Feds owing money could see pay garnished

Monday - 5/2/2011, 5:17pm EDT

By Jason Miller
Executive Editor
Federal News Radio

Federal employees who owe back taxes or other money to the federal government could see those debts be taken out of their pay checks even if the debt is more than 10 years old.

Under a new proposed rule by the Office of Personnel Management, creditor agencies no longer have a 10-year statute of limitations to collect debts due from federal employees.

"To avoid any undue hardship, the Secretary of the Treasury has added a requirement applicable to debts that were previously ineligible for collection by offset because they have been outstanding for more than 10 years," the notice stated. "For these debts, creditor agencies must certify to the Secretary of the Treasury that the notice of intent to offset was sent to the debtor after the debt became 10 years delinquent. This is intended to alert the debtor that his or her debt may now be collected by offset and allows the debtor additional opportunities to dispute the debt, enter into a repayment agreement, or otherwise avoid offset."

Comments on the proposed rule are due by July 1.

This proposed rule comes as Congress is considering several proposals aimed at federal employees and contractors who owe back taxes. Rep. Jason Chaffetz (R-Utah) introduced the Federal Employee Tax Accountability Act of 2011 that would require agencies to dismiss employees who owed back taxes that are "seriously delinquent." The House Oversight and Government Reform Committee approved the bill April 13.

Another similar bill from Chaffetz, the Contracting and Tax Accountability Act of 2011, would apply the same rules to companies who are "seriously delinquent" on back taxes from getting government contracts. The committee also approved the bill April 13.

OPM's proposed rule comes from an amendment in the Food, Conservation, and Energy Act of 2008 requiring the changes to the regulations.

The draft states that any deduction would be a fixed amount or a percentage of pay, not to exceed 15 percent.

"Agencies may initiate salary offset to collect a debt without time limitations on any debt outstanding after the government's right to collect the debt first accrued," the proposed rules stated.

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