. To assess the
reliability of these data, we interviewed knowledgeable officials,
reviewed relevant documentation, and conducted electronic testing. We
found these data to be sufficiently reliable for the purposes of our
work. However, data limitations prevented us from determining the full
extent of temporary duty travel to areas designated for imminent danger
pay or combat zone tax relief benefits, the total number of trips taken
by individual servicemembers during fiscal years 2003 through 2005, or
how much of this travel crossed calendar months. Furthermore, we were
unable to extrapolate travel patterns from the Defense Travel System to
DOD travel as a whole. Under DOD's Financial Management Regulations,
authorizing officials are responsible for determining the necessity of
trips and funds availability for temporary duty travel.[Footnote 13]
Further, DOD guidance states that DOD airlift authorizing officials
shall ensure that an official purpose is served by air travel.[Footnote
14] Therefore, we did not evaluate whether the purpose of the trips
were valid, but we did note that the U.S. Central Command and U.S.
Army, Europe, have developed policies and controls to preclude, in
their view, the appearance of abuse of imminent danger pay and combat
zone tax relief benefits. We conducted our review from October 2005
through July 2006 in accordance with generally accepted government
auditing standards. See appendix IV for more information about our
scope and methodology.
Results in Brief:
DOD's processes for reviewing existing imminent danger pay areas can be
improved. While combatant commanders have taken the initiative
periodically to make recommendations to designate or terminate imminent
danger pay areas, DOD has not conducted annual reviews of existing
imminent danger pay areas in accordance with its guidance to ensure
that conditions in these areas continue to warrant such designation.
Also, DOD has not updated its guidance to reflect current
responsibilities for initiating and managing annual reviews or to
include factors used to determine when conditions in foreign areas pose
the threat of physical harm or imminent danger to servicemembers on
duty in these locations. According to the Standards for Internal
Control in the Federal Government,[Footnote 15] clear policies,
procedures, and criteria are needed to help agencies use resources
effectively and efficiently to meet organizational and program
objectives. The Standards also emphasize the importance of management
oversight and review to ensure that programs continue to meet their
intended goals and comply with law and policies. DOD's imminent danger
pay guidance requires the unified combatant commanders to continuously
appraise conditions within designated areas to ensure that these areas
continue to present the threat of physical harm or imminent danger from
civil insurrection, civil war, terrorism, or wartime conditions, and to
submit their recommendations to continue or terminate area
designations, at least annually, to the Chairman, Joint Chiefs of
Staff, for review. At any time, unified combatant commanders may
recommend that additional areas be designated for imminent danger pay
or that existing area designations be terminated. The Chairman, in
turn, evaluates designation recommendations and, if the Chairman
recommends them for approval, forwards the unified combatant
commander's recommendations to the Under Secretary of Defense
(Personnel and Readiness).[Footnote 16] In practice, however, officials
in the Office of the Under Secretary of Defense (Personnel and
Readiness) have assumed responsibility for initiating and directly
managing these reviews. However, the combatant commanders have not
forwarded their recommendations to the Chairman, Joint Chiefs of Staff,
on existing designations at least annually, and the Under Secretary of
Defense (Personnel and Readiness) has not requested the combatant
commanders to do so. Rather, the Office of the Under Secretary of
Defense (Personnel and Readiness) requested the combatant commanders to
conduct these reviews six times between 1992 and 2006, and the 2006
review is ongoing. In the absence of annual reviews, unified combatant
commanders continued to recommend the designation of additional areas
for imminent danger pay as well as the termination of some designated
areas during that time period and the overall number of designated
areas increased from 34 to 54. According to DOD, the overall number of
designated areas increased during that time due to the changing global
security environment and the increase in the number of areas where
servicemembers face imminent danger, including areas supporting
Operation Enduring Freedom and Operation Iraqi Freedom. When DOD has
conducted reviews of areas designated for imminent danger pay, it has
queried combatant commanders using a set of factors to determine the
nature of threats to servicemembers arising from civil war, civil
insurrection, terrorism, or wartime conditions within designated
imminent danger pay areas. However, the department has not incorporated
these factors into its imminent danger pay guidance. In addition, DOD
has not updated its imminent danger pay guidance since 1992 to reflect
that the Office of the Under Secretary of Defense (Personnel and
Readiness) has assumed responsibility for initiating reviews of
imminent danger pay area designations. By conducting annual reviews in
accordance with its guidance, DOD could strengthen its oversight of
imminent danger pay designations to ensure that conditions in
designated areas continue to pose the threat of physical harm or
imminent danger to servicemembers and that these areas should continue
to be designated. Furthermore, updating DOD's guidance to include the
current processes and factors used for reviewing and designating
imminent danger pay areas would clarify responsibilities and establish
standard criteria for use in meeting the program's objectives.
Internal controls over servicemembers' temporary duty travel to areas
designated for imminent danger pay or combat zone tax relief benefits
need to be strengthened. While two DOD components have instituted
policies to regulate and monitor cross-month travel to these areas,
there is no similar departmentwide policy to ensure that travel to
areas designated for imminent danger pay or combat zone tax relief
benefits need to cross calendar months. Data limitations prevented us
from determining the full extent of temporary duty travel to areas
designated for imminent danger pay and combat zone tax relief benefits,
as well as how much of this travel crossed calendar months. The U.S.
Central Command and U.S. Army, Europe--which collectively account for
62 percent of imminent danger pay areas and 86 percent of areas
designated for combat zone tax relief designation--have developed
policies and controls to monitor and regulate cross-month travel to
areas designated for imminent danger pay and combat zone tax relief
benefits to preclude, in their view, the appearance of abuse of these
benefits. It is DOD's policy to minimize the number of visits and
visitors to overseas areas as well as demands on equipment, facilities,
time, installation services, and personnel visited. In addition, DOD's
temporary duty travel policy and its Foreign Clearance Guide,[Footnote
17] which implements this policy, provide mechanisms for the combatant
commands to regulate travel to foreign locations. Before any DOD
servicemember makes an official visit to a foreign country, including
areas where servicemembers qualify for imminent danger pay or combat
zone tax relief, the visit must be reviewed and approved by both the
U.S. embassy in the host country (country clearance) as well as by the
sponsoring unified commander (theater clearance). DOD's Foreign
Clearance Guide permits a unified combatant command to grant theater
clearance or to delegate this authority to component commands,
subordinate commands, special agencies, or units to be visited. The
Standards for Internal Control in the Federal Government[Footnote 18]
recommend that agencies establish internal controls to monitor and
review operations and programs to ensure that they meet their goals.
Moreover, we consider establishing such controls, including policies
and oversight mechanisms, a best practice that can help ensure
appropriate application of benefits such as imminent danger pay and
combat zone tax relief benefits. Two components, the Central Command
and the U.S. Army, Europe, have developed their own policies and
internal controls to regulate and monitor cross-month travel to
preclude, in their view, the perceived abuse of imminent danger pay and
combat zone tax relief benefits. To enforce its policy, the U.S Central
Command has established an electronic database with internal controls
that automatically alert officials to any proposed temporary duty
travel that crosses calendar months. The U.S. Army, Europe, requires
that all cross-month travel be approved by at least a colonel and its
Internal Review and Audit Compliance Office periodically reviews travel
to specific areas to monitor whether cross-month travel occurs.
However, DOD's departmentwide policies do not establish internal
controls to monitor or regulate cross-month travel, including to
foreign areas designated for certain special pays and benefits, such as
imminent danger pay and combat zone tax relief, and, with the exception
of U.S. Army, Europe, DOD does not conduct periodic audits of cross-
month travel to determine whether servicemembers are scheduling travel
in a fiscally responsible manner or attempting to maximize this pay and
benefit through cross-month travel. Our analysis of 28,404 vouchers for
temporary duty travel that were processed using the Defense Travel
System between October 1, 2002, and September 30, 2005, found that
cross-month travel does occur in 3 percent of the vouchers, thereby
qualifying the servicemember for 2 full months of imminent danger pay
and combat zone tax relief. We also obtained data from the U.S. Naval
Forces, Europe, for 56 ship port visits between fiscal years 2003 and
2005 to areas designated for imminent danger pay or combat zone tax
relief benefits within the European Command's area of responsibility.
By establishing internal controls such as a departmentwide policy and
periodic audits to monitor cross-month travel, DOD could ensure all
areas are covered and further strengthen its management of imminent
danger pay and combat zone tax relief benefits.
DOD tracks the cost of imminent danger pay and servicemembers'
compensation that qualifies for combat zone tax relief benefits. While
DOD reports the cost of imminent danger pay to Congress as part of its
budget request, the department does not report servicemembers'
compensation that qualifies for combat zone tax relief benefits. Combat
zone tax relief benefits could allow servicemembers to exclude a
significant portion of their compensation from federal taxes. For
example, enlisted personnel and warrant officers may exclude all
military compensation earned during one month. In 2006, the maximum
amount of compensation for commissioned officers that is eligible for
combat tax zone relief is $6,724.50 per month. The reporting of combat
zone tax relief benefit data to Congress could provide information on
the extent of this benefit and aid Congress in its oversight role.
We are making recommendations to strengthen DOD's internal controls and
management of imminent danger pay and combat zone tax relief benefits,
including monitoring travel to areas designated for these benefits, as
well as to assist Congress in its oversight role. In commenting on a
draft of this report, DOD generally agreed with two of our
recommendations and disagreed with a third recommendation to monitor
cross-month travel. DOD believes that it has sufficient travel
procedures and reviews over cross-month travel. Our work indicates
otherwise, and, thus, we continue to believe that our recommendation
has merit. DOD's comments and our evaluation of them can be found at
the end of this report. DOD's comments are reprinted in appendix V. In
addition, because of the substantial tax benefits that servicemembers
receive when performing duty in combat zones, we have added a matter
for congressional consideration. Congress should consider requiring DOD
to periodically report the amount of servicemembers' total compensation
that qualifies for combat zone tax relief benefits.
Background:
Congress has given the president the authority to issue executive
orders designating and terminating areas as combat zones. Since 1950,
U.S. presidents have designated combat zones in Korea, Vietnam, the
Persian Gulf area, the Kosovo area, and Afghanistan. U.S. presidents
terminated combat zone designations for Korea in 1955 and Vietnam in
1996[Footnote 19]. See appendix II for information on the current
combat zones. In addition, Congress has established qualified hazardous
duty areas where servicemembers serving in such areas receive the same
tax treatment as members serving in presidentially designated combat
zones.[Footnote 20] Congress has specified in this legislation,
however, that a servicemember on duty in a qualified hazardous duty
area is only entitled to combat zone tax relief benefits if that member
would also be entitled to hostile fire or imminent danger pay. Congress
has designated seven qualified hazardous duty areas since 1995 (see
app. II).
DOD is responsible for prescribing regulations for imminent danger pay
and for certifying locations where military service is in direct
support of combat zone operations. Servicemembers who perform duty in
certain foreign areas may be eligible for imminent danger pay as well
as income tax relief, in the form of combat zone tax relief benefits,
as summarized in table 1.[Footnote 21] See appendixes I, II, and III
for information about the locations designated for imminent danger pay
or combat zone tax relief benefits.
