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Division of Taxation

Federal Pension Payment Setoff

Did you know that people who receive a federal pension (including military pensions) could have up to 25% of their pension payment deducted to pay their New Jersey tax debts?

This action is allowed through "set-off" programs authorized by federal law. Under the programs, taxpayer refunds or government checks, like pensions, are used to pay federal or state debts, such as unpaid taxes. The Division of Taxation participates in several set-off programs that collect funds for New Jersey.

For those who have outstanding New Jersey tax debts, the U.S. Department of the Treasury, Bureau of the Fiscal Service (BFS), will notify them by mail with the balance due and the amount that will be deducted from their check to pay the State debt.

BFS will send the withheld federal pension payment to us, and will continue to withhold and remit monthly pension payments until the debt is paid.

The amount BFS withholds includes a processing fee of $21.84 per transaction.

See Set-Off/Offset Programs for additional program information.

Making an electronic payment is quick and easy.

If you need some time to pay in full, we will do our best to work with you to resolve your account. Submit your request, along with a copy of the BFS offset notice. Be aware, deductions to your pension will continue until your payment plan has been reviewed and approved by the Division.

If you already have an approved payment plan, contact your assigned caseworker to discuss your account. If your case is assigned to our collection agency, Pioneer Credit Recovery, call 1-866-372-6840.

Last Updated: Wednesday, 05/13/20