P.S. Docket No. AWG 23-179

FINAL DECISION

The Postal Service seeks to collect a debt of $1,448.06 from Tiffany Koonce by administrative wage garnishment through the United States Department of the Treasury (“Treasury Department”). The Postal Service’s claim of debt is based on overdrawn annual leave at the time of Ms. Koonce’s separation from the agency. The debt was ultimately referred to the Treasury Department, which collected the alleged debt entirely via administrative offset. Here, Ms. Koonce is challenging the debt due to lack of notice from the Postal Service. For the reasons discussed below, the Petition is granted. 

FINDINGS OF FACT

1. Ms. Koonce began working for the Postal Service as a City Carrier on April 17, 2018. At that time, her address of record was 725 Burnham, 4B, University Park, IL 60484. (Resp. Exh. 5).
2. In December 2020, Ms. Koonce updated her address of record to 1712 S. Dixie Hwy, Trlr 108, Crete IL, 60417 via the Postal Service’s internal employee website, LiteBlue (Tr. 48-49).
3. Ms. Koonce separated from the Postal Service on December 6, 2021, although her last day in a pay status was July 24, 2021 (Resp. Exh. 5).
4. On January 19, 2022, the Postal Service sent a Notice of Debt Determination and Invoice No. 703265744 to Ms. Koonce to recoup the cost of overdrawn annual leave, which totaled $1,448.06, to the following address: 725 Burnham, 4B, University Park, IL 60484-5355. These documents were returned to the Postal Service as “unable to forward” on January 24, 2022, because there was no addressee named Koonce at the listed address. (Resp. Exh. 3; Tr. 21).
5. On February 22, 2022, the Postal Service mailed another notice, also called a Dunning letter, to Ms. Koonce explaining that it intended to transfer the debt if no payment plan or settlement was reached (Tr. 24). Like the Notice of Debt Determination and invoice, the Dunning letter was mailed to Ms. Koonce at the invalid University Park, IL address (Tr. 25).
6. Eventually, the debt was transferred to the Treasury Department, which sent Ms. Koonce a Notice of Intent to Initiate Administrative Wage Garnishment Proceedings in July 2022 to her current address: 1712 S. Dixie Hwy, Trlr 108, Crete IL, 60417.
7. Ms. Koonce requested a hearing on July 19, 2022, and the Treasury Department referred this matter to the Judicial Officer Department for further proceedings (AWG Hearing Request). A hearing was held via video conference in October 2023. In the interim, however, the Treasury Department collected the entire debt via administrative offset (Resp. Exh. 2).

DECISION

This matter arises under our administrative wage garnishment procedures. In certain cases, the Postal Service may decide to send a nontax debt to the Treasury Department for collection. These debts may involve any indebtedness to the United States, but primarily involve former employees who owe money to the Postal Service. The procedures by which the Postal Service may transfer this debt are set forth in 31 C.F.R. § 285.11. Also, the Postal Service has a separate agreement with the Treasury Department that governs these debts. See, e.g., CY2023 Agreement to Certify Federal Nontax Debts for the Centralized Receivables Service, the Cross-Servicing Program, and the Treasury Offset Program (“Treasury Certification Agreement”). 
If a debtor requests a hearing after receipt of a Notice of Intent to Initiate Administrative Wage Garnishment from the Treasury Department, the matter is referred to the Judicial Officer for resolution. Our review of these debts is largely limited to two issues: 1) whether the Postal Service complied with due process provisions under the regulations and its obligations under the Treasury Certification Agreement; and 2) whether the debt is valid. The Postal Service carries the burden of proof on both issues.
In challenging the debt, Ms. Koonce testified that the Postal Service failed to provide proper notice because she learned about the debt after it had been transferred to the Treasury Department for collection (Tr. 51-52). As noted above, the Postal Service bears the burden of proving that it complied with the applicable regulations, which requires evidence that prior to its referral of the debt to Treasury, the Postal Service sent Ms. Koonce appropriate notice at her last known address. 31 C.F.R. § 285.11(e)(1); Hoffman v. United States Postal Service, AWG 22-195, 2023 WL 3504886 (March 20, 2023). The significance of the prior notice is that it offers the debtor an opportunity to resolve the debt with the agency prior to transfer to Treasury. Consequently, the debtor can avoid the sometimes-significant collection fees that Treasury adds to these debts. Id.
Here, the totality of the evidence shows that the Postal Service failed to meet its burden. Although the Postal Service submitted a copy of the invoice regarding Ms. Koonce’s alleged overdrawn annual leave, it failed to produce sufficient evidence that it sent appropriate notice of the debt to Ms. Koonce’s correct last known address (Resp. Exh. 3). A witness for the Postal Service testified that a Dunning letter, or notice, was mailed on February 22, 2022, but he admitted that proof of this mailing was not reflected in any of the Postal Service’s exhibits (Tr. 27). Moreover, the witness testified that the Dunning letter also would have been mailed to the University Park, IL address, instead of Ms. Koonce’s updated address (Tr. 21-27, Resp. Exh. 3).
Ms. Koonce provided credible testimony that she changed her address of record from University Park, IL to Crete, IL at the Postal Service via LiteBlue before her separation date (Tr. 44, 46, 49-50). Further, after the Treasury Department’s Notice of Intent to Initiate Administrative Wage Garnishment Proceedings was mailed to Ms. Koonce’s correct address on July 7, 2022, Ms. Koonce responded promptly with a request for a hearing less than two weeks later, on July 19, 2022 (AWG Hearing Request). Accordingly, I find that the Postal Service failed to meet its burden that appropriate notice was properly sent.
Because the Postal Service’s failure to comply with due process provisions is fatal to its claim of debt, I need not reach the merits of this case ¹. Any funds previously collected by the Treasury Department must be refunded to Ms. Koonce, as they were collected in violation of regulations.

ORDER

The Petition is GRANTED.
The Postal Service MUST RECALL Invoice No. 703265744 and neither it, nor the Treasury Department, may pursue any further collection of it until the Postal Service complies with applicable regulations and federal law.
The Postal Service MUST REFUND to Ms. Koonce all funds previously offset by the Treasury Department pertaining to Invoice No. 703265744, including any associated Treasury fees, within thirty days of the date of this Order.