Table 1: Summary of Imminent Danger Pay and Combat Zone Tax Relief
Benefits:
Benefit: Imminent danger pay;
Description: Compensates a servicemember on duty in foreign areas
designated by the Secretary of Defense where the servicemember is
subject to the threat of physical harm or imminent danger on the basis
of (1) civil insurrection, (2) civil war, (3) terrorism, or (4) wartime
conditions. Within a designated area, DOD may limit imminent danger pay
to servicemembers who perform duty in an area's airspace, land, or
waters, or designate the entire area depending on the threat; The
Secretary of Defense has delegated responsibility for designating areas
to the Under Secretary of Defense (Personnel and Readiness);
Dollar Amount: $225/ month; Members receive the entire $225 if they
serve at least part of 1 day in a designated zone during the month;
Authority: 37 U.S.C. §310(a)(2)(D); DOD Instruction 1340.9.
Benefit: Combat zone tax relief;
Description: Servicemembers may qualify for combat zone tax relief when
serving in (1) presidentially designated combat zones, (2)
congressionally legislated qualified hazardous duty areas, or (3) areas
where the Secretary of Defense has certified military service as
directly supporting military operations in combat zones or qualified
hazardous duty areas;
Dollar Amount: Enlisted personnel and warrant officers may exclude all
military compensation earned during that month. For commissioned
officers, compensation is free of federal income tax up to the maximum
amount of enlisted pay plus any imminent danger or hostile fire pay
received;
Authority: 26 U.S.C. §112.
Benefit: Combat zones;
Description: A combat zone is any area that the president designates by
executive order as an area in which U.S. Armed Forces are or have
engaged in combat after June 24, 1950. An area ceases to be a combat
zone on the dates the president designates by executive order;
Dollar Amount: Enlisted personnel and warrant officers may exclude all
military compensation earned during that month. For commissioned
officers, compensation is free of federal income tax up to the maximum
amount of enlisted pay plus any imminent danger or hostile fire pay
received;
Authority: Pub. L. No. 104-117 (1996); Pub. L. No. 106-21 (1999).
Benefit: Qualified hazardous duty areas;
Description: Congress designates qualified hazardous duty areas by
legislation. Servicemembers on duty in these areas are entitled to the
same benefits afforded service in a presidentially designated combat
zone if the Secretary of Defense also designates the qualified
hazardous duty area for hostile fire or imminent danger pay.[A];
Dollar Amount: In 2006, the maximum amount of compensation for
commissioned officers that is eligible for combat tax zone relief is
$6,499.50 plus $225 imminent danger pay, or $6,724.50 per month;
Authority: [Empty].
Benefit: In direct support of combat zone operations;
Description: The Secretary of Defense has delegated responsibility for
certifying that areas meet eligibility criteria to the Under Secretary
of Defense (Personnel and Readiness). Certification requires that;
* service is in direct support of military operations in combat zones,;
* service qualifies the servicemember for hostile fire payor imminent
danger pay, and;
* hostile fire pay or imminent danger pay is related to activities and
circumstances in the combat zone or qualified hazardous duty area;
Dollar Amount: [Empty];
Authority: 26 C.F.R. §1.112-1; IRS Revenue Ruling 70-671 (1970); DOD
FMR 44103(c).
Source: GAO presentation of DOD Financial Management Regulation and 37
U.S.C. §310, 26 U.S.C. §112, 26 C.F.R. §112-1, Internal Revenue Service
Revenue Ruling 70-671 (1970), Pub. L. No. 104-117 (1996), Pub. L. No.
106-21 (1999) and DOD Financial Management Regulation 44103(c).
[A] Servicemembers who have been (1) subject to hostile fire or
explosion of a hostile mine; (2) on duty in an area in close proximity
to a hostile fire incident and the servicemembers are in danger of
being exposed to the same dangers; or (3) injured, wounded, or killed
by hostile fire, mines, or any kind of hostile action, receive hostile
fire pay as opposed to imminent danger pay, at a rate of $225 per
month. Servicemembers receive the entire $225 if they serve at least
part of 1 day on a designated zone during the month. 37 U.S.C. §310.
[End of table]
The Under Secretary of Defense (Comptroller) in coordination with the
director of the Defense Finance and Accounting Service is responsible
for maintaining and updating the Financial Management Regulation,
Volume 7A, that provides financial management policy and procedures for
DOD, including imminent danger pay and combat zone tax relief benefits.
In DOD's imminent danger pay guidance, the Under Secretary of Defense
(Personnel and Readiness) requires unified combatant commanders to
continually appraise the conditions within areas designated for
imminent danger pay to ensure that the designation is warranted, and to
forward written recommendations, at least annually, to the Chairman,
Joint Chiefs of Staff, who evaluates these designations to determine
whether conditions in these areas continue to present the threat of
physical harm or imminent danger from civil war, civil insurrection,
terrorism, or wartime conditions. The Chairman forwards area
designations that he recommends for approval to the Under Secretary of
Defense (Personnel and Readiness) with support for these
recommendations.
The Secretary of Defense has delegated the responsibility for
designating imminent danger pay areas and certifying military service
as in direct support of combat zone operations to the Under Secretary
of Defense (Personnel and Readiness) who is responsible for DOD
personnel policy, including oversight of military compensation, and as
such, serves as the focal point for imminent danger pay. DOD's imminent
danger pay guidance requires the unified combatant commanders to
continuously appraise conditions within designated areas to ensure that
these areas continue to present the threat of physical harm or imminent
danger from civil insurrection, civil war, terrorism, or wartime
conditions, and to submit their recommendations to continue or
terminate area designations, at least annually, to the Chairman, Joint
Chiefs of Staff, for review. At any time, unified combatant commanders
may recommend that additional areas be designated for imminent danger
pay or that existing area designations be terminated. The Chairman, in
turn, evaluates designation recommendations and, if the Chairman
recommends them for approval, forwards the unified combatant
commander's recommendations to the Under Secretary of Defense
(Personnel and Readiness). In practice, however, officials in the
Office of the Under Secretary of Defense (Personnel and Readiness) have
assumed responsibility for initiating and directly managing these
reviews.
DOD's Management of Its Imminent Danger Pay Program Could Benefit from
Additional Oversight:
DOD's processes for reviewing existing imminent danger pay areas and
combat zones can be improved. While combatant commanders have taken the
initiative periodically to make recommendations to designate or
terminate imminent danger pay areas, DOD has not conducted annual
reviews of existing imminent danger pay areas in accordance with its
guidance to ensure that conditions in these areas continue to warrant
such designations. Also, DOD has not updated its guidance to reflect
that the Office of the Under Secretary of Defense (Personnel and
Readiness) has assumed responsibility for initiating and managing
annual reviews. In addition, DOD also has not incorporated factors
contained in questionnaires completed by combatant commanders that the
Office of the Under Secretary of Defense (Personnel and Readiness) uses
to evaluate when conditions in foreign areas pose the threat of
physical harm or imminent danger to servicemembers performing duty in
designated locations. By conducting annual reviews of existing
designations in accordance with its guidance, DOD could strengthen its
oversight of imminent danger pay designations to ensure that conditions
in designated areas continue to pose the threat of physical harm or
imminent danger to servicemembers and that these areas should continue
to be designated. Furthermore, updating DOD's guidance to include the
current processes and factors used for reviewing and designating
imminent danger pay areas would clarify responsibilities and establish
standard criteria for use in meeting the program's objectives.
DOD Has Not Conducted Annual Reviews of Imminent Danger Pay
Designations in Accordance with Its Guidance:
Imminent danger pay was first authorized in October 1983.[Footnote 22]
Between 1992--when DOD revised its guidance to require annual reviews,
as opposed to semiannual reviews, of imminent danger pay area
designations--and 2006, the number of designated areas increased from
34 to 54 areas. (See appendix I for a list of areas currently
designated for imminent danger pay).
While DOD guidance requires the combatant commanders to continuously
appraise conditions in designated areas and to forward recommendations
to the Chairman, Joint Chiefs of Staff, to continue or terminate these
designations at least annually, in practice, the Office of the Under
Secretary of Defense has assumed responsibility for initiating and
managing these reviews. The combatant commanders have not forwarded
their recommendations on existing designations to the Chairman, Joint
Chiefs of Staff, at least annually, nor has the Under Secretary of
Defense (Personnel and Readiness) requested the combatant commanders to
do so. Between 1992 and 2006, the Under Secretary of Defense (Personnel
and Readiness) requested the unified combatant commanders to conduct
six reviews of designated imminent danger pay areas. Reviews were
conducted in 1992, 1993, 1995, 1997, and 2002; the 2006 review is
ongoing, and officials in the Office of the Under Secretary of Defense
(Personnel and Readiness) expect to complete it by October. In the
absence of annual reviews, the combatant commanders have taken the
initiative to periodically recommend the designation or termination of
imminent danger pay areas.
According to DOD officials, the Under Secretary of Defense (Personnel
and Readiness) deferred several reviews because of anticipated policy
revisions and concerns about creating additional work for combatant
commanders while they are engaged in ongoing operations. For instance,
DOD deferred the 1998 review pending the anticipated revision of its
imminent danger pay guidance to incorporate criteria for determining
whether conditions in designated areas continue to pose the threat of
physical harm or imminent danger from civil war, civil insurrection,
terrorism, or wartime conditions to servicemembers. However, this
revision did not occur. The department initiated the ongoing 2006
review shortly after we began our review. According to officials from
the Office of the Under Secretary of Defense (Personnel and Readiness),
the department deferred reviews between 2002 and 2006 because it did
not want to create additional work for combatant commanders during
ongoing operations, and department officials also believe that
conditions in most designated areas had not changed sufficiently since
the terrorist attacks of September 11, 2001, and the start of the
Global War on Terrorism to result in termination of designated areas.
Although DOD guidance calls for the combatant commanders to forward
recommendations to continue or to terminate imminent danger pay areas
at least annually, this has occurred at longer intervals ranging from 2
to 5 years.
As a result of combatant commander's recommendations as well as annual
reviews of imminent danger pay areas conducted by the combatant
commanders at the request of the Under Secretary of Defense (Personnel
and Readiness), the department has terminated area designations where
conditions no longer pose the threat of physical harm or imminent
danger from civil war, civil insurrection, terrorism, or wartime
conditions. For instance, as a result of the 1993 review, DOD
terminated imminent danger pay designation for areas including Oman,
the United Arab Emirates, Bahrain, Qatar, and the Gulfs of Oman and
Aden as well as the Arabian Sea because the department determined that
conditions no longer posed the threat of physical harm or imminent
danger toward servicemembers. The department has also denied requests
from unified combatant commanders to designate new areas for imminent
danger pay when there is not sufficient information to demonstrate that
conditions pose a threat of physical harm or imminent danger to
servicemembers on duty in the location, based on criteria used in a
questionnaire and accompanying threat assessments.
By conducting annual reviews of existing designations in accordance
with its guidance, DOD could strengthen its oversight of imminent
danger pay designations to ensure that conditions in designated areas
continue to pose the threat of physical harm or imminent danger to
servicemembers and that these areas should continue to be designated.
