An agency may use any of the following methods.
Different methods may be used for different groups of employees. The
agency may–
- Withhold employment taxes from regular wages paid to the employee;
- Withhold employment taxes from the loan repayment; or
- Require a separate tax payment from the employee.
This answer was provided by the Internal Revenue Service (IRS). For further guidance/clarification on this issue, agency representatives may contact IRS (Federal, State and Local Governments) at (202) 283-9665.