TREASURY DIRECTIVE 34-01
Date:
Sunset Review:
SUBJECT: Waiving Claims Against Treasury
Employees for Erroneous Payments
1. PURPOSE. This
Directive establishes the Department of the Treasury's policies and procedures
for waiving claims by the Government against an employee for erroneous payments
of: (1) pay and allowances (e.g., health and life insurance) and (2)
travel, transportation, and relocation expenses and allowances.
2. BACKGROUND.
a. 5 U.S.C. §5584 authorizes the waiver of
claims by the United States in whole or in part against an employee arising out
of erroneous payments of pay and allowances, travel, transportation, and
relocation expenses and allowances. A waiver may be considered when collection
of the claim would be against equity and good conscience and not in the best
interest of the United States provided that there does not exist, in connection
with the claim, an indication of fraud, misrepresentation, fault, or lack of
good faith on the part of the employee or any other person having an interest
in obtaining a waiver of the claim.
b. The General Accounting Office Act of
1996 (Pub. L. 104-316), Title I, §103(d), enacted October 19, 1996, amended 5
U.S.C. §5584 by transferring the authority to waive claims for erroneous
payments exceeding $1,500 from the Comptroller General of the United States to
the Office of Management and Budget (OMB). OMB subsequently redelegated this
waiver authority to the executive agency that made the erroneous payment. The authority to waive claims not exceeding $1,500, which was
vested in the head of each agency prior to the enactment of Pub. L.
104-316, was unaffected by the Act.
c. U.S.C. §5514 authorizes the head of each
agency, upon a determination that an employee is indebted to the United States
for debts to which the United States is entitled to be repaid at the time of
the determination, to deduct up to 15%, or a greater amount if agreed to by the
employee, from the employee's pay at officially established pay intervals in
order to repay the debt.
3. DELEGATION.
a. The Deputy Assistant Secretary
(Administration), the heads of bureaus, the Inspector General, and the
Inspector General for Tax Administration are delegated the authority to waive,
in whole or in part, a claim of the United States against an employee for an
erroneous payment of pay and allowances, travel, transportation, and relocation
expenses and allowances, aggregating less than $5,000 per claim, in accordance
with the limitations and standards in 5 U.S.C. §5584.
b. Treasury's Deputy Chief Financial
Officer is delegated the authority to waive, in whole or in part, a claim of
the United States against an employee for an erroneous payment of pay and
allowances, travel, transportation, and relocation expenses and allowances,
aggregating $5,000 or more per claim, in accordance with the limitations and
standards in 5 U.S.C. §5584.
4. APPEALS.
a. Requests for waiver of claims
aggregating less than $5,000 per claim which are denied in whole or in part may be appealed to the Deputy Chief Financial
Officer for the Department of the Treasury.
b. Requests for waiver of claims
aggregating $5,000 or more per claim which are denied in whole or in part may
be appealed to the Assistant Secretary (Management)/Chief Financial Officer.
5. REDELEGATION. The
Deputy Assistant Secretary (Administration), the heads of bureaus, the
Inspector General, and the Inspector General for Tax Administration may
redelegate their respective authority and responsibility in writing no lower
than the bureau deputy chief financial officer unless authorized by Treasury's
Deputy Chief Financial Officer. Copies of each redelegation shall be submitted
to the Department's Deputy Chief Financial Officer.
6. RESPONSIBILITIES.
a. The Deputy Assistant Secretary
(Administration), the heads of bureaus, the Inspector General, and the Inspector General for Tax Administration
shall:
(1) promptly notify
an employee upon discovery of an erroneous payment to that employee;
(2) promptly act to
collect the erroneous overpayment, following established debt collection
policies and procedures;
(3) stablish time
frames for employees to request a waiver in writing and for the bureau to
review the waiver request. These time frames must take into consideration the
responsibilities of the
(4) notify
employees whose requests for waiver of claims aggregating less than $5,000 per
claim are denied in whole or in part of the basis for the denial and the right
to appeal the denial to the Deputy Chief Financial Officer of the Department of
the Treasury. All such appeals shall:
(a)
be made in
writing;
(b)
specify
the basis for the appeal;
(c)
include a
chronology of the events surrounding the erroneous payments;
(d)
include a
statement regarding any mitigating factors; and
(e) be submitted to the official who denied
the waiver request no later than 60 days from receipt by the employee of
written notice of the denial of the waiver; and
(f)
attach at
least the following documents: the employee’s original request for a waiver;
the bureau's denial of the request; any personnel actions, e.g., promotions, demotions,
step increases, etc. that relate to the overpayment.