DOD Has Not Updated Guidance to Reflect Current Responsibilities or
Incorporated Factors to Define Criteria:
DOD has not updated its imminent danger pay guidance to (1) reflect the
responsibility of the Office of the Under Secretary of Defense
(Personnel and Readiness) for initiating and managing annual reviews of
imminent danger pay areas or (2) to incorporate factors that DOD uses
to evaluate and define when servicemembers face imminent danger.
Updating guidance to include the current processes and factors used for
reviewing and designating imminent danger pay areas would clarify
responsibilities and establish standard criteria for use in meeting the
objectives of the imminent danger pay program.
First, while DOD's imminent danger pay area guidance requires the
unified combatant commanders and Joint Chiefs of Staff to conduct
reviews of areas designated for imminent danger pay at least annually,
in practice, the Under Secretary of Defense (Personnel and Readiness)
has directly managed these reviews since the mid-1990s. However, as
previously discussed, the combatant commanders have not forwarded
recommendations on existing designations to the Chairman, Joint Chiefs
of Staff, on an annual basis in accordance with DOD's guidance and the
Under Secretary of Defense (Personnel and Readiness) has not requested
them to do so on an annual basis. In addition, DOD has not updated its
imminent danger pay guidance to show that the Under Secretary of
Defense (Personnel and Readiness) has been assigned the functions,
relationships, and authorities previously assigned to the position of
the Assistant Secretary of Defense (Force Management and Personnel).
Second, the Federal Managers' Financial Integrity Act of 1982 states
that agencies must establish internal administrative controls in
accordance with the standards prescribed by the Comptroller
General.[Footnote 23] The Comptroller General published these standards
in Standards for Internal Control in the Federal Government, which sets
out management control standards for all aspects of an agency's
operations. These standards are intended to provide reasonable
assurance of meeting agency objectives. Two of the standards of
internal control--risk assessment and control activities--state that an
agency should establish clear objectives as well as appropriate
policies, procedures, and plans with respect to its activities to
ensure effective and efficient use of resources to meet organizational
objectives.[Footnote 24]
Neither the statute that authorizes imminent danger pay nor DOD
guidance define what constitutes the threat of physical harm or
imminent danger or contain criteria to determine this. However, in
1997, DOD developed a questionnaire that contains specific factors that
it continues to use to evaluate requests from combatant commands to
designate new imminent danger pay areas as well as to review existing
imminent danger pay designations. These factors help DOD to gather
consistent information that supports its goal to limit imminent danger
pay to those members placed in direct or imminent danger. The factors
consider:
* acts of violence against U.S. personnel, such as assassinations,
homicides, sabotage, kidnapping, aggravated battery, property damage,
terrorizing, extortion, rioting, and commandeering vessels or hijacking
aircraft;
* insurrection, war, or wartime conditions, including fighting that
occurs sufficiently close to servicemembers that creates a substantial
probability of death or bodily injury to servicemembers, causes
servicemembers to fear for their safety, or creates danger to human
life or property;
* terrorism conditions, including the existence of terrorist
organizations that have the intent or ability to harm servicemembers or
terrorist threat levels indicative of an imminent threat;
* security environment, that places U.S. forces at risk. DOD also
considers existing security measures including threat condition levels
and operating tempo levels, as well as restrictions on leave and off-
duty travel and measures taken by the host government to protect
servicemembers;
* travel restrictions, including restriction of servicemembers to duty
stations, installations, or defined sections of the area; and:
* presence of dependents in the area, including school-age dependents,
whether dependents are targets, and the security measures in place to
protect them.
We reviewed 54 completed questionnaires for imminent danger pay--some
for the same countries over a period of time--that were submitted by
combatant commands to the Office of the Under Secretary of Defense
(Personnel and Readiness) between 1998 and 2005. We found that DOD is
using information supplied on these questionnaires, in conjunction with
threat assessments, to inform decisions to designate new imminent
danger pay areas and to review existing designations to ensure that
they continue to be appropriately designated. For instance, DOD denied
requests from the U.S. Central Command to designate Turkmenistan and
Kazakhstan for imminent danger pay in 2001 because the support provided
in the questionnaires did not demonstrate an imminent threat of
physical harm or danger to servicemembers based on civil war, civil
insurrection, terrorism, or wartime conditions in those areas. DOD also
denied a request from the U.S. European Command in 2003 to designate a
number of areas, including Bulgaria, Romania, Hungary, and Cyprus, for
imminent danger pay based on the probability of increased danger to
military personnel due to their involvement in combat operations
related to Iraq as well as general terrorist threats to DOD personnel.
The Office of the Under Secretary of Defense (Personnel and Readiness)
determined that there was not sufficient support of an imminent threat
of personal harm to servicemembers on official duty in these areas. In
contrast, DOD has designated areas, such as Ethiopia, for imminent
danger pay based on facts and circumstances that indicate the
likelihood that U.S. personnel might be harmed as a result of civil
unrest. Beginning in 2006, Congress authorized the Secretary of Defense
to retroactively designate an area for imminent danger pay, subject to
the availability of appropriated funds.[Footnote 25]
Despite the demonstrated usefulness of these questionnaires to decision
makers, DOD has not incorporated factors contained in the questionnaire
into its imminent danger pay guidance. For example, DOD does not
include minimum terrorist threat levels, one such potential factor
identified in the questionnaire, in its imminent danger pay guidance.
While terrorist threat levels for a country may change over time and
are raised and lowered on the basis of new information and analysis, in
the past DOD officials responsible for overseeing imminent danger pay
have considered establishing minimum terrorist threat levels of "high"
or "significant" to help assess the imminence of threats and dangers
from terrorism. Although DOD has yet to do so, we believe that
establishing a minimum terrorist threat level threshold needed for an
area to be designated for imminent danger pay could help to limit
imminent danger pay to those servicemembers who truly face an imminent
threat or danger to their lives and would likely reduce the number of
imminent danger pay area designations. Currently, DOD identifies
terrorist threat levels using the Defense Intelligence Agency's four
step scale (see fig. 1) that describes the severity of a
threat.[Footnote 26]
Figure 1: Terrorist Threat Levels and Associated Number of Designated
Imminent Danger Pay Areas as of July 2006:
[See PDF for image]
Source: Defense Intelligence Agency, Air Force Protection Guide,
Department of the Army, Physical Security Field Manual, and GAO
analysis.
[End of figure]
For example, using Defense Intelligence Agency terrorism threat levels,
if current threat levels for designated areas remain constant and DOD
was to establish a minimum terrorist threat level of "significant" for
areas to be designated for imminent danger pay, then designations for
19 currently designated areas with threat levels below "significant"
would be terminated. These areas include Angola, Burundi, Croatia, and
Haiti. However, 29 areas with "high" or "significant" terrorist threat
levels, such as Indonesia, the Philippines, Columbia, Iraq, Kuwait,
Malaysia, Qatar, and Syria, would continue to qualify for imminent
danger pay. Due to changing world circumstances since July 2006, the
terrorist threat levels may have changed.
DOD Does Not Have a Departmentwide Policy to Monitor Cross-Month Travel
to Areas Designated for Imminent Danger Pay or Combat Zone Tax Relief
Benefits:
Internal controls over servicemembers' temporary duty travel to areas
designated for imminent danger pay or combat zone tax relief benefits
need to be strengthened. While two DOD components have instituted
policies to regulate and monitor cross-month travel to these areas,
there is no similar departmentwide policy to ensure that travel to
areas designated for imminent danger pay or combat zone tax relief
benefits needs to cross calendar months. Data limitations prevented us
from determining the full extent of temporary duty travel to areas
designated for imminent danger pay and combat zone tax relief benefits,
as well as how much of this travel crossed calendar months. However,
the U.S. Central Command and U.S. Army, Europe--which collectively
account for 62 percent of imminent danger pay areas and 86 percent of
areas designated for combat zone tax relief benefits--have developed
policies and controls to monitor and regulate cross-month travel to
areas designated for imminent danger pay and combat zone tax relief
benefits to preclude, in their view, the appearance of abuse of these
benefits. Our review of data from DOD's Defense Travel System as well
as data for ship port visits to the U.S. European Command's area of
responsibility show that cross-month travel does occur. By establishing
internal controls such as a departmentwide policy and periodic audits
to monitor cross-month travel, DOD could ensure that all areas are
covered and further strengthen its management of imminent danger pay
and combat zone tax relief benefits.
No Departmentwide Monitoring of Cross-Month Travel Occurs, but Two
Commands Have Taken Steps to Regulate Cross-Month Travel:
Internal controls over servicemembers' temporary duty travel to areas
designated for imminent danger pay or combat zone tax relief benefits
need to be strengthened. It is DOD's policy to minimize the number of
visits and visitors to overseas areas as well as demands on equipment,
facilities, time, installation services, and personnel.[Footnote 27] In
addition, DOD's temporary duty travel policy and its Foreign Clearance
Guide,[Footnote 28] which implements this policy, provide mechanisms
for the unified combatant commands to regulate travel to foreign
locations. Before any servicemember makes an official visit to a
foreign country, including areas where servicemembers qualify for
imminent danger pay or combat zone tax relief benefits, the visit must
be reviewed and approved by both the U.S. embassy in the host country
(country clearance) as well as by the sponsoring unified commander
(theater clearance). DOD's Foreign Clearance Guide permits the unified
combatant command to grant theater clearance or to delegate this
authority to component commands, subordinate commands, special
agencies, or units to be visited. The Standards for Internal Control in
the Federal Government[Footnote 29] recommend that agencies establish
internal controls to monitor and review operations and programs to
provide reasonable assurance that these meet their goals. Moreover, we
consider establishing such controls, including policies and oversight
mechanisms, a best practice that can ensure that cross-month travel
needs to cross calendar months, especially to areas designated for
imminent danger pay or combat zone tax relief benefits. With the
exception of U.S. Army, Europe, DOD does not conduct periodic audits of
cross-month travel.
Although there is no requirement to do so, the U.S. Central Command and
U.S. Army, Europe--which collectively account for 62 percent of
imminent danger pay areas and 86 percent of areas designated for combat
zone tax relief designation--have developed policies and internal
controls to monitor and regulate cross-month travel to areas for which
they provide theater clearance. According to U.S. Central Command
officials, they instituted this policy to preclude, in their view, the
appearance of abuse of imminent danger pay and combat zone tax relief
benefits. Specifically, the U.S. Central Command--which consists of 29
(approximately 55 percent) of the areas currently designated for
imminent danger pay and 20 (approximately 71 percent) of the areas
currently designated for combat zone tax relief benefits--precludes
travel that crosses months to its area of responsibility. According to
U.S. Central Command officials, the command instituted this policy in
2003 as a result of the high pace of operations and to preclude, in
their view, the abuse of imminent danger pay and combat zone tax relief
benefits. All five sea areas and all but 3 of the 27 countries in the
U.S. Central Command's area of responsibility are designated for
imminent danger pay, and 16 of these countries as well as all sea areas
are designated for combat zone tax relief benefits (see app. I).
