View
215
Download
0
Category
Tags:
Preview:
Citation preview
22nd Annual Illinois Statewide APA Conference
08/13/2015 and 08/14/2015Lombard, IL
What Payroll Needs to Know About Garnishments So You Don’t Miss the Parade
Vicki M. Lambert, CPP
About the Speaker
2
Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor™, a firm specializing in payroll education and training. The company’s website www.thepayrolladvisor.com offers a subscription payroll news service which keeps payroll professionals up-to-date on the latest rules and regulations.
As an adjunct faculty member at Brandman University, Ms. Lambert is the creator of and instructor for the Practical Payroll Online payroll training program, which is approved by the APA for recertification credits.
©2015 The Payroll Advisor
What Is Our Focus For Today?
Terms, Definitions and Priorities
Laws & Regulations Handling in the Payroll
Office Child Support Medical support orders Federal Tax Levies State Tax Levies
Federal Agency Debt Collections
Creditor Garnishments Voluntary Wage
Assignments Bankruptcies Student Loans Doing the calculations
3
©2015 The Payroll Advisor
Usual Suspects
©2015 The Payroll Advisor
Child SupportFederal Tax LevyFederal Agency Debt CollectionState Tax LevyCreditorStudent Loans*Bankruptcies*
4
*Not really sure where they fit in until received
Exceptions on Priority
©2015 The Payroll Advisor
Federal tax levy is received prior to child support order
Federal Agency Debt received prior to tax levy but not child support
Bankruptcy may include other levies and child support and therefore goes first
Student loans fall in with creditorState tax levy and creditor depend on state
requirements
5
The Laws and Regulations
©2015 The Payroll Advisor 6
The Laws
©2015 The Payroll Advisor 7
Consumer Credit Protection Act (CCPA)
Child Support Enforcement Amendments of 1984
Family Support Act of 1988Uniform Interstate Family Support ActPersonal Responsibility and Work
Opportunity Reconciliation Act of 1996
Consumer Credit Protection Act
©2015 The Payroll Advisor 8
Limits the amount that can be deducted from “disposable pay” for child support and creditor garnishments
Limits apply if more than one garnishment is in effect
Watch out for lump sum payments for child support
CCPA Limits
50% of disposable earnings if employee has second family
60% if does not Add 5% if in arrears to both State may be lower 50% is the common amount
CCPA limits apply except where state is lower
25% of disposable or the amount that exceeds 30 times the federal minimum hourly wage
Some states have severe restrictions
Federal chart furnished-as of July 2009
9
©2015 The Payroll Advisor
Child Support Creditor Garnishments
Definition of Income
©2015 The Payroll Advisor 10
Income is defined as “any periodic form of payment due to an individual, regardless of source, including wages and salaries, commissions, bonuses, workers’ compensation, disability, payments pursuant to a pension or retirement program, and interest.”
Disposable Earnings
©2015 The Payroll Advisor 11
Disposable Income = gross pay - mandatory deductions.
Disposable income is the amount of earnings remaining after subtracting certain mandatory deductions from an employee's gross pay.
Disposable Earnings
©2015 The Payroll Advisor 12
Mandatory deductions include federal, state and local taxes; unemployment insurance; workers' compensation insurance; state employee retirement deductions; other deductions determined by state law.
Note that disposable income is not necessarily the same as net pay. An employee may have a deduction taken from his pay that is not mandatory, such as union dues or a car loan payment.
