What Is a Letter of Restitution and How Does It Work?

A letter of restitution is a written statement from a crime victim detailing the financial losses caused by the offense, submitted to the court so a judge can order the defendant to repay those losses at sentencing. The term is not a formal label found in any statute. In practice, it refers to the victim’s written accounting of losses, usually submitted as part of a victim impact statement or as a standalone affidavit provided to the probation officer before sentencing.¹ Federal law requires the probation officer to send each identified victim an affidavit form for exactly this purpose, and the loss information is then folded into the presentence investigation report the judge reviews at sentencing.²

Done well, the letter is the single document that determines how much the court orders the defendant to repay you. Done sloppily, it leaves money on the table.

What to Include in the Letter

A strong restitution letter backs up every dollar with documentation. Vague estimates get discounted or ignored. Specific numbers with paperwork behind them get adopted. The categories courts expect to see:

Property losses. Receipts, repair estimates, photos of damaged or stolen items, and police reports noting whether any property was recovered.
Medical costs. Bills from hospitals, pharmacies, therapists, and counselors. If treatment is ongoing, a letter from the treating provider estimating future costs.
Lost wages. A statement from your employer on company letterhead showing the dates you missed and the pay you lost because of the crime or your involvement in the prosecution.
Other out-of-pocket expenses. Invoices for services directly tied to recovering from the crime, such as locksmith charges after a burglary or temporary housing costs.

If you have already filed an insurance claim or received money from a state victim compensation fund, say so and include the amounts. Courts subtract reimbursements already received so the final order reflects the remaining gap. Leaving this out does not get you a double recovery; it gets your letter flagged as unreliable.

Write in plain, factual language. The letter is an accounting document, not an argument. The judge will see your emotional account of the crime in your victim impact statement; the restitution letter’s job is to prove numbers.

When the Judge Must Order Restitution

Federal law draws a hard line between cases where a judge must order restitution and cases where it is left to the judge’s discretion. The Mandatory Victims Restitution Act of 1996 requires restitution whenever a defendant is convicted of a crime of violence, a property offense (including fraud), consumer product tampering, or theft of medical products, as long as an identifiable victim suffered a physical injury or financial loss.³ In those cases, the judge cannot skip restitution or reduce the amount based on what the defendant can afford. Theft, embezzlement, fraud, and forgery together account for nearly half of all federal cases where restitution is ordered.⁴

For federal offenses outside the mandatory categories, the Victim and Witness Protection Act of 1982 still gives judges the option to order restitution. Under that discretionary framework, the court weighs the victim’s losses against the defendant’s financial resources, earning ability, and dependents before deciding how much to order.⁵

State courts follow their own restitution statutes, which vary. Most states have mandatory restitution for at least some offense categories, and in many states restitution is a standard condition of probation or a suspended sentence. If your case is in state court, ask the prosecutor’s victim-witness coordinator which rules apply.

How the Amount Is Calculated and When to Submit

The court does not pick a number out of the air. The probation officer compiles a detailed accounting of each victim’s losses before sentencing, drawing on information from the prosecutor, the investigating agents, and the victims themselves. The prosecutor must deliver that loss information to the probation officer at least 60 days before sentencing.¹ That is the practical deadline for getting your letter in: if it arrives later, there is no guarantee it makes the presentence report.

For property crimes, the restitution amount is either the cost of replacing or repairing the property, or the property’s value at the time of loss, whichever is greater. For offenses involving bodily injury, restitution covers medical and mental health treatment, rehabilitation, and lost income. Any disputes about the proper amount are resolved by the judge using a preponderance-of-the-evidence standard, which is a lower bar than the beyond-a-reasonable-doubt standard used for the underlying conviction.

If the full extent of your losses is not clear by ten days before sentencing, the court can set a separate hearing to finalize the number, as long as it happens within 90 days of the sentencing date. And if you discover additional losses after that, you have 60 days from the discovery to petition the court for an amended restitution order.¹ This matters in practice, because costs like ongoing medical treatment often do not fully materialize until months after sentencing.

How the Order Gets Enforced

Once the judge enters a restitution order, it is not a suggestion. The order creates a lien on all of the defendant’s property and property rights, treated the same way as a federal tax lien. The lien attaches at the moment of judgment and lasts for 20 years or until the balance is paid in full.⁶ The government can enforce the order using the same tools available for collecting civil judgments: wage garnishment, bank levies, and property seizures.

