MSPB Debt Management — Federal Employee Salary Offset Procedures

Legal Authority

• 5 U.S.C. § 5514 — Salary offset authority; authorizes federal agencies to deduct amounts from a current federal employee's pay to satisfy a debt owed to the government without the employee's consent; establishes the right to notice and an opportunity for a hearing before deductions begin
• 31 U.S.C. §§ 3711–3716 — Federal Claims Collection Act; establishes the government-wide framework for administrative debt collection; authorizes referral of delinquent debts to other agencies, the Treasury Offset Program, and credit reporting; 5 U.S.C. § 5514 salary offset operates within this broader framework
• 5 CFR Part 1215 — MSPB implementing regulation; governs how MSPB acts both as a paying agency (executing deductions when another agency refers a debt involving an MSPB employee) and as a creditor agency (pursuing collection when MSPB itself is owed money)

Key Mechanics

Federal salary offset — the involuntary deduction from a federal employee's paycheck to satisfy a debt owed to the government — requires 30 days' written notice before deductions begin; the notice must state the amount and nature of the debt, the proposed deduction rate, and the employee's rights. Employees may request a written explanation, contest the debt in a hearing conducted by a neutral official outside the office that initiated the claim, or negotiate a voluntary repayment agreement. Deductions are capped at 15% of disposable pay per pay period unless the employee consents in writing to more; "disposable pay" is gross pay minus mandatory deductions (taxes, health insurance, retirement). If the employee separates before the debt is fully paid, MSPB may collect from the final salary payment or offset against retirement payments. MSPB operates on both sides of the system: as a paying agency executing deductions from MSPB employees when creditor agencies refer their debts, and as a creditor agency pursuing debts owed to MSPB itself from its employees, former employees, or contractors under Subpart B (§§ 1215.21–1215.35). The rule has remained substantively unchanged since 1987; it implements the baseline procedural protections Congress mandated in 5 U.S.C. § 5514.

Current Rule (2026)

What This Rule Does

When a federal employee owes money to the federal government — an overpayment, an unpaid debt, or a judgment — agencies have the power to collect it by deducting from the employee's paycheck without consent. This is called "salary offset" or "administrative offset." Five CFR Part 1215 governs how the Merit Systems Protection Board uses this tool, both when collecting debts that other agencies refer to MSPB for collection, and when collecting debts owed directly to MSPB itself.

Part 1215 has two distinct subparts:

Subpart A (§§ 1215.1–1215.12) — Covers MSPB's role when a creditor agency (the agency that is owed money) requests MSPB to collect the debt from an MSPB employee's salary. MSPB acts as the paying agency — the employer that executes the deduction.

Subpart B (§§ 1215.21–1215.35) — Covers MSPB as the creditor agency — when MSPB itself is owed money and must pursue collection from its employees, former employees, or contractors.

Salary Offset — MSPB as Paying Agency (Subpart A)

• § 1215.1 — The subpart covers salary offset collections from federal employees without their consent to satisfy debts owed to the federal government; MSPB must follow these procedures when another agency requests collection from an MSPB employee
• § 1215.2 — Key definitions: "agency" includes executive agencies, the Postal Service, and GAO; "debt" means a claim the government has against an employee; "salary offset" means involuntary deduction from current pay
• § 1215.4 — Before any deduction begins, MSPB must provide the employee with written notice at least 30 days before the proposed start of deductions; the notice must include the type and amount of the debt, MSPB's intention to collect by deduction, the proposed deduction rate (up to 15% of disposable pay per pay period), an explanation of the employee's rights, and how to request a review
• § 1215.5 — Employees have the right to request a written explanation of the debt, request a review of MSPB's determination, and enter into a voluntary repayment agreement before deductions begin
• § 1215.6 — Employees may request a hearing conducted by an official outside the office that initiated the claim; hearings may be in-person or based on a written record at MSPB's discretion
• § 1215.7 — MSPB may not collect more than 15% of the employee's disposable pay per pay period unless the employee consents in writing to a larger deduction; "disposable pay" means gross salary minus mandatory deductions (taxes, health insurance, retirement)
• § 1215.8 — Deductions continue until the debt is paid in full, the employee separates from service (in which case unpaid amounts may be collected from a final salary payment or retirement), or an alternative arrangement is made
• § 1215.10 — Statute of limitations: no salary offset if the debt has been outstanding for more than 10 years after MSPB's right to collect first accrued, unless facts were fraudulently concealed
• § 1215.11 — Involuntary payment of a debt through salary offset does not waive any rights the employee may have to contest the debt in other proceedings
• § 1215.12 — Interest, penalties, and administrative costs may be charged in accordance with the Federal Claims Collection Standards (31 CFR Chapter IX)

