Overpayment of WagesCauses
Debts due to overpayment of wages generally occur for two reasons:
1. Your timekeeper made a correction or change to your time and attendance for a prior pay period. For example, if you worked fewer hours than originally reported and paid, your timesheet or timecard would be updated after your original one was processed to reflect the actual hours worked.
Any time a time and attendance correction is made to a prior pay period the Remarks section of your Leave and Earnings Statement (LES) will have the statement:
“RETROACTIVE TIME AND ATTENDANCE ADJUSTMENTS PROCESSED.”
2. Your human resources office (HRO) made a correction or change to a previous Notification of Personnel Action, Standard Form 50 (SF-50). For example, if you were given your Within Grade Increase (WGI)/Step Increase or a promotion earlier than you should have been, an updated or corrected SF-50 would be processed to correct the original error.
If this happens, your LES will have the remark:
“RETROACTIVE PERSONNEL DATA PROCESSED.”
These LES remarks could reflect either a prior pay period’s underpayment or overpayment. These remarks will be printed on the LES whenever the action is retroactive (or effective as of a date that has already passed). Your LES’ Retroactive Earnings section will show the amounts processed for the action. If you have a question about the adjustment, contact your timekeeper for time and attendance adjustments and your HRO for information about personnel action adjustments.
If you did not receive a debt notification letter you may call one of the following numbers:
If your debt is $50.00 or less OR the debt was processed within four pay periods of the original overpayment, deductions are made immediately upon establishment of the debt. You are notified of the collection via the following remark on your LES:
The Debt Collection Improvement Act authorizes your civilian payroll office to collect this debt.
If your debt is more than $50.00 or after the four pay period window, your payroll office notifies you by letter to repay the debt or to establish a repayment agreement within 30 days (45 days for overseas pay accounts; 70 days for Department of Defense Education Activity pay accounts). If you do not repay the debt or establish a repayment agreement, your payroll office will begin involuntary deductions of 15 percent of the amount of your net disposable pay, which is the amount of your pay after deductions required by law are subtracted.
If your debt is covered under the Debt Collection Improvement Act, a letter will not be available; please contact one of the below numbers for the proper address to mail your request:
Debt Collected from Retroactive Earnings
If you have earnings due to you in the current pay period for a prior pay period (e.g., late processing of your WGI/Step Increase) and a debt is also established in the current pay period, your debt will be collected from the retroactive earnings due. If this occurs, your LES’ Remarks section will have the statement:
“INDEBTEDNESS COLLECTED FROM RETROACTIVE EARNINGS AND/OR ADJUSTED DEDUCTIONS.”
When the payroll system processes an overpayment for a prior pay period in the current calendar year, it automatically collects all of the deductions from the debt. Therefore, the amount you still owe is the amount you received after taxes and deductions.
If you choose not to repay your debt in the same year the overpayment occurred, any unpaid portion of the debt will be reported as income and you will be required to pay all income taxes applicable to the unpaid debt balance.
Prior Year Debt
IRS Publication 15, Circular E, Employer's Tax Guide, states that tax withholding adjustments cannot be made for a prior year. Therefore, the debt owed is the overpayment amount before taxes and deductions.
For Civilian Pay questions, please contact your Customer Service Representative (CSR). Contact your immediate supervisor for more details.
Page updated July 26, 2011