The enforcement window is generous by design. Federal restitution liability does not expire until 20 years after the entry of judgment or 20 years after the defendant’s release from prison, whichever is later. If the defendant dies with a balance owing, the lien continues against the estate until a written release is obtained. The Department of Justice’s Financial Litigation Unit monitors collection efforts throughout that entire period.⁷

The federal government can also intercept the defendant’s tax refunds, certain federal benefit payments, and other government payments through the Treasury Offset Program, which picks up delinquent debts once they are 120 days overdue.⁸ Wage garnishment for restitution follows the Consumer Credit Protection Act limits, generally capping the garnished amount at 25 percent of disposable earnings.

At the federal level, compliance with a restitution order automatically becomes a condition of supervised release, so the defendant stays under probation-office monitoring for payments.⁹

Interest and Why the Balance Can Grow

Federal law adds interest on any restitution order exceeding $2,500 unless the defendant pays in full within 15 days of judgment. Interest accrues daily at a rate tied to the weekly average one-year constant maturity Treasury yield for the week before the interest obligation begins, so the effective rate varies by case.¹⁰ The judge can waive interest, cap it, or limit the period it accrues if the defendant genuinely lacks ability to pay. State courts set their own interest rules, with statutory rates generally ranging from around 2 to 10 percent annually.

What Happens When the Defendant Can’t Pay

Mandatory restitution is ordered regardless of ability to pay, which means defendants routinely owe more than they can realistically cover. The court typically sets a payment schedule tied to the defendant’s income, and the probation officer monitors compliance.

Falling behind can trigger revocation of probation or supervised release, but courts cannot automatically jail someone for being broke. The Supreme Court’s decision in Bearden v. Georgia held that a court may revoke probation for failure to pay only if the defendant willfully refused to pay when able, or failed to make a genuine effort to find the money. If the defendant truly cannot pay through no fault of their own, the court must first consider alternatives like community service or modified payment terms before imposing incarceration.¹¹

For victims, the practical reality is that collection on a large restitution order against a low-income defendant can stretch across decades, arriving in small installments. The 20-year enforcement window exists because that is often how long collection takes.

Taxes on Restitution You Receive

Whether you owe federal income tax on restitution depends on what the payment is replacing. Restitution received for personal physical injuries or physical sickness is excluded from gross income under the federal tax code.¹² That exclusion covers medical expenses, pain and suffering tied to a physical injury, and related emotional distress.

Several categories of restitution are taxable:

Lost wages. Restitution replacing income is taxed as ordinary income, the same way the wages would have been.
Emotional distress without physical injury. If the underlying crime did not cause physical harm, restitution for emotional distress is taxable, except to the extent it reimburses actual medical treatment costs.
Previously deducted medical expenses. If you itemized medical costs on an earlier return and later received restitution for those same costs, the reimbursed portion is taxable up to the amount of the earlier deduction.
Interest. Any interest earned while payments were held in escrow or accrued after judgment is taxable regardless of the underlying claim.

Payments are reported as income in the year received. If restitution covers more than one category of loss, a written allocation between parties, or clear language in the restitution order itself, helps establish which portions qualify for the physical-injury exclusion and which do not.

One Boundary Worth Knowing

A restitution order is a criminal-court instrument. It does not cover punitive damages, and it does not replace a civil lawsuit if your losses exceed what the criminal court orders or if the defendant is acquitted. If your losses are large or your evidence is strong, talk to a civil attorney about a separate lawsuit on top of whatever the criminal court orders.

1
Office of the Law Revision Counsel. 18 USC 3664 – Procedure for Issuance and Enforcement of Order of Restitution
2
U.S. Department of Justice. Victim Impact Statements
3
GovInfo. 18 USC 3663A – Mandatory Restitution to Victims of Certain Crimes
4
United States Sentencing Commission. Federal Offenses Involving Restitution
5
Office of the Law Revision Counsel. 18 USC 3663 – Order of Restitution
6
GovInfo. 18 USC 3613 – Civil Remedies for Satisfaction of an Unpaid Fine
7
U.S. Department of Justice. Restitution Process
8
Bureau of the Fiscal Service. What Is the Treasury Offset Program?
9
United States Courts. Chapter 3 Financial Requirements and Restrictions Probation and Supervised Release Conditions
10
Office of the Law Revision Counsel. 18 USC 3612 – Collection of Unpaid Fine or Restitution
11
Justia. Bearden v Georgia, 461 US 660 (1983)
12
Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness