Notice Requirements Under Tax Refund Offset Program; Say What?

By Jay Weller

Under 31 USC Section 3720A(b), the Department of Education, through its Secretary, can refer a Debt for Offset only after having complied with certain procedures. The holder of the loan must mail written notice to the Borrower’s last known address, as determined by the Department of Education or the Guarantor. The Courts that have heard Notice Issue Cases, have ruled that Actual Notice is not required. The Collector must only use Reasonable Means to provide Notice.

In addition, if the Department of Education provides initial Notice of an intent to Offset the Tax Refund of a Student Loan Borrower in Default, then subsequent Notice is not required to Offset further Tax Refunds.

Some of the more notable cases involving the Notice Requirement and what constitutes Reasonable Means are Glover v Brady, a 1994 New York case in which the Court ruled that no violated existed when the letter was mailed twice to the last known address, and Setlech v United States, a 1992 New York case in which the court ruled that using a last known address from a database that had the Borrowers’ last filed tax return as its listing, also did not violate Notice requirement.