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OFFICE OF
INSPECTOR GENERAL
DEPARTM ENT OF THE TREASURY
WASHINGTON, D.C. 20220
September 10, 2021
OIG-CA-21-028
Thomas E. Jordan
President
West Air, Inc.
5005 E. Andersen Avenue
Fresno, CA 93727
Dear Mr. Jordan:
On September 11, 2020, we initiated an audit of West Air Inc.’s (West Air)1 certifications
of wages, salaries, benefits, and other compensation in its application for financial
assistance to the Department of the Treasury (Treasury),2 as required under Title IV,
Subtitle B, of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).3 The
CARES Act requires that financial assistance to passenger and cargo air carriers and
respective contractors must exclusively be used for the continuation of payments of
employees’ wages, salaries, and benefits. Passenger and air cargo carriers that do not
report salaries and benefits to the Department of Transportation (DOT), referred to as
non-241 air carriers,4 and contractors requesting financial assistance are required to
certify to Treasury via “sworn” financial statements, or other appropriate data, wages,
salaries, benefits, and other compensation amounts for the period of April 1, 2019,
through September 30, 2019. The CARES Act assigned the Treasury Office of Inspector
General (OIG) with responsibility to audit the certifications required to be submitted by
non-241 carriers and contractors.
1
West Air is a cargo air carrier headquartered in Incline Village, Nevada, that provides cargo feeder
services to major worldwide courier companies and individual cargo charter services throughout the
Pacific Northwest.
2
In an engagement memorandum dated April 13, 2020, we notified Treasury officials that we were
initiating audits specific to the certifications submitted by passenger and cargo air carriers and
contractors that do not report to Department of Transportation (DOT).
3
P. L. 116-136 (March 27, 2020).
4
Air carriers that are not required to report salaries and wages to the DOT under 14 CFR Part 241,
“Uniform System of Accounts and Reports for Large Certificated Air Carriers” defines “Air carrier, large
certificated” as an air carrier holding a certificate issued under 49 U.S.C. 41102, as amended, that: (1)
Operates aircraft designed to have a maximum passenger capacity of more than 60 seats or a maximum
payload capacity of more than 18,000 pounds; or (2) conducts operations where one or both terminals
of a flight stage are outside the 50 states of the United States, the District of Columbia, the
Commonwealth of Puerto Rico and the U.S. Virgin Islands.
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The objective of our audit was to assess the accuracy, completeness, and sufficiency of
West Air’s “sworn” financial statements or other data used to certify the wages, salaries,
benefits, and other compensation amounts submitted to and approved by Treasury. The
scope of our audit included West Air’s certified application, financial statements, tax
returns, and other documentation submitted to Treasury on April 3, 2020, as part of its
Payroll Support Program’s (PSP1) PAYROLL SUPPORT APPLICATION FORM for Air
Carriers and Contractors (PSP1 Application). We selected West Air’s certification
submitted to Treasury for audit as part of a non-statistical sample of non-241 passenger
and air cargo carriers and contractors.5
On April 3, 2020, West Air submitted its PSP1 Application to Treasury requesting
$
of financial assistance for the continuation of payments of employees’
wages, salaries, and benefits. Treasury and West Air entered into a Payroll Support
Program Agreement on May 14, 2020, for the requested amount with Treasury making
an initial payroll support payment of $1,050,543. However, on May 29, 2020, Treasury
informed West Air officials that the company included employee compensation in its
payroll support program application that was not included on its Internal Revenue Service
(IRS) Form 941 (Employers Quarterly Federal Tax Return) filing for the same period.6 West
Air submitted a Revised Awardable Amount form to Treasury on June 9, 2020 to correct
its awardable amount to $2,974,054, having made reductions to its employees’ wages,
salaries, and benefits. Treasury made additional payments from June through September
2020 to West Air totaling $1,923,511 for a total awardable amount equal to
$2,974,054.