(5) orward to Treasury's Deputy Chief
Financial Officer the appeal and supporting documentation, the bureau's
recommendation as to why the appeal should be approved or denied; and a
statement as to the action taken by the bureau to avoid a recurrence of the
error.
(6) pay a refund
when appropriate if a waiver is granted;
(7) ulfill all labor
relations responsibilities when implementing this directive; and
(8) fulfill any
other responsibility of the agency imposed by 5 U.S.C. § 5584, or other
applicable laws and regulations.
b. Treasury's Deputy Chief Financial
Officer shall advise employees whose requests for waiver of claims aggregating
$5,000 or more per claim are denied in whole or in part of the basis for the
denial and the right to appeal the denial to the Assistant Secretary
(Management)/Chief Financial Officer. All such appeals shall be in the format
and contain the information and documentation described in subsection 6.a.(4), above. The Deputy Chief Financial Officer shall
forward to Assistant Secretary (Management)/Chief Financial Officer the appeal
and supporting documentation, his/her recommendation as to why the appeal
should be approved or denied, and a statement obtained from the bureau from
which the claim arose as to the action taken by the bureau to avoid a
recurrence of the error.
7. REPORTING REQUIREMENTS.
a. Each bureau, the Deputy Assistant
Secretary (Administration) for Departmental Offices, the Inspector General, and
the Inspector General for Tax Administration shall maintain a register of
waiver actions subject to Departmental review. The register shall cover each
fiscal year and be prepared by December 31 of each year for the preceding
fiscal year. The register shall contain the following information:
(1)
The total amount waived by the
bureau;
(2)
The number and dollar amount of
waiver applications granted in full;
(3)
The number and dollar amount of
waiver applications granted in part and denied in part, and the dollar amount
of each;
(4)
The number and dollar amount of
waiver applications denied in their entirety;
(5)
The number of waiver applications
referred to the Deputy Chief Financial Officer for initial action or for
appeal;
(6)
The dollar amount refunded as a
result of waiver action by the bureau; and
(7)
The dollar amount refunded as a
result of waiver action by the Deputy Chief Financial Officer or the Assistant
Secretary (Management)/Chief Financial Officer.
b.
Each bureau, the Deputy Assistant
Secretary (Administration) for Departmental Offices, the Inspector General, and
the Inspector General for Tax Administration shall retain a written record of
each waiver action for 6 years and 3 months. At a minimum, the written record
shall contain:
(1) the bureau's
summary of the events surrounding the erroneous payment;
(2) any written
comments submitted by the employee from whom collection is sought;
(3) an account of
the waiver action taken and the reasons for such action; and
(4)
other
pertinent information such as any action taken to refund amounts repaid.
8. EFFECT
OF REQUEST FOR WAIVER. A request for a waiver of a claim shall not affect
an employee's opportunity under 5 U.S.C. §5514(a)(2)(D)
for a hearing on the determination of the agency concerning the existence or
the amount of the debt, or the terms of the repayment schedule. A request by an
employee for a hearing under 5 U.S.C. §5514(a)(2)(D)
shall not affect an employee's right to request a waiver of the claim. The
determination whether to waive a claim may be made at the discretion of the
deciding official either before or after a final decision is rendered pursuant
to 5 U.S.C. §5514(a)(2)(D) concerning the existence or the amount of the debt,
or the terms of the repayment schedule.
9. GUIDELINES
FOR DETERMINING REQUESTS.
a.