To enforce its policy, the U.S. Central Command has established an
electronic database with internal controls that automatically alert
officials to any proposed temporary duty travel that crosses calendar
months. Officials in the U.S. Central Command's Travel Clearance
Office, which is responsible for granting theater clearance, review all
requests from servicemembers not assigned to the U.S. Central Command
to travel to countries in the command's area of responsibility. If the
proposed travel dates cross calendar months, the Travel Clearance
Office requests that the traveler changes the dates of the trip or
provide justification for why the trip needs to occur at that time.
According to a command official, appropriate justification may include
mission requirements or the limited availability of flights. However,
according to an official, most travelers choose to change the dates of
travel to avoid crossing months.
In 2005, U.S. Army, Europe, which was delegated authority by the U.S.
European Command to approve travel to locations in the former Federal
Republic of Yugoslavia, instituted a policy precluding cross-month
travel--although this was minimal--to Bosnia-Herzegovina; Croatia;
Serbia and Montenegro, including Kosovo; Macedonia; and Slovenia in
order to prevent, in their view, the perceived abuse of combat zone tax
relief benefits. These areas, excluding Slovenia, are designated for
imminent danger pay and combat zone tax relief benefits and constitute
approximately 8 percent of the areas currently designated for imminent
danger pay and approximately 14 percent of the areas currently
designated for combat zone tax relief benefits. In addition, U.S. Army,
Europe, requires that a colonel or general officer approve all cross-
month travel, and its Internal Review and Audit Compliance Office
periodically reviews travel to specific areas to monitor whether cross-
month travel occurs. According to an official in the U.S. Army, Europe,
Internal Review and Audit Compliance Office, cross-month travel
accounted for 1.6 percent of all travel to countries for which U.S.
Army, Europe, approves theater clearance requests. Although no similar
policy precludes cross-month travel to Georgia, a country for which the
U.S. Marine Corps Forces, Europe, has been delegated authority by the
U.S. European Command to approve travel, an official who is responsible
for approving travel to this location told us that since January 2005
the U.S. Marine Corps Forces, Europe, has monitored travel requests for
potential cross-month travel. Neither U.S. Naval Forces, Europe, nor
U.S. Air Forces in Europe has policies to monitor temporary duty travel
that crosses calendar months. We did not determine the amount of cross-
month travel conducted by servicemembers under these commands.
In contrast, neither U.S. European Command (excluding U.S. Army,
Europe), U.S. Pacific Command, or U.S. Southern Command--which
collectively account for 20 (about 38 percent) imminent danger pay
areas and 4 (about 14 percent) combat zone tax relief benefits--have
policies that address temporary duty travel that crosses calendar
months.
Although two commands have instituted policies and internal controls to
preclude the perceived abuse of imminent danger pay and combat zone tax
relief by regulating and monitoring cross-month travel, no requirement
exists for DOD to monitor cross-month travel to 38 percent of areas
currently designated for imminent danger pay and 14 percent of areas
currently designated for combat zone tax relief benefits. By
establishing internal controls, such as a departmentwide policy and
periodic audits to monitor cross-month travel, DOD could ensure that
all areas are covered and further strengthen its management of imminent
danger pay or combat zone tax relief benefits.
Analysis of Defense Travel System Vouchers Indicates That Cross-Month
Travel Occurs:
Our analysis of data from the Defense Travel System indicates that
cross-month travel does occur during temporary duty travel. We reviewed
28,404 vouchers for temporary duty travel that were processed using the
Defense Travel System for travel that occurred between fiscal years
2003 and 2005. During about 18 percent (5,152) of these trips, a
servicemember traveled to an area that is designated for imminent
danger pay or combat zone tax relief benefits at some point during the
trip regardless of whether the trip crossed months. About 93 percent
(1,469) of the 1,576 trips that crossed calendar months were to
countries within the Central Command's and European Command's areas of
responsibility.
We found that 1,576 (about 6 percent) of the 28,404 trips processed
using the Defense Travel System from fiscal year 2003 through fiscal
year 2005 involved cross-month travel to an area designated for
imminent danger pay or combat zone tax relief benefits, including trips
during which servicemembers were eligible for imminent danger pay or
combat zone tax relief benefits during 1 or 2 months. For instance,
servicemembers traveling in areas designated for imminent danger pay or
combat zone tax relief benefits qualified for 2 full months of imminent
danger pay and combat zone tax relief benefits for 745 (about 3
percent) of the 28,404 trips. Also, during 831 (about 3 percent) of the
28,404 trips, individual servicemembers traveled to areas designated
for imminent danger pay or combat zone tax relief benefits at some
point during a single month, although their travel crossed calendar
months. As a result, these servicemembers qualified for 1 month of
imminent danger pay or combat zone tax relief benefits. As depicted in
table 2, we also found that the 1,576 cross-month trips ranged in
duration from 2 days to more than 15 days.
Table 2: Number and Duration of Cross-Month Trips Eligible for 1 or 2
Months of Imminent Danger Pay or Combat Zone Tax Relief Benefits,
October 1, 2002, to September 30, 2005:
Fiscal year: 2003;
2 days or less: 0;
3 to 4 days: 0;
5 to 6 days: 1;
7 to 14 days: 0;
15 or more days: 2;
Total number of trips: 3.
Fiscal year: 2004;
2 days or less: 0;
3 to 4 days: 2;
5 to 6 days: 7;
7 to 14 days: 82;
15 or more days: 45;
Total number of trips: 136.
Fiscal year: 2005;
2 days or less: 6;
3 to 4 days: 115;
5 to 6 days: 154;
7 to 14 days: 674;
15 or more days: 488;
Total number of trips: 1,437.
Fiscal year: Total number of trips;
2 days or less: 6;
3 to 4 days: 117;
5 to 6 days: 162;
7 to 14 days: 756;
15 or more days: 535;
Total number of trips: 1,576.
Source: GAO analysis of Defense Travel System data.
Note: The majority of our data reflect travel that occurred during
fiscal year 2005. Defense Travel System data for fiscal years 2003 and
2004 were minimal because DOD locations were just beginning to
transition from using approximately 43 legacy systems for processing
travel vouchers during this time frame.
[End of Table]
The six trips that involved cross-month travel lasting 2 days or less
were to Afghanistan, Haiti, Iraq, and the Philippines for training,
meetings, special missions, and site visits.
Most of these 1,576 cross-month trips were to the U.S. Central
Command's area of responsibility and the majority was longer than 7
days in duration, as shown in table 3.
Table 3: Duration of Cross-Month Trips Eligible for 1 or 2 Months of
Imminent Danger Pay or Combat Zone Tax Relief Benefits by Combatant
Command, October 1, 2002, to September 30, 2005:
Trip duration: 2 days or less;
Combatant Command: Central Command: 3;
Combatant Command: European Command: 0;
Combatant Command: Pacific Command: 1;
Combatant Command: Southern Command: 2;
Combatant Command: Total trips: 6.
Trip duration: 3 to 4 days;
Combatant Command: Central Command: 100;
Combatant Command: European Command: 9;
Combatant Command: Pacific Command: 3;
Combatant Command: Southern Command: 5;
Combatant Command: Total trips: 117.
Trip duration: 5 to 6 days;
Combatant Command: Central Command: 117;
Combatant Command: European Command: 41;
Combatant Command: Pacific Command: 4;
Combatant Command: Southern Command: 0;
Combatant Command: Total trips: 162.
Trip duration: 7 to 14 days;
Combatant Command: Central Command: 628;
Combatant Command: European Command: 71;
Combatant Command: Pacific Command: 37;
Combatant Command: Southern Command: 20;
Combatant Command: Total trips: 756.
Trip duration: 15 or more days;
Combatant Command: Central Command: 405;
Combatant Command: European Command: 95;
Combatant Command: Pacific Command: 32;
Combatant Command: Southern Command: 3;
Combatant Command: Total trips: 535.
Trip duration: Total;
Combatant Command: Central Command: 1,253;
Combatant Command: European Command: 216;
Combatant Command: Pacific Command: 77;
Combatant Command: Southern Command: 30;
Combatant Command: Total trips: 1,576.
Source: GAO analysis of temporary duty travel vouchers processed using
the Defense Travel System.
[End of table]
The Air Force and the Army account for the majority of cross-month
travel. In addition, we found that officers at the O-3 and O-4 pay
grades accounted for the greatest number of cross-month trips by active
duty officers to areas designated for imminent danger pay and combat
zone tax relief benefits during fiscal years 2003 through 2005. In
contrast, officers at the O-7, O-8, O-9, and O-10 pay grades made the
least number of cross-month trips to areas designated for imminent
danger pay or combat zone tax relief benefits. Enlisted servicemembers
at the E-3, E-5, and E-6 pay grades made the majority of cross-month
trips by active duty enlisted servicemembers to areas designated for
this special pay or benefit during fiscal years 2003 through 2005.
In comparison, we found that 23,083 (about 81 percent) of the 28,404
trips processed using the Defense Travel System from fiscal year 2003
through fiscal year 2005 involved travel to areas that were not
designated for either imminent danger pay or combat zone tax relief
during fiscal years 2003 to 2005.[Footnote 30] Further, we found that
4,414 trips (about 16 percent) of the 28,404 trips crossed calendar
months, but did not include travel to areas designated for imminent
danger pay or combat zone tax relief benefits. Of these 4,414 trips,
3,058 (about 69 percent) were 7 or more days in duration and 1,356
(about 31 percent) were less than a week in duration, as shown in table
4.
Table 4: Duration of Cross-Month Travel to Areas Not Designated for
Imminent Danger Pay or Combat Zone Tax Relief Benefits, October 1,
2002, to September 30, 2005:
Fiscal year: 2003;
2 days or less: 0;
3 to 4 days: 2;
5 to 6 days: 2;
7 to 14 days: 5;
15 days or more: 67;
Total number of trips: 76.
Fiscal year: 2004;
2 days or less: 32;
3 to 4 days: 47;
5 to 6 days: 88;
7 to 14 days: 181;
15 days or more: 178;
Total number of trips: 526.
Fiscal year: 2005;
2 days or less: 223;
3 to 4 days: 426;
5 to 6 days: 536;
7 to 14 days: 1,479;
15 days or more: 1,148;
Total number of trips: 3,812.
Fiscal year: Total number of trips;
2 days or less: 255;
3 to 4 days: 475;
5 to 6 days: 626;
7 to 14 days: 1,665;
15 days or more: 1,393;
Total number of trips: 4,414.
Source: GAO analysis of Defense Travel System data.
Note: The majority of our data reflect travel that occurred during
fiscal year 2005. Defense Travel System data for fiscal years 2003 and
2004 were minimal because DOD locations were just beginning to
transition from using 43 legacy systems for processing travel vouchers
during this time frame.
[End of Table]
However, due to data limitations, we were unable to determine whether
this travel was representative of temporary duty travel departmentwide.
U.S. Navy Ships Make Port Visits to Designated Areas and These Visits
May Cross Calendar Months:
Data provided by U.S. Naval Forces, Europe, indicate that some ships
make port visits to areas designated for imminent danger pay or combat
zone tax relief benefits, and that some of these port visits cross
calendar months thus qualifying servicemembers for 2 months of imminent
danger pay, and more significantly, combat zone tax relief benefits.
