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Administrative Wage Garnishment

Background

EPA simultaneously published a direct final rule (docket # EPA‐HQ‐OA‐2014‐0012‐0001) and a proposed

rule (docket # EPA‐HQ‐OA‐2014‐0012‐0002), “Administrative Wage Garnishment,” in the Federal

Register on July 2, 2014. Administrative wage garnishment is a debt collection tool whereby a non‐

federal employer is ordered to withhold up to 15% of an employee’s disposable income (as defined by

the Department of Treasury) from an employee who owes a non‐tax, delinquent debt to a federal

agency. The Debt Collection Improvement Act of 1996 gives federal agencies the authority to collect

delinquent nontax debt owed to the United States through administrative wage garnishment. Currently,

at least 30 federal agencies use such wage garnishment to collect federal debt.

Due to comments the agency has received and per the Federal Register notice, we published a

withdrawal notice for the direct final rule in the Federal Register on July 17, 2014 at 79 FR 41646.

However, our proposed rule to use administrative wage garnishment as a debt collection tool remains

open. On July 23, 2014, we extended the public comment period to September 2, 2014, in order to

provide additional time for public comment to the agency on this proposed rule.

   

The EPA will begin using administrative wage garnishment after the proposed rule becomes final and

following negotiations with the Department of Treasury on a memorandum of understanding, as the

EPA has chosen for Treasury to conduct any administrative wage garnishment hearings on the EPA’s

behalf. When the EPA begins using administrative wage garnishment, the Department of Treasury will

send a wage garnishment notice to the debtor, the debtor will be afforded the full opportunity to

exercise his/her due process rights, and, if administrative wage garnishment ensues, the EPA will receive

the proceeds from the collection minus fees charged by the Treasury to the EPA for performing this

service. The EPA’s ability to use the money will depend on the nature of the appropriation from which

the collection occurred.

Administrative wage garnishment is only one of a suite of debt collection tools used by federal agencies

to collect delinquent nontax debt. Our proposed rule will make available this tool to the EPA, so the EPA

can join with other federal agencies in ensuring that nontax delinquent debts are recovered for

appropriate public use per the Debt Collection Improvement Act of 1996.

FAQs

What is administrative wage garnishment?  Administrative wage garnishment is a debt collection tool

whereby a non‐federal employer is ordered to withhold up to 15% of an employee’s disposable income

(as defined by the Department of Treasury1

) from an employee who owes a non‐tax, delinquent debt

with a federal agency. There must be an employer‐employee relationship for administrative wage

                                                            

1 Treasury’s administrative wage garnishment regulation at 31 CFR 285.11(c) defines the term “disposable pay.”  

That term is defined as follows:  Disposable pay means that part of the debtor's compensation (including, but not

limited to, salary, bonuses, commissions, and vacation pay) from an employer remaining after the deduction of

health insurance premiums and any amounts required by law to be withheld. For purposes of this section,

"amounts required by law to be withheld" include amounts for deductions such as social security taxes and

withholding taxes, but do not include any amount withheld pursuant to a court order.
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garnishment to apply; self‐employed individuals not receiving wages, for example, would not be eligible

for wage garnishment nor would businesses/firms.

Does the EPA have the authority to do administrative wage garnishment?  The Debt Collection

Improvement Act of 1996 gives Federal agencies the authority to collect delinquent nontax debt owed

to the United States through administrative wage garnishment.  Currently, 30 Federal agencies use such

wage garnishment to collect Federal debt.  The constitutionality of the Debt Collection Act of 1996 has

not been successfully challenged in court in the 18 years of its existence.

Can wages be garnished without a court order?  Yes, the Debt Collection Improvement Act of 1996

(Public Law 104‐134) permits Federal agencies to garnish the pay of individuals who owe non‐tax

delinquent debt without first obtaining a court order. However, the debt itself must have been

established through administrative or judicial process.

