P.S. Docket Nos. AO 22-280 & AO 23-132

INITIAL DECISION

The Postal Service seeks to collect two debts from Mr. Jollivette by administrative offset. The first is based on a negative annual leave balance of 145.27 hours when Mr. Jollivette retired from the Postal Service. The second is for taxes associated with that leave.
For the reasons discussed below, I find that Mr. Jollivette is liable for the debts and that the Postal Service may collect them by administrative offset.

FINDINGS OF FACT

1. Mr. Jollivette was employed by the Postal Service from 1984 until his retirement on April 30, 2022 (Resp. Exh. 5; Tr. 28).¹
2. At the end of the 2021 leave year, Mr. Jollivette had a negative annual leave balance of 7.7 hours (Resp. Exh. 11 at 98, 112; Tr. 15–16).
3. At the beginning of the 2022 leave year, based on his tenure, the Postal Service advanced 208 hours of annual leave to Mr. Jollivette, leaving him with a new balance of 200.3 hours (Resp. Exh. 11 at 112; Tr. 15).
4. During 2022, Mr. Jollivette earned 64 hours of annual leave and used 201.57 hours of annual leave (Resp. Exh. 11 at 102–04; Tr. 16–17).
5. When he retired, Mr. Jollivette was overdrawn 145.27 hours of annual leave (Resp. Exh. 11 at 98; Tr. 15–17).
6. Within a month of his retirement, the Postal Service issued to Mr. Jollivette a Notice of Debt Determination and invoice for $4,285.77 based on the overdrawn annual leave. The invoice number was 703311148 and the reference number was B13070 PRD. (Resp. Exh. 10; Tr. 13).
7. The Postal Service used $67,437 to calculate the monetary value of his negative leave balance. That was Mr. Jollivette’s annual salary when he took annual leave in 2022; it did not include retroactive salary increases that were processed after he retired. $67,437 divided by 2080 (the number of hours in a work-year) equaled an hourly salary of $32.4216, which multiplied by the overdrawn hours, 145.27, equaled $4,709.89. The Postal Service then credited back $386.43 for taxes and $37.68 for retirement contributions to determine the invoice amount.² (Resp. Exhs. 7, 8, 9, and 11 at 102–03; Tr. 18–22).
8. Mr. Jollivette requested reconsideration of the debt from the Postal Service Accounting Service Center. After receipt of a denial, he filed a petition for hearing with the Judicial Officer Department, which docketed the petition as AO 22-280. (Pet. Exh. 5; Notice of Docketing for AO 22-280, July 7, 2022; Tr. 28–30).
9. Because Invoice 703311148 was not paid in 2022, the Postal Service issued Invoice No. 703387795 in January 2023 to recover the taxes that Mr. Jollivette owed on Invoice No. 703311148, which was referred to by part of its reference number, B13070. The amount, $382.82, was slightly lower than what was withheld because it was calculated using a yearly average. (Pet. Exh. 6; Tr. 14–15, 21).
10. Mr. Jollivette filed a second petition for hearing, which was docketed as AO 23-132 and consolidated with the first petition (Pet. Exh. 6; Notice of Docketing for AO 23-132, Mar. 8, 2023; Order, Mar. 10, 2023).³

DECISION

Invoice No. 703311148
Invoice No. 703311148 was based on Mr. Jollivette’s negative annual leave balance of 145.27 hours. A retired employee’s negative annual leave balance equates to a salary overpayment, entitling the Postal Service to recover the monetary value of the unearned annual leave under the Debt Collection Act. Employee and Labor Relations Manual (ELM) § 512.72. To recover, the Postal Service bears the burden of proving by a preponderance of the evidence that (1) it made the overpayment, (2) it properly calculated the amount of the debt, and (3) the employee was not entitled to it. Helen M. Lofton v. United States Postal Service, AO 13-313, 2018 WL 1606049, at *2 (Mar. 29, 2018) (remanded on other grounds); David G. Cleaver v. United States Postal Service, AO 22-56, 2022 WL 16836195, at *1 (Oct. 28, 2022).
Normally, the Postal Service would meet this burden by submitting payroll journals for the relevant pay periods, along with witness testimony explaining the relevant portions of the payroll journals.⁴ Cleaver, 2022 WL 16836195, at *2. Here, the Postal Service submitted all of Mr. Jollivette’s payroll journals starting from pay period 1/2022 (Resp. Exh. 11). At the hearing, conducted by video-teleconferencing on April 12, 2023, the Postal Service presented a witness from the Postal Service Accounting Service Center who explained relevant portions of those journals (Tr. 11–23).Through that testimony and accompanying documentary evidence, the Postal Service proved that Mr. Jollivette was overdrawn 145.27 hours of annual leave upon his retirement from the Postal Service. It also proved that the monetary value of that leave was at least $4,285.77, the amount stated on the invoice.  
Mr. Jollivette did not challenge the Postal Service’s valuation of the leave hours. In fact, the annual salary used by the Postal Service is lower than what Mr. Jollivette was ultimately paid because it did not reflect retroactive salary increases that were processed after he retired. 
Mr. Jollivette focused on the number of hours. He argued, before and during the hearing, that he needed his PS Form 3971s (Request for or Notification of Absence) to verify that he took the leave. Before the hearing, the Postal Service’s representative tried to obtain his PS Form 3971s from 2022 but she could not do so (Order, Mar. 31, 2023; Order and Memorandum of Telephone Conference, Mar. 30, 2023; Order and Memorandum of Telephone Conference, Mar. 6, 2023). While ELM § 512.423, Retention and Disposal Period, states that PS Form 3971s “are retained by the installation head for 2 years from the date the leave is taken or disapproved,” I cannot require the Postal Service to produce documents that it represents that it does not have.
More importantly, whether a PS Form 3971 was submitted is not relevant to these petitions. Kevin Bell v. United States Postal Service, AO 19-361, 2020 WL 5255635, at *2 (Aug. 24, 2020). The issue here is a narrow one: Was the petitioner overpaid by the alleged hours? Id. The Postal Service need not use PS Form 3971s to answer this question. Relevant payroll journals and witness testimony about those journals suffice. Cleaver, 2022 WL 16836195, at *2. The Postal Service met its burden here. 
Mr. Jollivette also argued that ELM § 512.43, Insufficient Leave Balance, supports his position. It states, “If the leave is approved and the employee has an insufficient leave balance, it is changed to LWOP [(Leave without Pay)] when the employee’s pay is processed.” Mr. Jollivette, however, disregarded the 208 hours of annual leave that he was advanced at the beginning of the 2022 leave year. Advanced annual leave is credited even before it is earned. ELM § 512.311. Before his retirement, Mr. Jollivette had a sufficient annual leave balance for all but 1.27 of the hours he used in 2022.
While ELM § 512.43 is not written as a mandatory requirement, even if the Postal Service erred in not converting those 1.27 hours to LWOP, Mr. Jollivette was still overpaid because he did not work those hours. Administrative error does not relieve an employee of a valid debt.⁵ Lofton, 2018 WL 1606049, at *2 (remanded on other grounds). The payroll journals and witness testimony proved that Mr. Jollivette used 201.57 hours of annual leave in 2022, even though he had only 200.3 hours of annual leave available for use before he retired. They also proved that, after accounting for the 62 hours that he earned in 2022, Mr. Jollivette had a negative annual leave balance of 145.27 hours when he retired.
Mr. Jollivette also argued, in one of his exhibits, that the Postal Service did not tell him how advanced annual leave works and that he never received a stand-up talk on advanced annual leave that was supposed to take place in 2019 (Pet. Exh. 3). But the pay stubs that he filed show that he was advanced 208 hours of annual leave at the beginning of the 2022 leave year. Those hours are even listed in a standalone field. (Pet. Exh. 4). Moreover, Mr. Jollivette has shown himself to be familiar with the ELM, which explains advanced annual leave.
In sum, the Postal Service met its burden of proof on the annual leave debt, and Mr. Jollivette did not present any valid defenses.