Although ship commanders determine ship movements within an operating
area, U.S. Naval Forces, Europe, determines the location of port visits
based on security concerns and joint exercises and operations, among
other considerations. The U.S. Naval Forces, Europe, provided data on
port visits made by Navy ships for fiscal years 2003 through 2005 to
areas designated for imminent danger pay or combat zone tax relief
benefits within the U.S. European Command's area of responsibility.
According to these data, for which we did not validate the accuracy, 56
ships made port visits to areas designated for imminent danger pay or
combat zone tax relief benefits within the U.S. European Command's area
of responsibility during this time. Seven of these ships made port
calls to areas designated for imminent danger pay or combat zone tax
relief that crossed calendar months (see table 5).
Table 5: Port Visits to Areas within the U.S. European Command That Are
Designated for Imminent Danger Pay or Combat Zone Tax Relief Benefits:
Country/sea area of port visit: Croatia;
Designated for imminent danger pay: June 22, 1992-present;
Designated for combatant zone tax relief benefits: November 1995-
present;
Number of ships making port calls: Fiscal year 2003: 4;
Number of ships making port calls: Fiscal year 2004: 9;
Number of ships making port calls: Fiscal year 2005: 8;
Number of port calls that crossed calendar months: Fiscal year 2003: 2;
Number of port calls that crossed calendar months: Fiscal year 2004: 0;
Number of port calls that crossed calendar months: Fiscal year 2005: 2;
Purpose of port visits: Quality of life port visit, refueling, training
exercise.
Country/sea area of port visit: Israel;
Designated for imminent danger pay: January 31, 2002-present;
Designated for combatant zone tax relief benefits: January 1, 2003-July
31, 2003;
Number of ships making port calls: Fiscal year 2003: 4;
Number of ships making port calls: Fiscal year 2004: 5;
Number of ships making port calls: Fiscal year 2005: 5;
Number of port calls that crossed calendar months: Fiscal year 2003: 1;
Number of port calls that crossed calendar months: Fiscal year 2004: 1;
Number of port calls that crossed calendar months: Fiscal year 2005: 0;
Purpose of port visits: Quality of life port visit, training exercise.
Country/sea area of port visit: Mediterranean Sea (east of 30 degrees
east);
Designated for imminent danger pay: March 19, 2003-July 31, 2003;
Designated for combatant zone tax relief benefits: March 19, 2003- July
31, 2003;
Number of ships making port calls: Fiscal year 2003: 1;
Number of ships making port calls: Fiscal year 2004: 1l
Number of ships making port calls: Fiscal year 2005: 0;
Number of port calls that crossed calendar months: Fiscal year 2003: 0;
Number of port calls that crossed calendar months: Fiscal year 2004: 0;
Number of port calls that crossed calendar months: Fiscal year 2005: 0;
Purpose of port visits: Quality of life port visit.
Country/sea area of port visit: Turkey;
Designated for imminent danger pay: March 1, 1998-present;
Designated for combatant zone tax relief benefits: September 21, 2001-
December 31, 2005;
Number of ships making port calls: Fiscal year 2003: 10;
Number of ships making port calls: Fiscal year 2004: 9;
Number of ships making port calls: Fiscal year 2005: 0;
Number of port calls that crossed calendar months: Fiscal year 2003: 0;
Number of port calls that crossed calendar months: Fiscal year 2004: 1;
Number of port calls that crossed calendar months: Fiscal year 2005: 0;
Purpose of port visits: Quality of life port visit.
Source: U.S. Navy, Europe.
Note: Data provided by the U.S. Naval Forces, Europe, are from fiscal
year 2003 through fiscal year 2005. Areas may have been designated for
imminent danger pay or combat zone tax relief benefits prior to the
time of our review, such as was the case with Croatia and Israel. These
designations may still be in effect.
[End of table]
According to U.S. Naval Forces, Europe, the purpose of these port
visits was generally for quality of life reasons or part of training or
exercises.
DOD paid approximately $7.5 million to the 26,849 servicemembers who
qualified for imminent danger pay for 1 month and the 3,284
servicemembers who qualified for 2 months of imminent danger pay
because the port visit crossed calendar months. We did not determine
how much compensation servicemembers qualified to exclude from federal
taxes as a result of these port visits.
We focused on port visits made by ships and did not obtain individual
ships' logs to determine whether ships crossed into sea areas
designated for imminent danger pay or combat zone tax relief benefits
while en route to other destinations or while performing operations. We
also did not obtain similar data for the U.S. Central Command because
most ports and all sea areas in its area of responsibility are
designated for imminent danger pay or combat zone tax relief benefits.
We also did not obtain this information from the U.S. Southern Command
or U.S Pacific Command because few countries and no sea areas in their
areas of responsibility are designated for imminent danger pay or
combat zone tax relief benefits.
DOD Tracks Imminent Danger Pay and Combat Zone Tax Relief Benefits and
Reports Some Data to Congress:
DOD tracks the cost of imminent danger pay and servicemembers'
compensation that qualify for combat zone tax relief benefits. While
DOD tracks and reports the cost of imminent danger pay to Congress as
part of its budget request, the department does not report the amount
of servicemembers' compensation that qualifies for combat zone tax
relief benefits. Combat zone tax relief benefits could allow
servicemembers to exclude a significant portion of their compensation
from federal taxes. For example, enlisted personnel and warrant
officers may exclude all military compensation earned during one month.
For commissioned officers, compensation is free of federal income tax
up to the maximum amount of enlisted pay plus any imminent danger or
hostile fire pay received. In 2006, the maximum amount of compensation
for commissioned officers that is eligible for combat tax zone relief
is $6,499.50 plus $225 imminent danger pay, or $6,724.50 per
month.[Footnote 31] The Defense Finance and Accounting Service reports
servicemembers' compensation that qualifies for combat zone tax relief
benefits to the services' financial management offices. However, there
is no requirement for DOD to report this information to Congress. The
reporting of combat zone tax relief benefit data to Congress could
provide information on the extent of this benefit and aid Congress in
its oversight role.
Conclusions:
With concerns about the long-term sustainability of rising costs
associated with military compensation, it is important that DOD
effectively manage its imminent danger pay program to ensure that only
those servicemembers who are subject to the threat of physical harm or
imminent danger on the basis of civil war, civil insurrection,
terrorism, or wartime conditions while on duty in a designated foreign
area receive imminent danger pay. While DOD has significantly increased
the number of areas designated for imminent danger pay over the past 14
years, it has conducted reviews of these areas only six times between
1992 and 2006, and the current review is ongoing. In addition, we
believe that updating guidance to reflect the responsibility of the
Office of the Under Secretary of Defense (Personnel and Readiness) for
reviewing area designations and incorporating factors into its guidance
to determine what specifically constitutes imminent danger, would
clarify responsibilities and establish standard criteria for use in
meeting the objectives of the imminent danger pay program.
Clearly, it is important that servicemembers are appropriately
compensated for the duties they perform, particularly when there are
risks associated with those duties. It is also important that DOD
ensure the need for cross-month travel as both the U.S. Central Command
and U.S. Army, Europe, are doing. Although these two commands have
instituted policies and internal controls to preclude the perceived
abuse of imminent danger pay and combat zone tax relief by regulating
and monitoring cross-month travel, no requirement exists for DOD to
monitor cross-month travel to 38 percent of areas currently designated
for imminent danger pay and 14 percent of areas currently designated
for combat zone tax relief benefits. Managing these programs
effectively is important, as the nation's growing fiscal concerns will
require DOD and the federal government to consider difficult trade-offs
in the years ahead. In addition, internal controls to monitor cross-
month travel could ensure all designated areas are covered and further
strengthen DOD's management of imminent danger pay and combat zone tax
relief benefits.
Finally, combat zone tax relief benefits can be substantial. Congress
may benefit from obtaining information on servicemembers' total
compensation that qualifies for combat zone tax relief benefits as a
means to assist in providing oversight of this benefit.
Recommendations for Executive Action:
To strengthen DOD's internal controls and management of imminent danger
pay and to monitor cross-month travel, we recommend that the Secretary
of Defense direct the Under Secretary of Defense (Personnel and
Readiness) to take the following three actions:
* Update DOD's imminent danger pay guidance to (1) reflect the office
responsible for reviewing and designating imminent danger pay areas and
(2) incorporate factors that clearly define what constitutes the
presence of imminent threat or dangers to servicemembers on duty in
foreign areas.
* Request the designated organizations to conduct reviews of areas
designated for imminent danger pay in accordance with DOD's guidance,
and, if necessary, update its guidance to reflect the appropriate time
period for conducting these reviews.
* Establish departmentwide policies and internal controls that include
periodic audits to monitor cross-month travel to ensure that the travel
needs to cross calendar months.
Matter for Congressional Consideration:
In light of the substantial tax benefits that servicemembers receive
when performing duty in combat zones, Congress should consider the
following action:
* Require DOD to periodically report the amount of servicemembers'
total compensation that qualifies for combat zone tax relief benefits
to Congress.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DOD generally concurred
with two of our three recommendations, but did not concur with our
recommendation to establish a departmentwide policy and internal
controls to monitor cross-month travel to ensure that the travel needs
to cross calendar months. DOD also provided separate technical comments
which we have incorporated in the report, as appropriate.
DOD concurred with our recommendation to update DOD's imminent danger
pay guidance. DOD acknowledged that there are informal processes and
additional guidance and concurs that its informal policy should be
updated to reflect the office currently responsible for the review and
to provide additional clarification and guidance as to what factors are
considered in determining whether imminent danger pay is warranted.
DOD partially concurred with our recommendation to conduct
comprehensive reviews of imminent danger pay area designations, noting
it had conducted reviews six times since 1992 and expects to complete
its ongoing review by October 31, 2006. DOD stated that the department
believes that comprehensive reviews of imminent danger pay should be
conducted at least biennially. DOD's current imminent danger pay
guidance requires at least annual reviews of areas designated for
imminent danger pay. We continue to believe that DOD should conduct
reviews of areas designated for imminent danger pay in accordance with
its guidance, which is reflected in our recommendation. If DOD believes
that the appropriate time period for conducting these reviews is
biennially, as reflected in its comments, then DOD should update its
imminent danger pay guidance accordingly.