Why is the EPA implementing administrative wage garnishment as a collection tool?  In October, 2011,

the U.S. Department of Treasury’s Financial Management Service, published a requirement that federal

agencies’ debt collection activities comply with all relevant laws, including the Debt Collection

Improvement Act of 1996, and that agencies must authorize the Financial Management Service to use

all appropriate debt collection tools, including administrative wage garnishment.

When will the EPA start using administrative wage garnishment?  The EPA will begin using

administrative wage garnishment after the proposed rule becomes final. In addition, EPA will need to

negotiate a memorandum of understanding with Treasury after the rule becomes final, as the EPA has

chosen for Treasury to conduct any administrative wage garnishment hearings on the EPA’s behalf.

  

How will administrative wage garnishment work for the EPA? The Department of Treasury will send a

wage garnishment notice to the debtor. Treasury will afford the debtor the full opportunity to exercise

his/her due process rights through a hearing. If administrative wage garnishment ensues, the EPA will

receive the proceeds from the collection minus fees charged by the Treasury to the EPA for performing

this service. The EPA’s ability to use the money will depend on the nature of the appropriation from

which the collection occurred.

What kind of debts would be collected? Administrative Wage Garnishment will only be used for non‐tax

delinquent debts owed to the EPA by employees of non‐federal employers. Examples of the types of

debts to be collected are debts owed by former employees, individuals who owe the EPA money

because of overpayments, reimbursements, FOIA requests, amounts disallowed to a grantee, and

administrative and judicial civil penalties to individuals. Excluded from administrative wage garnishment

are debts in litigation or under appeal, debts where the debtor is in bankruptcy, and debts for which DOJ

has enforcement responsibility, such as Superfund Debts. Examples of debts owed to the EPA can arise

from various Federal Government programs and actions, including loan and loan guarantee programs;

overpayments to beneficiaries, former Federal employees, or contractors; or penalties and fines owed

from violations of law, to exclude Superfund debts.

What are debtors’ due process rights? Prior to referring debt to Treasury, the EPA’s due process

practices include the opportunity for debtors to dispute the validity of the debt, pay the debt in full, or

enter into a repayment agreement acceptable to the EPA. The EPA informs debtors of their due process

rights and gives them the opportunity to exercise those rights. Under the proposed rule, debtors have

an express right to request a hearing conducted by Treasury, which at Treasury’s option may be oral or
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written.  This means debtors will be given the opportunity to dispute the debt at a hearing before the

Department of Treasury. Debtors will be provided oral hearings when the government determines that

the issue in dispute cannot be resolved by review of the documentary evidence (for example, when the

validity of the claim turns on the issue of credibility or veracity).

When does EPA collect debt and when does Treasury collect debt on behalf of EPA? As a general

matter, EPA seeks to collect debts that are 120 days old or less by issuing a bill and three dunning

notices. After that, all debts are referred to Treasury for collection. Treasury has a suite of methods for

collecting delinquent debt, such as offsetting debt owed to the federal government from payments (e.g.

tax refunds) owed to the debtor. Administrative wage garnishment is one such collection method; when

the proposed rule becomes final, Treasury will administer wage garnishment on behalf of the EPA.

Does the Direct Final Rule go into effect September 2, 2014? No. The EPA withdrew the direct final rule

on July 17, 2014. The proposed rule to use administrative wage garnishment as a debt collection tool

remains open for public comment until September 2, 2014.

When does the public comment period end for the proposed rule?  The comment period ends

September 2, 2014 (on July 23, 2014, the EPA extended the public comment period from August 1, 2014

to September 2, 2014).

More Information

Proposed Rule: http://www.regulations.gov/#!documentDetail;D=EPA‐HQ‐OA‐2014‐0012‐0002

Extension of Public Comment Period: http://www.regulations.gov/#!documentDetail;D=EPA‐HQ‐OA‐

2014‐0012‐0687

Cross‐Servicing at the Department of Treasury (including FAQs on administrative wage garnishment):

http://fiscal.treasury.gov/fsservices/gov/debtColl/faqs/debt_questions_crosserv.htm