Approximately 250 Army in Europe employees receive debt notices for erroneously paid LQA


May 2, 2013

By U.S. Army Europe Public Affairs

WIESBADEN, Germany – As the result of a Department of Defense-directed, DOD-wide audit of locally hired overseas employees receiving Living Quarters Allowance, approximately 250 U.S. civilian employees assigned to various activities of Army in Europe were notified May 1, 2013 that they had been receiving LQA erroneously, in the vast majority of cases due to no fault of their own. 

DOD directed the termination of LQA for the affected employees effective May 1.

However, DOD granted an exception that will permit approximately 125 of the U.S. Army in Europe employees to continue to receive LQA for one year so they can make decisions on future employment – either stay overseas without LQA or seek employment in the United States. The exception covers primarily former service members who separated while serving overseas and went to work for contractors before obtaining an appropriated fund position. The exception does not cover the remaining approximately 120 U.S. Army in Europe employees who took a non-appropriated fund or AAFES position before obtaining an appropriated fund position.

LQA for the remaining approximately 120 U.S. Army in Europe employees was stopped effective May 1.

All of the affected employees will receive notices of indebtedness from the Defense Finance and Accounting Service, detailing the amount owed and requiring the employee to repay LQA paid erroneously.

Affected employees should request a waiver of the indebtedness from DFAS.

According to Defense Department officials, DOD has determined that it is in the best interests of the Department to support any such employee’s request for a waiver of indebtedness in these unique circumstances, provided the employee was not aware of the fact that they were not entitled to the payment of LQA, and there is no evidence of misrepresentation, fraud, or deception by the employee to acquire LQA in the first place.

USAREUR leaders recognize the significant financial and emotional effect this action will have on our affected employees and their Families, and have directed civilian personnel experts throughout the command to provide all appropriate support to those affected.

Human resources specialists at affected Army in Europe organizations, as well as the personnel specialists at all servicing Civilian Personnel Advisory Centers, are standing by to assist employees throughout the waiver request process.

In many cases, the employee will receive two or more notices of indebtedness. One notice will detail the debt incurred over the past 52 weeks. Debt incurred beyond the past 52 weeks will be summarized in a second, later notice.

DFAS will begin collecting the debt within approximately 45 days of the employee being notified of the debt. Debt collection will continue during the waiver request process. In the event the waiver is granted, the employee will be reimbursed the money collected prior to the granting of the waiver.

During the debt notification process, the employee will be asked to submit a voluntary repayment letter. In the letter the employee can choose from repayment options including a one-time payroll deduction, monthly payroll deductions of at least $25, or a cash payment by check. If the employee does not provide a repayment letter, DFAS will automatically deduct 15 percent of the employee’s pay until the debt is repaid or until the waiver of indebtedness is granted, whichever occurs first.
Human resources experts will also be available to answer questions regarding relocation to different housing, stateside job prospects and other options.

Along with being a resource for information, these experts will direct employees to support providers including chaplain services, family advocacy centers, Soldier and family readiness centers and housing offices to help with adjustment and personal needs.

The LQA audit began after an appeal decision in 2011 alerted DOD authorities that overseas commands may have misinterpreted a regulation and erroneously paid LQA to a group of employees who lived overseas.

LQA, a tax-free allowance, is intended to cover the costs of rent and utilities for government civilian employees working overseas.

The allowance policy is outlined in Department of Defense Instruction 1400.25, Volume 1250:
DoD Civilian Personnel Management System: Overseas Allowances and Differentials. The document can be obtained at this link:

LQA rates are governed by Department of State Standardized Regulation 130: Living Quarters Allowance.

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