DOD did not concur with our recommendation to establish departmentwide
policies and internal controls that include periodic audits to monitor
cross-month travel to ensure that the travel needs to cross calendar
months. DOD stated in written comments that doing so would add
unnecessary bureaucracy and cost to its travel system and believes that
our recommended action is already implemented in existing travel
procedures that require thorough review and management of the necessity
and cost-effectiveness of travel by DOD personnel. Further, DOD
commented that our review found no apparent abuse of cross-month travel
and the two commands that collectively account for the majority of
imminent danger pay and combat zone tax relief benefits have developed
theater-specific policies and controls to monitor and regulate cross-
month travel. As stated in our scope and methodology and the report,
data limitations prevented us from determining the full extent of
temporary duty travel to areas designated for imminent danger pay and
combat zone tax relief benefits, as well as how much of this travel
crossed calendar months. Further, we reviewed only temporary duty
travel vouchers processed using DOD's Defense Travel System. We did not
review travel that was processed in DOD's numerous legacy travel
systems, and therefore did not reach any conclusions as to whether
servicemembers have scheduled travel in a fiscally responsible manner
or have attempted to maximize this pay and benefit by scheduling cross-
month travel. We recognize DOD has procedures in place to review and
authorize travel. Our recommendation addresses the need to have greater
monitoring of travel trends. Moreover, although two commands have
instituted policies and internal controls to preclude the perceived
abuse of imminent danger pay and combat zone tax relief by regulating
and monitoring cross-month travel, no requirement exists for DOD to
monitor cross-month travel to the 38 percent of areas currently
designated for imminent danger pay and the 14 percent of areas
currently designated for combat zone tax relief benefits not covered by
these two commands. Also, while we recognize that these commands
currently reflect the majority of areas designated for imminent danger
pay and combat zone tax relief benefits, security conditions are
subject to change over time. Therefore, we continue to believe our
recommendation has merit and that internal controls to monitor cross-
month travel departmentwide are needed to ensure all designated areas
are covered and further strengthen DOD's management of imminent danger
pay and combat zone tax relief benefits.
In response to the other written comments provided by DOD, we modified
the report to acknowledge that the global security environment has
played a role in the increased number of areas designated for imminent
danger pay since 1992. In addition, we modified the report to reflect
that danger pay was first authorized on October 1, 1983, by Public Law
98-94, section 905.
We are sending copies of this report to congressional committees, the
Secretary of Defense, the secretaries of the Army, the Navy, the Air
Force; and the Commandant of the Marine Corps. We will also make copies
available to other interested parties upon request. In addition, the
report will be available at no charge on the GAO Web site at
[Hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please call
me at (202) 512-9619 or pickups@gao.gov. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. The GAO contact and key contributors are listed in
appendix VI.
Signed by:
Sharon Pickup:
Director, Defense Capabilities and Management:
List of Congressional Committees:
The Honorable John Warner:
Chairman:
The Honorable Carl Levin:
Ranking Minority Member:
Committee on Armed Services:
United States Senate:
The Honorable Ted Stevens:
Chairman:
The Honorable Daniel K. Inouye:
Ranking Minority Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Duncan L. Hunter:
Chairman:
The Honorable Ike Skelton:
Ranking Minority Member:
Committee on Armed Services:
House of Representatives:
The Honorable C.W. Bill Young:
Chairman:
The Honorable John P. Murtha:
Ranking Minority Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Areas Currently Designated for Imminent Danger Pay and
Combat Zone Tax Relief Benefits:
Table 6 identifies the areas designated for imminent danger pay or
combat zone tax relief benefits as of July 2006.
Table 6: Summary of Areas Designated for Imminent Danger Pay and Combat
Zone Tax Relief Benefits:
Area: Adriatic Sea;
Designated for imminent danger pay: [Empty];
Designated for combat zone tax relief: X;
Combatant command responsible for area: European Command.
Area: Afghanistan;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Albania;
Designated for imminent danger pay: [Empty];
Designated for combat zone tax relief: X;
Combatant command responsible for area: European Command.
Area: Algeria;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Angola;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Arabian Sea North of 10 degrees North latitude and West of 68
degrees East longitude;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Azerbaijan;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Bahrain;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Bosnia-Herzegovina;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: European Command.
Area: Burundi;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Colombia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Southern Command.
Area: Cote d'Ivoire;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Croatia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: European Command.
Area: Democratic Republic of Congo (formerly Zaire);
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Djibouti;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: East Timor;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Pacific Command.
Area: Egypt;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Central Command.
Area: Eritrea;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Central Command.
Area: Ethiopia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Central Command.
Area: Georgia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Greece (Athens);
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Gulf of Aden;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Gulf of Oman;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Haiti;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Southern Command.
Area: Indonesia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Pacific Command.
Area: Ionian Sea north of the 39[TH] parallel;
Designated for imminent danger pay: [Empty];
Designated for combat zone tax relief: X;
Combatant command responsible for area: European Command.
Area: Iran;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Central Command.
Area: Iraq;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Israel;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Jordan;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Kenya;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Central Command.
Area: Kuwait;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Kyrgyzstan;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Lebanon;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Central Command.
Area: Liberia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Macedonia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: European Command.
Area: Malaysia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Pacific Command.
Area: Oman;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Pakistan;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Persian Gulf;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Philippines;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Pacific Command.
Area: Qatar;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Red Sea;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Rwanda;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Saudi Arabia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Serbia and Montenegro, including Kosovo[A];
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: European Command.
Area: Sierra Leone;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Somalia;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Central Command.
Area: Sudan;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: Central Command.
Area: Syria;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Tajikistan;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Turkey;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: Uganda;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: [Empty];
Combatant command responsible for area: European Command.
Area: United Arab Emirates;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Uzbekistan;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Area: Yemen;
Designated for imminent danger pay: X;
Designated for combat zone tax relief: X;
Combatant command responsible for area: Central Command.
Source: DOD data; GAO presentation.
Note: Although a geographic command, the Northern Command's area of
responsibility--the continental United Stated, Alaska, and the
surrounding waters as well as the Gulf of Mexico, Puerto Rico, and the
U.S. Virgin Islands--are not eligible for imminent danger pay because
they are not foreign areas.
[A] For purposes of this chart, Serbia and Montenegro are presented as
one area. However, when calculating the number of areas designated for
imminent danger pay, Serbia and Montenegro are considered separate
areas.
[End of table]
[End of section]
Appendix II: Presidentially Designated Combat Zones and Congressionally
Legislated Qualified Hazardous Duty Areas:
Combat Zones:
A combat zone is any area that the president designates by executive
order as an area in which U.S. Armed Forces are or have engaged in
combat after June 24, 1950. An area ceases to be a combat zone on the
dates the president designates by executive order. Since 1950, U.S.
presidents have designated combat zones in Korea, Vietnam, the Persian
Gulf, the Kosovo area, and Afghanistan. U.S. presidents terminated
combat zone designations for Korea in 1955 and Vietnam in 1996.
Enlisted personnel and warrant officers may exclude from taxes all
military compensation earned during the month that they serve in a
combat zone. For commissioned officers, compensation is free of federal
income tax up to the maximum amount of enlisted pay plus any imminent
danger or hostile fire pay received. In 2006, the maximum amount of
compensation for commissioned officers that is eligible for combat tax
zone relief is $6,499.50 plus $225 imminent danger pay, or $6,724.50
per month.[Footnote 32] Table 7 depicts the current combat zones.
Table 7: Combat Zones as of July 2006:
Combat zones: Afghanistan, including airspace above;
Designated by: Executive Order 13239;
Date designated: September 19, 2001.
Combat zones: The Kosovo area including airspace above: Federal
Republic of Yugoslavia (Serbia/Montenegro), Albania, Adriatic Sea,
Ionian Sea north of the 39th parallel;
Designated by: Executive Order 13119;
Date designated: March 24, 1999.
Combat zones: Persian Gulf area, including airspace above:
* Arabian Sea north of 10 degrees north latitude and west of 68 degrees
east longitude;
* Bahrain;
* Gulf of Aden;
* Gulf of Oman;
* Iraq;
* Kuwait;
* Oman;
* Persian Gulf;
* Qatar;
* Red Sea;
* Saudi Arabia;
* United Arab Emirates;
Designated by: Executive Order 12744;
Date designated: January 17, 1991.
Source: Executive Orders 12744, 13119, and 13239.
[End of table]
Qualified Hazardous Duty Areas:
Servicemembers on duty in qualified hazardous duty areas designated by
Congress are entitled to the same benefits afforded those who serve in
a presidentially designated combat zone if the Secretary of Defense
also designates that qualified hazardous duty area for imminent danger
pay.[Footnote 33] If Congress designates a qualified hazardous duty
area, but the Secretary of Defense has not designated the area for
imminent danger pay, servicemembers deployed to the area are not
eligible to receive combat zone tax relief unless the qualified
hazardous duty area becomes eligible for imminent danger pay. If the
Secretary of Defense terminates imminent danger pay for a qualified
hazardous duty area, members no longer receive combat zone tax relief
benefits. Table 8 depicts the current qualified hazardous duty areas.
Table 8: Qualified Hazardous Duty Areas as of July 2006:
Qualified hazardous duty area:
* Bosnia-Herzegovina;
* Croatia;
* Macedonia;
Authority: Public Law 104-117;
Date designated: November 21, 1995.
Qualified hazardous duty area:
* Federal Republic of Yugoslavia (Serbia/Montenegro);
* Albania;
* Adriatic Sea;
* Ionian Sea north of the 39th parallel;
Authority: Public Law 106-21;
Date designated: March 24, 1999.
Source: Public Laws 104-117 and 106-21.
[End of table]
[End of section]
Appendix III: Military Service Certified as in Direct Support of Combat
Zone Operations:
DOD has certified military service as in direct support of military
operations in combat zones, thus qualifying servicemembers for combat
zone tax relief benefits (see table 9). Unlike the other areas
identified in the table, Jordan is the only area where DOD has
certified military service as in direct support of combat zone
operations as part of both Operation Enduring Freedom and Operation
Iraqi Freedom.
Table 9: Areas Certified by DOD Where Military Service Is in Direct
Support of Combat Zone Operations as of July 2006:
Area:
* Pakistan;
* Tajikistan;
* Jordan;
Date of designation: September 19, 2001;
Combat zone: Afghanistan;
Military operation: Operation Enduring Freedom.
Area:
* Uzbekistan;
* Kyrgyzstan;
Date of designation: October 1, 2001;
Combat zone: [Empty];
Military Operation; [Empty].
Area:
* Philippines;
Date of designation: January 9, 2002;
Combat zone: [Empty];
Military Operation; [Empty].
Area:
* Yemen;
Date of designation: April 10, 2002;
Combat zone: [Empty];
Military Operation; [Empty].
Area:
* Djibouti;
Date of designation: July 1, 2002;
Combat zone: [Empty];
Military Operation; [Empty].
Area:
* Jordan;
Date of designation: March 19, 2003;
Combat zone: Iraq;
Military operation: Operation Iraqi Freedom.
Area:
* Syria;
Date of designation: January 1, 2004;
Combat zone: [Empty];
Military Operation; [Empty].
Sources: DOD Financial Management Regulation and Internal Revenue
Service.
[End of table]
[End of section]
Appendix IV: Scope and Methodology:
To evaluate DOD's processes for reviewing imminent danger pay areas and
to understand how servicemembers become eligible for combat zone tax
relief, we analyzed legislation and DOD regulations and guidance. We
compared these to the objectives and fundamental concepts of internal
control defined in Standards for Internal Control in the Federal
Government and Internal Control Management and Evaluation Tool. We also
held discussions with knowledgeable officials from the following
offices, geographic commands, and services:
* Commander, Navy Installations, Personnel Support Activity,
Washington, D.C.
* Defense Finance and Accounting Service, Indianapolis, Indiana:
* Defense Manpower and Data Center, Monterey, California and Arlington,
Virginia:
* Defense Travel System Office, Arlington, Virginia:
* Department of Defense Inspector General, Inspector General/Hotline
Cases and Senior Officials Investigation Offices, Arlington, Virginia:
* Joint Chiefs of Staff, Personnel and Policy, Arlington, Virginia:
* Office of Management and Budget, Washington, D.C.