MSPB Debt Collection — MSPB as Creditor Agency (Subpart B)

• § 1215.21 — Sets standards for MSPB officers collecting debts owed to the United States through MSPB; covered debts include overpayments to contractors or grantees, unpaid fees, and damages from MSPB actions
• § 1215.22 — "Claim or debt" means any amount owed to the United States including overpayments to program participants, overpayments to contractors and grantees, unpaid penalties, and damages; includes amounts wrongly retained by employees who received erroneous pay
• § 1215.23 — The remedies in this subpart are not exclusive; the MSPB Chairman may impose additional sanctions; all remedies should be used concurrently
• § 1215.24 — Debtors whose indebtedness involves criminal activity (fraud, embezzlement, theft, misuse of government property) are subject to criminal prosecution in addition to civil collection; MSPB will refer such matters to the Department of Justice
• § 1215.25 — MSPB takes aggressive collection action including sending three progressive demand letters to the debtor's last known address; collection by offset against amounts owed by the government to the debtor (tax refunds, contract payments, etc.)
• § 1215.26 — MSPB will transfer delinquent debts to the Department of the Treasury for collection, including by federal tax refund offset, passport denial, or credit bureau reporting
• § 1215.27 — Compromise: MSPB may accept less than the full amount if the debtor establishes inability to pay in full or the cost of collection outweighs the likely recovery; compromises over $100,000 require DOJ concurrence
• § 1215.29 — Administrative offset: MSPB may offset amounts owed to the debtor by the government (salary, travel reimbursements, contract payments) against the debt without a separate court action
• § 1215.30 — Wage garnishment: MSPB may pursue involuntary withholding from a debtor's non-federal wages through a court-ordered garnishment if the debtor works for a private employer
• § 1215.35 — Referral to DOJ: debts over $100,000 (or any amount if doubtful about legal sufficiency of the debt) must be referred to the Department of Justice for litigation

How It Affects You

If you are a current MSPB employee and a creditor agency (say, the IRS or VA) claims you owe the government money, MSPB will notify you before taking any deduction. You have 30 days to request a review, and deductions cannot exceed 15% of your disposable pay per period. The government cannot pursue salary offset if the debt is more than 10 years old unless there was fraud.

If you owe money to MSPB directly — an erroneous payment, unpaid fees, or damages — MSPB will pursue collection through demand letters, administrative offset, tax refund offset, and (for larger debts) referral to the Treasury offset program or the Department of Justice. MSPB can also report the debt to credit bureaus.

Former federal employees are not immune. If you leave federal employment with a salary offset still pending, MSPB can collect from your final paycheck or from amounts due at separation. Delinquent debts can also be referred to Treasury for collection from any federal payments you may receive (such as a tax refund).

Criminal referral: If MSPB determines that the underlying debt arose from fraud, embezzlement, or theft, the agency will refer the matter to the Department of Justice for possible criminal prosecution — in addition to pursuing civil collection.

Statutory Authority

This rule implements:

• 5 U.S.C. § 5514 — Statutory authority for salary offset collection of federal debts from federal employee pay
• 31 U.S.C. §§ 3711–3716 — Federal Claims Collection Act; governs all federal agency debt collection, including compromise, suspension, and termination of collection
• 31 CFR Chapter IX — Federal Claims Collection Standards implementing the above; governs interest, penalties, and administrative costs

Recent Rulemakings

No major amendments since original promulgation in 1987. The underlying Federal Claims Collection Standards have been updated periodically by Treasury and DOJ.

Pending Action