TREASURY DIRECTIVE: 34-01
DATE: January 9, 2009
SUBJECT: Waiving Claims Against Treasury Employees for Erroneous Payments
1. PURPOSE. This directive delegates certain authority and establishes responsibilities for waiving claims by the Government against an employee for erroneous payments of:
a. pay and allowances (e.g., health and life insurance) and
b. travel, transportation, and relocation expenses and allowances.
2. SCOPE. This directive applies to all bureaus, offices, and organizations in the Department of the Treasury. The provisions of this directive shall not be construed as to interfere with the authority of the Inspectors General as set forth in Section 3 of the Inspector General Act and the Internal Revenue Service Restructuring and Reform Act and defined in Treasury Order 114-01 and Treasury Order 115-01 or successor orders.
3. BACKGROUND.
a.
Section 5584 of Title 5, United States Code (5 USC
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
b. Under 5 USC 5584, the head of the agency is authorized to waive claims for erroneous payments when the claim is not more than $1,500. The authority to waive claims for erroneous payments exceeding $1,500 is provided to the Director, Office of Management and Budget (OMB), who has redelegated this authority to the executive agency that made the erroneous payment.
4. DELEGATION. The authority to grant or deny, in whole or in part, a request for waiver of claims, in accordance with the standards in 5 USC 5584, is delegated to:
a. the Inspector General (IG) and the Treasury Inspector General for Tax Administration (TIGTA) for claims against employees of their respective offices;
b. the Deputy Assistant Secretary for Human Resources and Chief Human Capital Officer (DASHR/CHCO) for claims against employees of Departmental Offices;
c. the Heads of Bureaus for claims against employees of their respective bureaus aggregating less than $7,500 per claim; and
d.
the DASHR/
5. REDELEGATION.
a. The IG and TIGTA may redelegate their respective authority and responsibility.
b. The heads of bureaus and the DASHR/CHCO may redelegate their respective authority and responsibility to the bureau position that warrants such authority, for example the highest ranking human resources official, Chief Financial Officer (CFO) or Deputy CFO.
6. APPEALS.
a. Requests for waiver of claims against employees of the IG or TIGTA which are denied, in whole or in part, may be appealed to a position designated by the IG and TIGTA.
b. Requests for waiver of claims against employees of Departmental Offices which are denied, in whole or in part, may be appealed to a designated position one-level higher than the deciding official. Denials issued by the DASHR/CHCO may be appealed to the Assistant Secretary for Management.
c. Requests for waiver of claims which are denied, in whole or in part, by Treasury bureaus (excluding the IG and TIGTA) may be appealed to the DASHR/CHCO.
7. RESPONSIBILITIES. The heads of bureaus, the IG, the TIGTA, the DASHR/CHCO, or their designees, shall:
a. promptly notify an employee upon discovery of an erroneous payment to that employee.
b. promptly act to collect the erroneous overpayment following established debt collection policies and procedures.
c.
establish reasonable 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
d. notify an employee whose request for waiver of claim is denied, in whole or in part, of the basis for the denial and the right to appeal the denial. All appeals must:
1) be submitted, in writing, 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;
2) specify the basis for the appeal;
3) include a chronology of the events surrounding the erroneous payments;
4) include a statement regarding any mitigating factors; and
5) include the employee’s original request for a waiver; the bureau’s denial of the request; an administrative report of the facts; the bureau’s conclusion for the basis of the denial; and copies of any personnel actions (e.g., promotions, demotions, step increases, etc.) that relate to the overpayment.
e. promptly forward appeals and supporting documentation to the appropriate deciding official with:
1) a recommendation as to why the appeal should be approved or denied; and
2) a statement as to the action taken to avoid a recurrence of the error.
f. If a waiver is granted on appeal, ensure that the employee is refunded any money collected on the debt, including any interest collected. xz
g. fulfill all labor relations responsibilities when implementing this directive.
h. fulfill any other responsibility of the agency imposed by 5 USC 5584, or other applicable laws and regulations.
