Before referring a debt for collection by administrative offset, a creditor agency must provide each debtor with:
(a) a written notification of the nature and the amount of the debt, the intention of the agency to collect the debt through administrative offset, and an explanation of the debtor’s rights;
(b) an opportunity to inspect and copy the records of the agency;
(c) an opportunity for review within the agency; and
(d) an opportunity to enter into a written repayment agreement.
Can they offset my tax refund and then tell me after the fact?
Yes, after the debt has been referred for administrative offset and an offset is taken, the disbursing official conducting the offset must notify the debtor/payee that the offset has occurred (including the amount and type of payment that was used to pay the debt) and the identity of the creditor agency requesting the offset, including a contact name. The specific timing of the notice is not mandated for tax refund offsets.
What if I did not receive a notice at all?
Regardless of the type of payment, failure of the debtor to receive notice will not affect the legality of the offset (withholding).
What is Administrative Wage Garnishment?
Administrative Wage Garnishment (AWG) is a debt collection process that allows a federal agency to order a non-federal employer to withhold up to 15 percent of an employee’s disposable income to pay a non-tax delinquent debt owed to the agency.
How Does It Work?
Treasury, on behalf of the federal agency, is authorized to issue a wage garnishment order to collect the debt. Under federal law, a court order does not need to be obtained. The employer will be required to send the amounts deducted to Treasury for payment to the federal agency. The AWG process is governed by federal law. State laws do not apply.
Do I have a right to object to the garnishment?
A debtor is entitled to a hearing before AWG begins if it is requested within 15 business days after the AWG notice letter is mailed. The federal agency may continue the AWG process if a hearing is requested after the 15-day period. A hearing may be requested concerning the existence or amount of the debt, or the terms of the proposed repayment schedule under the garnishment order (hardship).
The federal agency will determine whether the hearing will be oral or written. If the agency decides to hold an oral hearing, the agency will decide when and where the hearing will be held, and the debtor may decide whether the hearing will be in-person or by telephone. The debtor will have to pay any travel expenses for an in-person hearing.
To request a hearing regarding the terms of the repayment schedule (hardship), a financial statement with supporting documentation must be submitted with the hearing request form received with the notice letter.
How much will I be Garnished?
Up to 15% of your disposable income. Disposable pay includes, but is not limited to: salary, overtime, bonuses, commissions, sick leave and vacation pay. Determining how much you have at risk can be complex. If section 2(a) of the Wage Garnishment Order specifies the dollar amount to be garnished, it will control. However, if you have not yet been garnished, the Wage Garnishment Calculator will help you determine what may be taken to pay your debt.
No matter what, you can keep an amount equal to 30 times the minimum wage. The minimum wage as of July 24, 2009 is $7.25/hour. This means that 30 x 7.25 = $217.50 is protected per week.
Note – The Wage Garnishment Calculator is provided by the Bureau of the Financial Service and the Perliski Law Group makes no representation or warranty as it accuracy. Use of the Calculator should be limited to general information only and is not a substitute for legal advice on this important issue.