7/31/2013 – WASHINGTON (AFPS) – Teams from the Defense Finance and Accounting Service will help civilian Defense Department employees in Europe, South Korea and Japan complete paperwork seeking to have repayment waived for living quarters allowances that were granted to them by mistake.
In a memo to the commanders of U.S. European, Africa and Pacific commands, Deputy Defense Secretary Ash Carter said it is in DOD’s best interest of to support employee requests for waivers of indebtedness resulting from the erroneous payments, provided there is no evidence of misrepresentation, fraud or deception to acquire the allowance in the first place.
By law, employees who receive housing allowances by mistake are required to repay them once notified.
The issue stems from a 2011 ruling from the Office of Personnel Management that the allowances cannot be granted to civilian employees hired overseas who worked for more than one employer locally before joining the Defense Department. A department audit earlier this year found that 659 DOD employees abroad were being erroneously paid living quarters allowances. Officials decided to grant them a one-year extension, under certain conditions, to avoid financial hardship. The extension will not be subject to repayment, officials said.
In response to concerns from commanders, DFAS teams were dispatched to sites in Europe earlier this month and will head to Japan and South Korea in September to help process requests for waivers of repayment. The Defense Office of Hearings and Appeals will make the final determination for employees who request a waiver.
Employees who do not request waivers will be expected to begin repaying the erroneously paid allowances about six months after being notified of the debt amount.
DOD officials said senior leaders understand that employees who have been receiving the allowance in error have made life choices based on continuing to receive it. Leaders have made every effort to mitigate the impact, officials added, noting that a thorough review of the living quarters allowance policy is underway to ensure it is clear.