8. IMPLEMENTATION.
a. Guidelines for Deciding Waiver and Appeal Requests.
1) A request for a waiver must be denied 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.
a) "Fault" exists if, in light of all the circumstances, it is determined that the employee knew or should have known that an error existed. 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:
(1) the payment resulted from the employee’s incorrect, but not fraudulent, statement that the employee should have known was incorrect;
(2) 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
(3) the employee accepted a payment, which the employee knew or should have known, to be erroneous.
b) Every case must be examined in light of its particular facts. For example, where an employee’s pay is set based on complicated laws or regulations that are subject to misinterpretation, and 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 pay setting in various situations. 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.
2)
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
a) whether collection of the claim would cause serious financial hardship to the employee from whom collection is sought;
b) 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, as follows:
(1) 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. 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; or
(2) 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) the time elapsed between the erroneous payment and discovery of the error and notification of the employee;
d) whether failure to make restitution would result in unfair gain to the employee; or
e) whether recovery of the claim would be unconscionable under the circumstances.
b. Reporting Requirements.
1) The heads of bureaus and the DASHR/CHCO shall maintain a register of waiver actions, subject to Departmental review. The register must cover each fiscal year and be prepared by October 15th of each year for the preceding fiscal year. The register must contain:
a) the total amount waived by the bureau;
b) the number and dollar amount of waiver applications granted in full;
c) the number and dollar amount of waiver applications granted in part and denied in part, and the dollar amount of each;
d) the number and dollar amount of waiver applications denied in their entirety;
e) the number of waiver applications referred to the DASHR/CHCO for initial action or for appeal;
f) the dollar amount refunded as a result of waiver action by the bureau; and
g) the dollar amount refunded as a result of waiver action by the DASHR/CHCO or the Assistant Secretary for Management.
2) The IG and TIGTA will maintain a register described in paragraph 8.b.1) and provide the above categories of information to the DASHR/CHCO annually.
3) Each bureau head, the IG, TIGTA, and DASHR/CHCO for the Departmental Offices, must retain a written record of each waiver action for 6 years and 3 months. At a minimum, the written record shall contain:
a) the bureau's summary of the events surrounding the erroneous payment;
b) any written comments submitted by the employee from whom collection is sought;
c) an account of the waiver action taken and the reasons for such action; and
d) other pertinent information such as any action taken to refund amounts repaid.
c. Effect of Request for Waiver. A request for a waiver of a claim shall not affect an employee's opportunity under 5 USC 5514(a)(2)(D) for a hearing, oral or written, on the validity or the amount of the debt, or the terms of the repayment schedule. A request by an employee for a hearing under 5 USC 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 USC 5514(a)(2)(D) concerning the validity or the amount of the debt, or the terms of the repayment schedule.
9. REFERENCES.
a.
5 USC 5514, “Installment Deduction for Indebtedness to
the
b. 5 USC 5584, “Claims for Overpayment of Pay and Allowances, and of Travel, Transportation and Relocation Expenses and Allowances.”
c. 31 USC 3711, “Collection and Compromise.”
d. 31 USC 3716, “Administrative Offset.”
e. 31 USC 3717, “Interest and Penalty on Claims.”
f. 5 Code of Federal Regulations (CFR) Part 550, subpart K, “Collection by Offset from Indebted Government Employees.”
g. 31 CFR Part 5, subpart B, “Procedures to Collect Treasury Debts.”
h. Determination with Respect to Transfer of Functions Pursuant to Public Law 104-316, OMB, December 17, 1996.
10. AUTHORITY. Treasury Order 102-01, “Delegation of Authority Concerning Personnel Management,” dated January 17, 2008.
11. CANCELLATION. Treasury Directive 34-01, “Waiver of Claims for Erroneous Payments,” dated July 12, 2000, is superseded.
12. OFFICE OF PRIMARY INTEREST. Office of the Deputy Assistant Secretary for Human Resources and Chief Human Capital Officer.
/S/
Peter B. McCarthy
Assistant Secretary for Management
and Chief Financial Officer