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DoD to start living quarters allowance debt collections May 4

Apr. 17, 2014 - 08:11PM   |  
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Civilian employees assigned to U.S. Air Forces Europe-Africa and Pacific Air Forces who were overpaid for their housing allowance — some months, some years — must begin repaying the debt May 4, unless they have been granted a waiver.

An audit conducted last year by the Defense Department identified 659 overseas civilian employees who erroneously received the living quarters allowance.

The average debt being waived by the Defense Office of Hearings and Appeals is $173,000, said Defense Department spokesman Lt. Cmdr. Nate Christensen.

Of the employees who were identified as erroneously receiving LQA, approximately two-thirds were assigned in Europe, approximately one-third in the Pacific, and a handful in Bahrain and Peru, he said.

Of the employees in Europe, 71 were assigned to USAFE-AFAFRICA. Eleven Air Force civilians in Pacific Air Forces were overpaid, according to Maj. Jillian Torango, spokeswoman for PACAF.

Defense Finance and Accounting Service extended the LQA repayment for one year to give those who were overpaid time to apply for waivers or prepare to start making payments. The extension ends this month.

By mid-April, the Defense Office of Hearing and Appeals in USAFE had approved 57 waivers and four were pending, according to personnel officials. Seven remaining employees had requested a hearing with DFAS, and debt collections will not begin until a formal decision is made, officials said.

Three other USAFE employees had yet to request a waiver, Aaron Gillison, the director of Defense Finance and Accounting Services Indianapolis, said in a news release.

“While it is your choice to not pursue a waiver, we need to stress that if you do not submit a waiver before May 4, debt collections will begin. Additionally, you will no longer have the benefit of the one-year LQA extension,” Gillison said.

Ten of the 11 employees from PACAF filed debt waivers with DFAS, Torango said. Of the 10, nine waivers have been approved and one is pending. No one has requested a hearing, she said.

“You can still apply for a waiver after May 3,” said Gillison. “If you do, and your debt is waived in full, any payments that have been collected on the debt will be refunded to you.”

Only 38 of the total affected employees overseas have yet to request a waiver of indebtedness or a hearing. These 38 employees will be receiving letters from DFAS indicating that collection action will be initiated, Christensen said. An additional 30 overseas employees have hearings pending.

The debt will be collected by withholding 15 percent of the employee’s paycheck, unless the employee completes a Voluntary Repayment Agreement for alternate payment through the employee’s respective command channels and through DFAS, according to the release.

Approximately 32,000 DoD employees are assigned overseas, with about 16,000 authorized to receive LQA.

LQA, a tax-free allowance, is intended to substantially cover the costs of rent and utilities for government civilian employees working overseas. The average LQA payment for employees in all locations is $35,000 annually, Christensen said.

State Departments regulation makes ineligible for LQA employees hired overseas after working for more than one employer — such as a contractor, an international organization or the military.

However, DoD interpreted the regulation differently for years, resulting in thousands of employees receiving the allowance.

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