* Under Secretary of Defense (Personnel and Readiness), Arlington,
Virginia:
* United States Air Forces in Europe, Ramstein Air Force Base, Germany:
* United States Army, Europe, Heidelberg, Germany:
* United States Central Command, MacDill Air Force Base, Tampa,
Florida:
* United States Department of State, Office of Allowances, Washington,
D.C.
* United States European Command, Patch Barracks, Stuttgart, Germany:
* United States Marine Corps Forces, Europe, Boeblingen, Germany:
* United States Naval Forces, Europe, Commander, U.S. Sixth Fleet,
Naples, Italy:
* United States Pacific Command, Camp H.M. Smith, Honolulu, Hawaii:
United States Southern Command, Miami, Florida:
To gain an understanding of DOD's rationale for designating certain
areas and to determine whether DOD followed its policy for designating
and reviewing imminent danger pay areas and areas certified as in
direct support of combat zones, we reviewed 54 imminent danger pay area
questionnaires completed by combatant commanders and used by DOD to
evaluate area designations and the threat of imminent danger. This
nonprobability sample of areas was selected to ensure that each
geographic combatant command was represented. In addition, we sought to
include imminent danger pay areas where designation was limited to
either land, or airspace, or water areas, or the designation was for
the entire area including land, air, or water areas. For purposes of
our analysis, we considered an area to be designated for imminent
danger pay if DOD had designated any portion of the area (land,
airspace, or water) for imminent danger pay. We also reviewed other
relevant DOD documents related to DOD's review of imminent danger pay
and combat zone tax relief benefits from 1992 through 2006. We compared
these against the standards for oversight envisioned in Standards for
Internal Control in the Federal Government and the Internal Control
Management and Evaluation Tool.
To understand how DOD regulates and monitors temporary duty travel, and
cross-month travel in particular, we reviewed DOD's temporary duty
travel policy and its Foreign Clearance Guide that establishes DOD
policy for military personnel traveling overseas. We also reviewed
travel policies from the U.S Central Command and U.S. Army, Europe. We
discussed these policies with officials responsible for approving
travel in accordance with the Foreign Clearance Guide, and compared
these with the standards for internal control activities contained in
the Standards for Internal Control in the Federal Government. In
addition, we interviewed personnel in the U.S. Pacific Command and U.S.
Southern Command who are knowledgeable about these command's travel
policies and requirements. Because the U.S. European Command does not
have a travel clearance office, we spoke with service officials at the
U.S. European Command who are responsible for authorizing travel to
certain locations.
To determine the extent to which servicemembers were making cross-month
trips to areas that would make them eligible to receive imminent danger
pay and combat zone tax relief benefits, we also analyzed 28,404 travel
vouchers obtained from the Defense Travel System for servicemembers
traveling on temporary duty between October 1, 2002, and September 31,
2005. In addition, we obtained data from the U.S. Naval Forces, Europe,
on ship port visits to areas within the U.S. European Command's area of
responsibility that are designated for imminent danger pay or for
combat zone tax relief benefits. We did not obtain similar data for the
U.S. Central Command because most ports and all sea areas in its area
of responsibility are designated for imminent danger pay or combat zone
tax relief benefits. We also did not obtain this information from the
U.S. Southern Command or U.S. Pacific Command because few countries and
no sea areas in their areas of responsibility are designated for
imminent danger pay or combat zone tax relief benefits. Under DOD's
Financial Management Regulations, authorizing officials are responsible
for determining the necessity of trips and funds availability for
temporary duty travel.[Footnote 34] Further, DOD guidance states that
DOD airlift authorizing officials shall ensure that an official purpose
is served by air travel.[Footnote 35] Therefore, we did not evaluate
whether the purposes of the trips were valid. We analyzed travel
vouchers from the Defense Travel System because it is the only system
that captures temporary duty travel from all four services.
We also reviewed data from the Defense Finance and Accounting Service's
Operational Data System that captures the balance of travel data for
the Army that is not processed using the Defense Travel System. Data
from the Operational Data System frequently were missing information
about trip destinations. As a result, we were unable to use these data
to analyze cross-month travel to areas designated for imminent danger
pay or combat zone tax relief benefits. We also did not review data
processed in the 43 legacy systems used by the services to process
travel vouchers because of data reliability concerns.
Due to the large number of countries and sea areas within the U.S.
Central Command's area of responsibility that are designated for
imminent danger pay or combat zone tax relief and because most travel
vouchers for servicemembers assigned to the U.S. Central Command's
headquarters during the time period of our review were not processed
using the Defense Travel System, we sought to obtain travel data
directly from several combatant commands. We tested this approach with
the U.S. Central Command. First, we attempted to obtain data from the
U.S. Central Command's finance office that processes travel vouchers.
Due to data limitations and concerns about the accuracy of data in the
automated business service system, a document processing system used to
approve travel orders, we were unable to use this approach. Second, we
sought to use theater clearance requests and approvals to determine the
extent of cross-month travel to the U.S. Central Command's area of
responsibility. However, database limitations prevented us from using
this approach. For instance, if more than one servicemember was listed
on a travel clearance request submitted to the U.S. Central Command's
travel clearance office, only the name of the most senior official was
listed in the database and information on the pay grades of junior
servicemembers would not be available for analysis. In addition, we
could not determine the accuracy of travel dates contained in the
Travel Clearance Office's database because itinerary changes are not
always captured in the database.
The scope of this review excluded servicemembers deployed or assigned
to foreign areas. The scope also excluded servicemembers who served as
part of crews on aircraft and, with the exception of data provide by
the U.S. Naval Forces, Europe, ships because aircraft and ship
movements are dictated by operational needs and mission requirements,
and generally, do not have the same degree of flexibility associated
with scheduling temporary duty travel. To assess the reliability of
data obtained from the Defense Travel System, we (1) reviewed existing
documentation related to the data sources, (2) electronically tested
the data to identify problems with completeness or accuracy, and (3)
interviewed knowledgeable officials about the data. We found these data
to be sufficiently reliable for the purposes of this report.
For purposes of our analysis, we defined cross-month travel as any
temporary duty travel of 30 days or fewer that begins during one month
and concludes during the following month. This cross-month travel may
encompass travel to a single location or multiple locations during a 30-
day period. During this time, a servicemember may travel to areas
designated for imminent danger pay or combat zone tax relief, areas not
designated for these special pays and benefits, or to both areas
designated and not designated for such benefits.
However, we do not know the portion of overall travel that these trips
represent because some DOD locations were not using the Defense Travel
System to process travel vouchers during the time of our review. As a
result, we cannot extrapolate travel patterns based on the data we
obtained and analyzed from the Defense Travel System. We also requested
and received information on GAO's FraudNet hotline as well as the DOD
Inspector General hotline on inquiries related to servicemembers
scheduling cross-month travel to potentially maximize combat zone tax
relief benefits. GAO's FraudNet did not receive any calls concerning
servicemembers scheduling travel to maximize imminent danger pay or
combat zone tax relief benefits. Two calls received by the DOD
Inspector General's hotline were not substantiated. Additionally, we
obtained data from the Defense Finance and Accounting Service to
determine the compensation excluded from federal taxable wages for
servicemembers for calendar years 2003 through 2005 as a result of
performing military service that the Office of the Under Secretary of
Defense (Personnel and Readiness) certified as in direct support of
combat zone operations and for combat zone tax exclusion overall. We
also obtained data from the Defense Manpower and Data Center to
estimate the total dollar amount of imminent danger pay for service
members for fiscal years 2003 through 2005. However, we did not use
these data because sufficient information was not available from the
Defense Manpower and Data Center to validate the accuracy of these data
for this report. As stated earlier in this report, we previously
reported on the lack of reliability on DOD's reported costs related to
the Global War on Terrorism, including military pay.
We conducted our review from October 2005 through July 2006 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix V: Comments from the Department of Defense:
Personnel And Readiness:
Office Of The Under Secretary Of Defense:
4000 Defense Pentagon:
Washington, D.C. 20301-4000:
Sep 15 2006:
Ms. Sharon L. Pickup:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Ms. Pickup:
This is the Department of Defense (DoD) response to the GAO draft
report, GAO-06-1011, "Military Personnel: Actions Needed to Strengthen
Management of Imminent Danger Pay and Combat Zone Tax Relief Benefits,"
dated August 22, 2006 (GAO Code 350758). The Department generally
concurs with comment on the findings and recommendations.
The Department notes the GAO draft report appears to infer that
imminent danger pay areas have increased since 1992 due to an absence
of sufficient oversight or review of country designations (see draft
report page 6 beginning with line 8) rather than a recognition that the
security environment has changed. The Department believes the inference
is incorrect because areas around the world designated for the receipt
of imminent danger pay have increased since 1992 due to the global
security environment and the increase in the number of areas where
Service members serve in imminent danger. Those areas include countries
in the former Republic of Yugoslavia (Bosnia, Herzegovina, Croatia,
Macedonia, etc), East Timor, the numerous dangerous areas our troops
have served in support of Operation Enduring Freedom and Operation
Iraqi Freedom, and many other areas of the world. The Department agrees
program management can be strengthened; however, we believe the
Department has appropriately designated and reviewed the designation of
imminent danger areas as well as travel through areas of imminent
danger and/or subject to combat zone tax relief benefits.
Additionally, the GAO's statement that "In 1971, only one location was
designated for imminent danger pay" (page 2 of the GAO draft report) is
incorrect since imminent danger pay was first authorized on October 1,
1983, by Public Law 98-94, section 905. However, hostile fire pay has
been authorized since 1963. In 1971, four locations were authorized
hostile fire pay: 1. Vietnam; 2. Cambodia; 3. Laos; and 4. A 45 square
mile area along the Korea demilitarized zone. This error is repeated on
page 12 of the report and again in Figure 1 on page 13. The error is
important because it results in the incorrect assertion that imminent
danger pay areas have increased from 1 to 54 between 1971 and today
(see page 2 and Figure l, page 13). This leaves the impression that the
Department has failed to properly review and appropriately remove
imminent danger pay area designations. In fact, the number of imminent
danger pay areas were low (actually non-existent) in 1971 because they
were not authorized, not because the Department has failed to properly
review their designations.
Regarding recommendation 3, the Department believes adequate travel
safeguards are in place to monitor temporary duty cross-month travel in
countries designated for imminent danger pay or combat zone tax
exclusion. Detailed comments to the draft recommendations are enclosed.
Technical comments were provided directly to GAO staff for
consideration.
If you have any questions, please contact Major John Johnson at (703)
693-1066, or m.john.johnson@osd.mil:
Sincerely,
Signed by:
Michael L. Dominguez:
Principal Deputy:
Enclosure:
As stated:
GAO Draft Report - Dated August 22, 2006 GAO Code 350758/GAO-06-1011:
"Military Personnel: Actions Needed to Strengthen Management of
Imminent Danger Pay and Combat Zone Tax Relief Benefits"
Department Of Defense Comments To The Recommendations:
Recommendation 1: The GAO recommended that the Secretary of Defense
direct the Under Secretary of Defense (Personnel and Readiness) to
update DoD's imminent danger pay guidance to: (1) reflect the office
responsible for reviewing and designating imminent danger pay areas;
and (2) incorporate factors that clearly define what constitutes the
presence of imminent threat or dangers to Service members on duty in
foreign areas.
