Garnishments beyond child support
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Garnishments BEYOND Child Support. Speaker. Rosemarie Fraumeni, CPP Manager, Payroll American Dental Partners, Inc. [email protected] Rosemarie Fraumeni, CPP. Certified Payroll Professional since 2000 BS in Accounting Involved in payroll since 1991 Member of APA’s

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Garnishments beyond child support

Garnishments BEYOND Child Support


Rosemarie Fraumeni, CPP

Manager, Payroll

American Dental Partners, Inc.

[email protected]

Rosemarie fraumeni cpp
Rosemarie Fraumeni, CPP

  • Certified Payroll Professional since 2000

    • BS in Accounting

    • Involved in payroll since 1991

  • Member of APA’s

    • National Speakers Bureau

    • Certification Advisory Board – CPP Committee

    • Government Affairs Task Force

  • Member of the APA Boston Local Chapter

    • Current Vice President

  • Member of the New England Payroll Conference Committee

    • Current Conference Chair and Treasurer

  • APA Awards

    • 2010 Payroll Woman of the Year

    • Special Recognition 2008

    • Meritorious Service 2005


  • Involuntary deductions

  • Federal tax levy

  • State tax levy

  • Student loan

  • Creditor garnishment

  • Bankruptcy

Please Complete Your Evaluation at the End of the Workshop

Involuntary deductions1
Involuntary deductions

  • Neither the employer nor employee have control

Employer s responsibilities
Employer’s responsibilities

  • Is the claim valid?

  • Inform the employee

  • Are there employee exemptions?

  • How will it affect employee’s pay?

Employer s responsibilities1
Employer’s responsibilities

  • Does it exceed any limits?

  • Will it affect other deductions?

  • Review with legal department

Deduction order
Deduction order

  • Child support

  • Bankruptcy

  • Federal administrative garnishment

Deduction order1
Deduction order

  • Federal tax levy

  • Student loan

    6. State tax levy

Deduction order2
Deduction order

  • Local tax levy

  • Creditor garnishment

    9. Voluntary deductions

Irs tax facts
IRS Tax Facts

A delinquency investigation is opened when a taxpayer does not respond to an IRS notice of a delinquent return.

In 2010, the Internal Revenue Service had over 3.6 million delinquency investigations.

(Information obtained from IRS web site)

Why are you getting a levy
Why are you getting a levy?

  • A levy is the result of the delinquency of an employee to pay owed tax liabilities

Form 668 w part 1
Form 668-W, Part 1

  • For Employer

Form 668 w part 3
Form 668-W, Part 3

I certify that I can claim the people named below as personal exemptions on my income tax return and that none are claimed on another Notice of Levy. No one I have listed is my minor child to whom (as required by court or administrative order) I make support payments that are already exempt from levy. I understand the information I have provided may be verified by the Internal Revenue Service. Under penalties of perjury, I declare that this statement of exemptions and filing status is true.

The federal tax levy
The federal tax levy

  • “What is the priority of the federal tax levy as compared with other attachments?”

The federal tax levy1
The federal tax levy

  • Payments exempt from the levy

    • Unemployment benefits

    • Workers’ compensation payments

    • Certain pension and annuity payments

    • Certain disability and welfare payments

    • Pre-existing involuntary deductions

The federal tax levy2
The federal tax levy

  • Wage exemption

The federal tax levy3
The federal tax levy

  • Publication 1494

The federal tax levy4
The federal tax levy

Levy deductions lasting into successive years






The federal tax levy5
The federal tax levy

  • Subtract these before determining take-home pay…

    • Taxes

    • Existing deductions

    • Some increases in existing deductions

The federal tax levy6
The federal tax levy

  • Post-levy deductions or increases to existing deductions lower the exempt amount

The federal tax levy7
The federal tax levy

  • Payments of any type are subject to levy

The federal tax levy8
The federal tax levy

  • When do we stop withholding?