A request for a waiver shall not be granted if the deciding
official determines there exists, in connection with the claim, an indication
of fraud, misrepresentation, fault, or lack of good faith on the part of the
employee or any other person having an interest in obtaining a waiver of the
claim. There are no exceptions to this rule for financial hardship or
otherwise.
(1)
"Fault" exists if, in
light of all the circumstances, it is determined that the employee knew or
should have known that an error existed, but failed to take action to have it
corrected. Fault can derive from an act or a failure to act. Unlike fraud,
fault does not require a deliberate intent to deceive. Whether an employee
should have known about an error in pay is determined from the perspective of a
reasonable person. Pertinent considerations in finding fault include whether:
(a)
the
payment resulted from the employee's incorrect, but not fraudulent, statement
that the employee should have known was incorrect;
(b)
the
payment resulted from the employee's failure to disclose material facts in the
employee's possession which the employee should have known to be material; or
(c)
the employee
accepted a payment, which the employee knew or should have known to be
erroneous.
(2) Every case must be examined in light of
its particular facts. For example, where an employee is promoted to a higher
grade but the step level for the employee's new grade is miscalculated, it may
be appropriate to conclude that there is no fault on the employee's part
because employees are not typically expected to be aware of and understand the
rules regarding determination of step level upon promotion. On the other hand,
a different conclusion as to fault potentially may be reached if the employee
in question is a personnel specialist or an attorney who concentrates on
personnel law.
b. If the deciding official finds an
indication of fraud, misrepresentation, fault, or lack of good faith on the
part of the employee or any other person having an interest in obtaining a
waiver of the claim, then the request for a waiver must be denied.
c. If the deciding official finds no
indication of fraud, misrepresentation, fault, or lack of good faith on the
part of the employee or any other person having an interest in obtaining a
waiver of the claim, the employee is not automatically entitled to a waiver.
Before a waiver can be granted, the deciding official must also determine that
collection of the claim against an employee would be against equity and good
conscience and not in the best interests of the
(1) whether
collection of the claim would cause serious financial hardship to the employee
from whom collection is sought.
(2)
whether,
because of the erroneous payment, the employee either has relinquished a
valuable right or changed positions for the worse, regardless of the employee's
financial circumstances.
(a)
to
establish that a valuable right has been relinquished, it must be shown that the
right was, in fact, valuable; that it cannot be regained; and that the action
was based chiefly or solely on reliance on the overpayment.
(b) to establish
that the employee's position has changed for the worse, it must be shown that
the decision would not have been made but for the overpayment, and that the
decision resulted in a loss.
(c)
an example
of a "detrimental reliance" would be a decision to sign a lease for a
more expensive apartment based chiefly or solely upon reliance on an erroneous
calculation of salary, and the funds spent for rent cannot be recovered.
(3)
the cost
of collecting the claim equals or exceeds the amount of the claim;
(4)
the time
elapsed between the erroneous payment and discovery of the error and notification
of the employee;
(5)
whether
failure to make restitution would result in unfair gain to the employee;
(6)
whether
recovery of the claim would be unconscionable under the circumstances.
d.
The burden is on the employee to
demonstrate that collection of the claim would be against equity and good
conscience and not in the best interest of the
10. AUTHORITIES.
a.
5 U.S.C. §5584, "Claims for
Overpayment of Pay and Allowances, and of Travel, Transportation and Relocation
Expenses and Allowances."
b.
31 U.S.C. §3711, "Collection
and Compromise."
c.
31 U.S.C. §3716,
"Administrative Offset."
d.
31 U.S.C. §3717, "Interest
and Penalty on Claims."
e.
5 C.F.R. Part 550, subpart K,
"Collection by Offset from Indebted Government Employees."
f.
31 C.F.R. Part 5, subpart B,
"Salary Offset."
g.
Determination with Respect to
Transfer of Functions Pursuant to Public Law 104-316, OMB, December 17, 1996.
11. CANCELLATION. TD 34-01, "Waiver of Claims for
Erroneous Payments," dated
12. OFFICE OF PRIMARY INTEREST. Office of
Accounting and Internal Control.
/S/
Lisa Ross
Acting Assistant Secretary for Management
and Chief Financial Officer