DOD Response: Dod concurs with this recommendation. As noted in the GAO
draft report (draft report page 5), DoD already has an informal process
for designating and reviewing imminent danger pay areas. This informal
process is contained in draft DoD Instruction 1340.9, "Special Pay for
Duty Subject to Hostile Fire or Imminent Danger," and provides guidance
as to what factors are considered in designating and reviewing imminent
danger pay area designations. However, DoD concurs that the informal
policy should be updated to reflect the office currently responsible
for the review and to provide additional clarification and guidance as
to what factors are considered in determining whether imminent danger
pay is warranted.
Recommendation 2: The GAO recommended that the Secretary of Defense
direct the Under Secretary of Defense (Personnel and Readiness) to
request the designated organizations to conduct reviews of areas
designated for imminent danger pay in accordance with DoD's guidance.
DOD Response: DoD partially concurs with this recommendation. As noted
in the GAO draft report (draft report page 28), DoD has conducted
comprehensive reviews of imminent danger pay area designations six
times since 1992. In fact, a review is currently on-going and should be
completed by October 31, 2006. DoD believes the review of imminent
danger pay areas should be conducted at least biennially.
Recommendation 3: The GAO recommended that the Secretary of Defense
direct the Under Secretary of Defense (Personnel and Readiness) to
establish Department-wide policies and internal controls that include
periodic audits to monitor cross-month travel to ensure that the travel
needs to cross calendar months.
DOD Response: DoD nonconcurs with this recommendation because it would
add unnecessary bureaucracy and cost to DoD's travel system. GAO's
recommended action is already implemented in existing DoD travel
procedures that require thorough review and management of the necessity
and cost-effectiveness of travel by DoD personnel. The Joint Travel
Regulations and the Joint Federal Travel Regulations already include
requirements to authorize only travel that is necessary to accomplish
the mission and when the mission cannot be met by other means. DoD
Directive 4500.54, "Official Temporary Duty Travel Abroad," adds
additional requirements to ensure that foreign travel is even more
closely scrutinized by adding country and/or theater clearance
requirements. These existing requirements already adequately control
and monitor cross-month travel. For this reason, we disagree with GAO's
finding that "DoD does not have a Department-wide policy to monitor
cross-month travel to areas designated for imminent danger pay or
combat zone tax relief benefits" (draft report page 19). This is
supported by GAO's draft report which found no apparent abuse of cross-
month travel (draft report pages 19-27). GAO also noted that the two
commands that collectively account for the majority of imminent danger
pay and combat zone tax relief benefits (U.S. Central Command and U.S.
Army, Europe) have developed theater-specific policies and controls to
monitor and regulate cross-month travel (draft report page 19).
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Sharon L. Pickup, (202) 512-9619 or pickups@gao.gov:
Acknowledgments:
In addition to the person named above, Ann Borseth, Assistant Director;
Krislin Bolling; Alissa Czyz; James Driggins; Ron La Due Lake;
Katherine Lenane; Grant Mallie; Oscar Mardis; David Mayfield; Ken
Patton; Vanessa Taylor; and John Van Schaik also made major
contributions to this report.
FOOTNOTES
[1] See 37 U.S.C. 310; Department of Defense Instruction 1340.9,
Special Pay for Duty Subject to Hostile Fire or Imminent Danger Pay
(Apr. 10, 1992), and the Financial Management Regulation, Volume 7A,
Chapter 10 (Feb. 2006). Servicemembers who have been (1) subject to
hostile fire or explosion of a hostile mine; (2) on duty in an area in
close proximity to a hostile fire incident and the servicemembers are
in danger of being exposed to the same dangers; or (3) injured,
wounded, or killed by hostile fire, mines, or any kind of hostile
action, receive hostile fire pay instead of imminent danger pay.
Commanders at the lowest level of command certify that the member has
met the requirements for entitlement to hostile fire pay within a given
month, except when the member is under orders on official duty in one
of the IDP-designated areas listed in appendix I.
[2] In this report, we used the term combat zone tax relief benefits to
describe tax exclusions provided to servicemembers under 26 U.S.C.
§112. However, there are other kinds of tax benefits for servicemembers
serving in combat zones or qualified hazardous duty areas that are not
addressed in this report, such as extensions for filing income tax
returns and exemptions from telephone excise taxes. Servicemembers may
have other tax deductions and exclusions that reduce their taxable
income.
[3] 26 CFR §1.1121-1(e) and DOD Financial Management Regulation 7A,
Chapter 44, §440103(c)(6).
[4] Servicemembers receive imminent danger pay and combat zone tax
relief benefits for an entire month regardless of the amount of time
spent in a designated area. These benefits are not prorated. See 37
U.S.C. §310 and 26 U.S.C. §112.
[5] Department of Defense Authorization Act, 1984, Pub. L. No. 98-94
§905 (1983).
[6] Under Secretary of Defense (Personnel and Readiness) Memorandum for
Director, Joint Staff, Annual Review of Designation of Foreign
Locations as Imminent Danger Areas for Imminent Danger Pay (IDP)
Purposes (Jan. 30, 2006).
[7] GAO, Standards for Internal Control in the Federal Government, GAO/
AIMD-00-21.3.1 (Washington, D.C.: November 1999), and Internal Control
Management and Evaluation Tool, GAO-01-1008G (Washington, D.C.: August
2001).
[8] GAO, Military Personnel: DOD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington: D.C., July 19, 2005), and Global War on Terrorism:
Observations on Funding, Costs, and Future Commitments, GAO-06-885T
(Washington, D.C.: July 18, 2006).
[9] We have previously reported on the lack of reliability in DOD's
reported costs related to the Global War on Terrorism, including
military pay. See GAO, Global War On Terrorism: DOD Needs to Improve
the Reliability of Cost Data and Provide Additional Guidance to Control
Costs, GAO-05-882 (Washington, D.C.: Sept. 21, 2005) and GAO-06-885T.
[10] 31 U.S.C. §717(b)(1)(2000).
[11] GAO/AIMD-00-21.3.1.
[12] The Unified Combatant Commands with geographic responsibility are
composed of forces from two or more services and have broad and
continuing missions for specific geographic areas. The commands
organized on a geographical basis include (1) the U.S. Central Command,
(2) the European Command, (3) the U.S. Northern Command, (4) the U.S.
Pacific Command, and (5) the U.S. Southern Command. None of the U.S.
Northern Command's geographic area of responsibility is eligible for
imminent danger pay or combat zone tax relief.
[13] DOD Financial Management Regulation 7000.14-R, Volume 9, Chapter
2, Section 020401(C) (April 2006). (Hereinafter cited as DODFMR, Vol.
9, Ch. 2, Section 020401(C) (April 2006)).
[14] DOD Directive 4500.56, DOD Policy on the Use of Government
Aircraft and Air Travel, Enclosure 2, Section E.2.1.2 (April 1999).
(Hereinafter cited as DODD 4500.56, Section E.2.1.2 (Apr. 1999)).
[15] GAO/AIMD-00-21.3.1.
[16] DODI 1340.9 refers to the Assistant Secretary of Defense (Force
Management and Personnel) rather than the Under Secretary of Defense
(Personnel and Readiness). The Secretary of Defense established the
position of the Under Secretary of Defense (Personnel and Readiness) in
1994. At this time, the functions, relationships, and authorities
assigned to the Assistant Secretary of Defense (Force Management and
Personnel) were assigned to the Under Secretary of Defense (Personnel
and Readiness). DOD Directive 5124.2, Under Secretary of Defense for
Personnel and Readiness (P&R), (Oct. 31, 1994).
[17] DOD Directive Number 4500.54, Official Temporary Duty Travel
Abroad, November 21, 2003 and DOD Directive 4500.54-G, Foreign
Clearance Guide, June 6, 2006.
[18] GAO/AIMD-00-21.3.1.
[19] See appendix II, table 7 for a list of the regions that constitute
the Persian Gulf Area and the Kosovo area.
[20] In addition, Congress has also stated that it was the sense of
Congress that servicemembers receiving hostile fire pay or imminent
danger pay should receive the same treatment under federal income tax
laws as servicemembers serving in combat zones. See Pub. L. No. 106-65,
§677 (1999) and Pub. L. No. 106-398, §1089 (2000).
[21] Under Section 5928 of Title 5, U.S. Code and Department of State
regulations, federal civilian employees serving in foreign areas may be
eligible for a danger pay allowance when the Secretary of State
determines that civil war, civil insurrection, terrorism, or wartime
conditions threaten physical harm or imminent danger to the health or
well-being of a majority of employees officially stationed or detailed
to a post in foreign area. To qualify for the danger pay allowance,
which is paid for those hours for which employees receive basic
compensation and ranges from 15 to 35 percent of base salary each month
depending on the level of danger specified for a given area and the
presence of nonessential personnel and dependents at the post, a
federal civilian employee must be assigned or on detail to a post for
at least 4 cumulative hours in 1 day during a given month.
Alternatively, federal civilian employees who accompany U.S. military
forces designated by the Secretary of Defense as eligible for imminent
danger pay receive $225 a month when authorized by the Secretary of
State. Federal civilian employees may not receive both imminent danger
pay and danger pay during the same month. Federal civilian employees
are not eligible for combat zone tax relief benefits.
[22] Pub. L. No. 98-94 §905 (1983).
[23] Federal Managers' Financial Integrity Act of 1982, Pub. L. No. 97-
255, §2 (1982).
[24] GAO/AIMD-00-21.3.1.
[25] National Defense Authorization Act for Fiscal Year 2006, Pub. L.
No. 109-163, §636 (2006) (codified at 37 U.S.C. §310(c)).
[26] These steps, from highest to lowest, are high, significant,
moderate, and low. The categories reflect the existence of terrorist
groups as well as their history, capability, and intent to harm
servicemembers.
[27] DOD Directive Number 4500.54, Official Temporary Duty Travel
Abroad, November 21, 2003.
[28] DOD 4500.54-G, DOD Foreign Clearance Guide.
[29] GAO/AIMD-00-21.3.1.
[30] Between fiscal years 2003 and 2005, individual servicemembers
processed 23,253 vouchers for temporary duty travel to areas not
designated for either imminent danger pay or combat zone tax relief
benefits using the Defense Travel System. However, 170 of these trips
that involved cross-month travel were dropped from our analysis due to
incomplete data. As a result, in our analysis we used 23,083 vouchers
for temporary duty travel to areas that were not designated for
imminent danger pay or combat zone tax relief benefits.
[31] Servicemembers may have other tax deductions and exclusions that
reduce their taxable income.
[32] Servicemembers may have other tax deductions and exclusions that
reduce their otherwise taxable income.
[33] 37 U.S.C. §310.
[34] DODFMR, Vol. 9, Ch. 2, Section 020401(C) (April 2006).
[35] DODD 4500.56, Section E.2.1.2 (Apr. 1999).
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