Invoice No. 703387795
Invoice No. 703387795 was for taxes on Mr. Jollivette’s annual leave debt. It is well settled that an employee who fails to repay a salary overpayment by the end of the calendar year incurs another debt to the Postal Service. Donald D. Salzano v. United States Postal Service, DCA 17-228, 2019 WL 479670, at *3 (Jan. 7, 2019). The Postal Service withholds taxes and other amounts such as retirement contributions on the total salary payment (known as the “gross payment”) and then pays the employee the remainder (known as the “net payment”). Id. The Postal Service takes the tax withholdings and forwards them to the appropriate taxing authorities. Id.
When the Postal Service calculates the debt amount for a salary overpayment that occurred before the end of the calendar year, it seeks only the net payment. Id. If the employee repays the net payment before the end of the calendar year, the Postal Service asks the taxing authorities to make a corresponding adjustment to the employee’s tax records, and the employee is cleared from any further liability for the overpayment. Id.
If, however, an employee fails to repay the salary overpayment by the end of the calendar year, the Postal Service is no longer able to recoup the taxes that it forwarded to the taxing authorities. Id. After the first of the year, the overpayment is treated as income by the taxing authorities, and the taxes paid by the Postal Service on behalf of the employee are credited as taxes paid by the employee. Id. At that point, it is too late for the Postal Service to recall those taxes from the taxing authorities. Id. The employee though was never entitled to the net payment or the taxes paid on his behalf to the taxing authorities. Id. The employee thus incurs a debt for both the net payment (here, Invoice No. 703311148) and the tax withholdings (here, Invoice No. 703387795). Id.
The Postal Service withheld taxes in 2022 on the wages it paid to Mr. Jollivette that year, and it did not recover Invoice No. 703311148 in 2022. Thus, in early 2023, the Postal Service issued Invoice No. 703387795 for taxes.
To recover a tax debt, the Postal Service must meet the same standard of proof and prove the same elements as the salary overpayment. Lofton, 2018 WL 1606049, at *2 (remanded on other grounds). There is, however, a rebuttable presumption that the Postal Service paid the withholdings on the employee’s behalf to the applicable tax authorities consistent with its legal obligations. See, e.g., Leroy J. Saunders, Jr. v. United States Postal Service, AO 14-307, 2015 WL 13647622, at *2 (Feb. 24, 2015) (holding that a rebuttable presumption exists that the Postal Service complied with its own regulations and federal law on its payment of premiums under the Federal Employees Health Benefits program).
The Postal Service proved through payroll journals and witness testimony that it withheld taxes and retirement contributions, and Mr. Jollivette did not allege—much less present evidence—that the Postal Service failed to pay those withholdings on his behalf to the applicable government authorities. He also did not challenge the amount of the tax debt, which was, in fact, lower than the withholdings shown on the payroll journals because the Postal Service used a yearly average to calculate the debt.
As to entitlement, as discussed above, the Postal Service proved that Mr. Jollivette was not entitled to 145.27 hours of annual leave. Accordingly, he was also not entitled to the associated taxes forwarded on his behalf.
In sum, the Postal Service met its burden to recover the tax debt, and Mr. Jollivette did not present any valid defenses.

ORDER

The petitions are denied. The Postal Service may collect the debts by involuntary administrative offset.