As part of our audit, we reviewed (1) Title IV, Subtitle B, Air Carrier Worker Support of
the CARES Act; (2) Treasury’s Guidelines and Application Procedures for Payroll Support
to Air Carriers and Contractors under Division A, Title IV, Subtitle B of the Coronavirus
Aid, Relief and Economic Security Act; (3) Treasury’s Q&A: Payroll Support to Air Carriers
and Contractors; and (4) the Payroll Support Program Agreement. While we reviewed
payroll registers, organizational charts, and tax records from West Air to support its
certification to Treasury, we paused this audit in February 2021 to address a systemic
issue identified in audits of other PSP1 recipients. Specifically, corporate officer
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Under PSP1, there are 611 recipients that include passenger (241 and non-241 carriers) and cargo air
carriers and contractors. For cargo air carriers and contractors, we selected all cargo air carriers and
contractors and divided them into four tiers based on initial payment amounts from Treasury. The four
tiers for cargo air carriers included payments ranging from $0 - $1,100,000 (Tier 1); $1,100,001 -
$2,200,000 (Tier 2); $2,200,001 - $3,300,000 (Tier 3); and any payments above $3,300,001 (Tier 4).
We selected the cargo carrier with the highest payment amount from each tier with West Air receiving
the highest initial payment in Tier 1 of $1,050,543.28.
6
As part of the Payroll Support Application Form for Air Carriers and Contractors, non-241 air carriers
and contractors were required to complete a table of salaries and wages, benefits, bonuses, and similar
payments for its employees from April 1, 2019, through September 30, 2019, referred to as the
awardable amount. Applicants for PSP1 payments were required to submit their completed IRS Form
941 “Employers Quarterly Federal Tax Return” covering the same time period. Employers use IRS Form
941 to (1) report salaries and wages, income taxes, Social Security taxes or Medicare taxes withheld
from employees’ paychecks; and (2) pay the employer’s portion of Social Security or Medicare taxes.
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compensation7 and employer-side payroll taxes,8 that are unallowable, were included in
awardable amounts on recipients’ PSP1 Applications. West Air officials informed us that
they unintentionally overstated the awardable amount by $
as a result of including
corporate officer pay on its PSP1 Application. West Air’s overstatement was part of the
cumulative overstatements that we reported to Treasury in an interim audit update on our
audits of non-241 air carrier and contractor certifications. 9
On February 23, 2021, West Air returned all $2,974,054 of its award to Treasury. West
Air officials informed us that their business industry was not negatively impacted by the
Coronavirus Disease 2019, and therefore had no need for PSP1 funding. West Air and
Treasury signed a Payroll Support Program Withdrawal Agreement on February 25, 2021,
and March 5, 2021, respectively. The withdrawal agreement terminated West Air’s
Payroll Support Program Agreement signed on May 14, 2020. Because West Air returned
its full awardable amount of $2,974,054 under PSP1, we are terminating the audit.
We appreciate the courtesies and assistance provided by your staff. Should you have any
questions regarding this letter, please contact me at (202) 486-1420.
Sincerely,
/s/
Deborah L. Harker
Assistant Inspector General for Audit
Office of Inspector General
cc:
Jacob Leibenluft, Chief Recovery Officer, Office of Recovery Programs,
Department of the Treasury
7
The CARES Act and the PSP1 Application define an employee as an individual, other than a corporate
officer, who is employed by an air carrier or a contractor. The definition states that recipients are to
exclude corporate officers in the determination of what is considered an employee.
8
The CARES Act and PSP1 Application do not explicitly state that the recipient should exclude employer-
side payroll taxes, it does state that only wages, salaries and benefits are allowable. In the PSP
Agreement, Treasury management defined the terms wages, salary, and benefit as “excluding any
Federal, state, or local payroll taxes paid by the Recipient.”
9
Interim Audit Update – Air Carrier and Contractor Certifications for Payroll Support Program (OIG-21-
025; issued March 31, 2021).