OPM Federal Retirement Debt Collection — IRS Tax Refund Offset for Overpaid Retirement and Health Benefits
Legal Authority
- 5 U.S.C. § 8347 — CSRS administration; authorizes OPM to recover overpayments of Civil Service Retirement System retirement benefits
- 5 U.S.C. § 8461 — FERS administration; parallel authority for Federal Employees' Retirement System overpayment recovery
- 5 U.S.C. § 8909 — FEHBP fund; authorizes OPM to collect unpaid Federal Employees Health Benefits Program premiums
- 26 U.S.C. § 6103(m)(2) — IRS authority to provide current mailing addresses to federal agencies seeking to collect debts through tax refund offset
- 5 CFR Part 835 — OPM implementing regulation; establishes the 60-day advance notice requirement, debtor rights to inspect records and dispute the debt, IRS address verification requirement, and stay procedures before referral
Key Mechanics
Five CFR Part 835 governs OPM's use of IRS tax refund offset to collect past-due debts from current and former federal employees and retirees. Two types of debts are eligible: (1) CSRS/FERS overpayments — retirement benefits paid at incorrect amounts due to calculation errors, unreported life events, or other administrative errors; and (2) unpaid FEHBP premiums from periods of leave without pay, post-retirement coverage gaps, or other situations where coverage continued but premiums were not collected. Before referring any debt to the IRS, OPM must: (a) verify the debt is legally enforceable and past-due; (b) obtain a current mailing address from IRS records under 26 U.S.C. § 6103(m)(2) within the preceding year; and (c) send the debtor 60 days' advance written notice disclosing the amount owed, the right to inspect OPM's supporting records, the opportunity to enter a repayment agreement, and how to dispute the debt. If the debtor responds with additional evidence or requests review, OPM must stay the referral until the evidence is considered. Once all procedural requirements are met and the debtor has had an opportunity to respond, OPM transmits the referral and the debtor's next federal income tax refund is reduced by the referred amount.
Current Rule (2026)
| Parameter | Value |
|---|---|
| Citation | 5 CFR Part 835 |
| Issuing agency | Office of Personnel Management (OPM) |
| Statutory authority | 5 U.S.C. §§ 8347, 8461 (CSRS/FERS); 5 U.S.C. § 8909 (FEHBP) |
| Last major amendment | No recent Federal Register amendments |
What This Rule Does
When the Office of Personnel Management overpays retirement benefits under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS), or when federal employees or retirees fail to pay premiums owed under the Federal Employees Health Benefits Program (FEHBP), those debts do not simply disappear. OPM has the legal authority to collect these past-due amounts through the federal government's tax refund offset program — intercepting a debtor's IRS income tax refund to satisfy the outstanding OPM debt.
Five CFR Part 835 establishes the procedures OPM must follow before referring a debt to the IRS for tax refund offset. The rule protects debtors with a notice requirement and opportunity to respond before OPM sends the referral, while giving OPM an effective collection tool for debts that are difficult to collect through ordinary means.
Key Provisions
- § 835.601 — Authority and scope: establishes procedures for OPM to refer past-due legally enforceable debts to the IRS for offset against the federal income tax refunds of people owing debts to OPM; covers both current and former federal employees and retirees
- § 835.602 — Eligible debts: past-due debts eligible for IRS tax refund offset are those resulting from: (1) erroneous payments under the Civil Service Retirement System (CSRS) or Federal Employees' Retirement System (FERS); (2) unpaid premiums under the Federal Employees' Health Benefits Program (FEHBP); OPM may only refer debts that are legally enforceable (undisputed or confirmed after any appeal) and past-due
- § 835.603 — Notice requirement: OPM may not refer a debt to the IRS for offset until it has made a determination that an amount is owed and past-due AND has given the debtor at least 60 days' written notice of the intent to collect through tax refund offset; the notice must inform the debtor of the amount owed, the right to inspect and copy OPM's records regarding the debt, the opportunity to enter a repayment agreement, and how to dispute the debt
- § 835.604 — IRS address requirement: OPM must have used a mailing address for the debtor obtained from the IRS (under 26 U.S.C. § 6103(m)(2)) within the preceding year before attempting to notify the debtor; this ensures OPM has a current address and the notice actually reaches the debtor before the offset occurs
- § 835.605 — Stay for debtor response: if, following the 60-day notice, OPM receives notice that the debtor will submit additional evidence or actually receives evidence from the debtor, OPM must stay any referral to the IRS until it has considered that evidence; debtors have a meaningful opportunity to challenge the debt before the offset is transmitted
How It Affects You
If you are a federal retiree receiving CSRS or FERS benefits and OPM determines you have been overpaid — for example, because your benefit was calculated incorrectly or a death in the family that should have changed your benefit was reported late — OPM may seek to recover the overpayment. One of OPM's collection tools is the IRS tax refund offset: your income tax refund may be reduced by the amount OPM has referred for collection.
If you owe unpaid FEHBP premiums from a period when you were covered under a federal health plan but did not make required premium payments (for example, during a period of leave without pay or after retirement), OPM may also refer those amounts for IRS offset.
The 60-day notice is your window to respond. After OPM sends its notice of intent to collect, you have 60 days to: review OPM's records supporting the debt, request a review of whether the debt is valid or the amount is correct, enter into a repayment agreement, or provide evidence that OPM has the wrong amount. If you act within that window, OPM must consider your response before sending the referral to the IRS.
If you disagree with the debt, act during the 60-day notice period — don't wait until you see your tax refund reduced. Once the offset has been processed, recovery of wrongly offset funds requires a separate correction process. Contact OPM's Retirement Services at opm.gov or call 1-888-767-6738 to request records review and dispute the debt.
Statutory Authority
This rule implements:
- 5 U.S.C. § 8347 — CSRS administration; authorizes OPM to recover overpayments of CSRS retirement benefits
- 5 U.S.C. § 8461 — FERS administration; parallel authority for FERS overpayment recovery
- 5 U.S.C. § 8909 — FEHBP fund; authorizes OPM to collect unpaid health benefit premiums
- 26 U.S.C. § 6103(m)(2) — IRS authority to provide mailing addresses to federal agencies seeking to collect debts through tax refund offset
Recent Rulemakings
No major Federal Register amendments. The tax refund offset procedures reflect the longstanding framework for OPM debt collection.