When employment ends
When employment ends

  • Complete the back side of 668-W, Part 3 and return it to the IRS

Voluntary agreement
Voluntary agreement

  • Employee may contact the IRS to negotiate a voluntary agreement

Voluntary agreement1
Voluntary agreement

  • Employee may file Form 2159

State tax levy1
State Tax Levy

CALIFORNIA – follows CCPA limits

State tax levy2
State Tax Levy

NEW YORK – 10% of gross earnings

State tax levy3
State Tax Levy

SOUTH CAROLINA – 25% of gross earnings

State tax levy4
State Tax Levy

IOWA – 100% of disposable earnings

State tax levy5
State Tax Levy

IDAHO – 100% of wages

Student Loan

  • Maximum deduction the lesser of:

    • 15% of disposable earnings, or

    • 30 times the federal hourly minimum wage

Student Loan

  • Protection from discharge

Student Loan

  • Notice before garnishment

    • 30 days before withholding begins

Student Loan

  • No guidance on priorities

Student Loan

  • Grace period after reemployment

    • 12 months

Student loan1
Student Loan

  • Penalties

    • Liable for any amount not withheld plus legal costs

Creditor garnishment

Creditor Garnishment

What is a creditor garnishment?

An employee has a debt that remains unpaid

What is a creditor garnishment?

A wage garnishment is a legal means by which the person who is owed the money can obtain payment

What is a creditor garnishment
What is a creditor garnishment?

“Wage attachment”

“Income execution”


“#@% !”

Disposable Earnings

Consumer Credit Protection Act (Title III)

Disposable Earnings

Maximum amount of an employee’s “disposable earnings”

Disposable Earnings

Disposable earnings = Gross earnings minus all deductions required by law

Disposable Earnings

  • Deductions required by law include withholding:

    • Federal, state, or local income tax

Disposable earnings
Disposable Earnings

  • Deductions required by law include withholding:

    • Mandated payments for state employee retirement systems

Garnishment Limits

  • Maximum amount of an employee’s “disposable earnings” is lesser of:

    • 25% of the employee’s disposable earnings for the week, or…

Garnishment Limits

  • …the amount by which the employee’s disposable earnings for the week exceeds 30 times the federal minimum wage

Garnishment Limits

State laws may still apply

Garnishment limits
Garnishment Limits

State law garnishment limits apply when they require a lesser amount to be garnished

Federal minimum wage
Federal Minimum Wage

$7.25 per hour

State rules6

Multiple garnishments
Multiple Garnishments

Federal garnishment maximum applies no matter how many garnishments are received

Areas of state regulation
Areas of state regulation

The priority of multiple garnishments


Wages subject to withholding for child support, tax levies, or bankruptcy orders are not considered deductions required by law


Withholding for child support, tax levies, or bankruptcy orders are not to be subtracted from gross earnings

Areas of state regulation1
Areas of state regulation

Time limits for remitting withheld amounts

Areas of state regulation2
Areas of state regulation

Whether the employer can charge an administrative fee for processing the garnishment

Areas of state regulation3
Areas of state regulation

The procedure to follow when an out-of-state garnishment order is received


Employers are prohibited by the CCPA from terminating an employee because of the employee’s one indebtedness


  • Chapter 7

  • Liquidation of assets

  • Cancellation of debts

  • Start over


  • Chapter 11

  • Business

  • Reorganization

  • Trustee pays creditors


  • Chapter 13

  • Individuals

  • Reorganization

  • Trustee pays creditors


Employee voluntarily declares bankruptcy


  • Employee is found to be bankrupt by a court


Stop withholding on any other garnishment order (except for child support)

General rules
General Rules

Continuing to withhold and remit other orders could result in a creditor receiving double payments

General rules1
General Rules

Continue to withhold for other garnishments only if the trustee specifically provides instructions to do so


An amount of the employee’s wages are withheld and paid to the trustee


The payment to the employee’s creditors is handled by the “bankruptcy trustee”


The payment satisfies the employee’s creditors

General rules2
General Rules

The debts underlying the bankruptcy will be paid by the trustee


Continue to satisfy the bankruptcy order until notified by the court to stop

General rules3

Bankruptcy orders issued under Chapter XIII of the Bankruptcy Act take priority over any other claim…

General rules4
General Rules

…other than child support withholding orders...

General rules5
General Rules

…and retirement loans

Additional Resources

APA’s Guide to Federal and State Garnishment Laws