Feds pledge to recoup overpayments from civil servants affected by Phoenix debacle

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The federal government will get back all of the money it has overpaid civil servants through its problem-plagued payroll system, the deputy minister in charge of overseeing the system vowed Wednesday, adding that overpayments to government employees are commonplace.

A number of government employees who have left their jobs or moved on to other positions are still being paid too much, Public Services and Procurement Canada deputy minister Marie Lemay acknowledged.

But anyone who received too much pay will eventually be required to return the money, she said.

"All overpayments will be recovered once we process these outstanding transactions," Lemay told a news conference.

The CBC reported this week the government has overpaid more than $68-million to thousands of its workers and has so far reached agreements to recover only about one third of the money.

While that may appear to some to be a big number, Lemay said the government was frequently forced to recover even larger amounts before the troubled Phoenix electronic pay system was brought online last spring.

In 2015, for example, more than $78 million in extra pay was doled out, she noted.

Since launching its new electronic pay system, more than 82,000 government workers have complained of being underpaid, overpaid or not paid at all.

That backlog has since been pared down to less than 7,000 files, although dealing with them has significantly slowed the processing of new payroll changes that have been filed over the last few months.

Judy Foote, who heads the department, said Tuesday she's more concerned about paying employees who haven't received what they're owed than she is about recouping money that's been overpaid.

Lemay repeated that statement Wednesday as she laid out steps that government workers dealing with pay issues should follow as they begin to prepare their taxes.

Thousands of civil servants are set to receive tax slips for 2016 and have expressed concerns that they will be forced to pay income tax on money they received in overpayments.

The Canada Revenue Agency said it's prepared to deal with any problems that may arise and to be flexible in handling civil servant tax issues.

Lemay stressed that while government workers may receive T4 slips containing incorrect pay amounts or deductions, they won't have to re-file their taxes if they receive amended tax documents.

"Almost all" employees who've already contacted their pay processing department about overpayments should see T4s delivered to them, starting next week, that contain corrected pay amounts, even if they haven't yet repaid the overpayments, said Lemay.