Ertan and Susan Eren - Page 6

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            petitioner's request for $250,000 for 1989.  Although petitioner                               
            did not have authority to exceed the approved budget, he could                                 
            allocate approved budget funds as necessary.                                                   
                  The $250,000 budget for 1989 did not include petitioner's                                
            $74,000 salary.  His biweekly salary was based on a Government                                 
            schedule (the Foreign Service Schedule).  Petitioner did not                                   
            receive any per diem in 1989.                                                                  
                  Petitioner had the authority to hire and fire his staff                                  
            without FBO approval.  He hired several workers who entered into                               
            contracts with FBO and were paid by FBO.                                                       
            PSC Provisions                                                                                 
                  Petitioner did not receive standard Government employee                                  
            benefits such as life insurance and retirement benefits under the                              
            terms of his 1989 PSC.  Rather, 5 percent of his compensation was                              
            allocated for purchasing health insurance. Petitioner received home                            
            leave,4 sick leave, and annual leave.                                                          
            Department of State Directives and Memorandum                                                  
                  Two FBO directives required that personal service contractors                            
            be treated as employees.  The first directive, issued July 7, 1987,                            
            refers to the Foreign Affairs Manual, which states that "a personal                            
            service contractor is not eligible for the 'foreign earned income                              
            exclusion'".  The second, issued July 7, 1987 (and revised on                                  

            4            Home leave is a mandatory Department of State leave for                           
            foreign service workers.                                                                       





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