Watch out for tips to be included Limit applies even to multiple garnishmentsOther garnishments are not subtracted before determining
disposable pay
Processing Through Payroll
©2015 The Payroll Advisor 13
Set It Up In Payroll
©2015 The Payroll Advisor 14
Always date stamp on day received Each garnishment should have separate file even if multiple for
one employee Tracking system (Excel spreadsheet) separate from payroll
system for reconciliations and questions Include amounts and dates of payments Current balance due if arrears or max sum Of course, reconciliation spreadsheet for all garnishments
processed matches payroll totals Cross years, and even systems over the life of the withholding
order They can last 18 to 20 years or more
Line item on payroll pay stub for child support
Answer Back
©2015 The Payroll Advisor
Determine if your employee or notForm may have response includedTime allowed is usually limitedExamples: IWO—accept or reject Federal Tax Levy—send in with first
paymentCreditor Garnishment: Answer
backs for Garnishee-sometimes 20 days
15
Go Tell It To The Employee
©2015 The Payroll Advisor
Form may include employee notification
Example: Federal Tax LevyMay be time limitAgain Federal Tax LevyShould include form letter
from payrollShould be done regardless if
garnishment requires
16
Payroll Form
©2015 The Payroll Advisor 17
Create template for each type of garnishment situation you may encounter to inform the employee as to:What you have receivedPayroll it will begin onAmount of deduction Contact information for deduction
questionsDisclaimer on responsibility of
garnishment
Paying It Out
©2015 The Payroll Advisor
Different types of garnishments have different due dates
If you can do by pay date to make sure you comply with all garnishments and state requirements
Creditor may have to hold until all monies withheld or time is up
EFT may be required
18
Security
©2015 The Payroll Advisor 19
Confidentiality is a must form has SSN on it
Anything that may be a garnishment should come to payroll first
Never discuss over the phoneOnly payroll has accessWatch out for processing through A/P
—again SSNs are on the form
Reconciling
©2015 The Payroll Advisor 20
Make sure you reconcile the G/L account each month
Spread sheet you created for tracking comes in handy now
Reconcile spreadsheet to payroll before releasing payments
Terminating Employees
©2015 The Payroll Advisor
Garnishments and tax levies are a per payroll event
Child support may not beTake normal deductionDo the required notificationsWatch for the state tax levies—
may require entire amount taken
21
CHILD SUPPORT
22©2015 The Payroll Advisor
Withholding and Paying Child Support
©2015 The Payroll Advisor 23
Uniform Notice to Withhold is now usedBegin deducting within 14 days or earlier if state requiresRemit payment within 7 days or earlier if state requiresState disbursement units are set up in all states-Except SC
http://www.acf.hhs.gov/programs/css/resource/state-disbursement-unit-sdu-contacts-and-program-information
May combine payments on one checkEFT may be required or available
Proper Source
©2015 The Payroll Advisor 24
A Notice of an Order to Withhold Income requires the sender to provide a copy of the underlying administrative or court order that contains a provision authorizing income withholding.
Non IV-D attorneys, individuals and private collection agencies must submit a copy of the underlying administrative or court order that contains a provision authorizing income withholding.
Income Withholding Order
©2015 The Payroll Advisor 25
An income withholding order may come from the employer’s state agency, directly from another state, court or private attorney. If from an out-of-state agency, it is called “direct income withholding” because it comes directly from an out-of-state agency to the employer rather than being processed through the child support enforcement agency in the employer’s state.
An Income or Withholding Order May Be
©2015 The Payroll Advisor 26
Judicial – originates in the court system and is ordered by a judge.
Administrative – originates through the child support enforcement agency’s “administrative process” in order to expedite case handling; is ordered by a child support hearing officer or equivalent, who has the same authority as a judge.
But It Will Be
©2015 The Payroll Advisor 27
A standardized form entitled “Order/Notice to Withhold Income for Child Support” (IWO) is now required for use in all states. This form includes information about the case (where the case is from, who the persons in the case are, and case-identifying information).
28©2015 The Payroll Advisor
Rejecting a Form
©2015 The Payroll Advisor 29
Under the following circumstances, the IWO must be rejected and returned to sender:
IWO instructs the employer/income withholder to send a payment to an entity other than a State Disbursement Unit (e.g., payable to the custodial party, court, or attorney). Each State is required to operate a State Disbursement Unit (SDU), which is a centralized facility for collection and disbursement of child support payments. Exception: If this IWO is issued by a Court, Attorney, or Private Individual/Entity and the initial child support order was entered before January 1, 1994 or the order was issued by a Tribal CSE agency, the employer/income withholder must follow the payment instructions on the form.
Form does not contain all information necessary for the employer to comply with the withholding.
Form is altered or contains invalid information. Amount to withhold is not a dollar amount. Sender has not used the OMB-approved form for the IWO (effective July, 2014). A copy of the underlying order is required and not included.
Generally Follow the Issuing State For:
©2015 The Payroll Advisor 30
Duration and amount of child support, current and arrears,
Medical support terms, Where to remit payments, and Payment of fees and costs charged
(if any) by the child support enforcement agency, issuing court, or custodial party's attorney.
http://www.acf.hhs.gov/programs/css/resource/state-income-withholding-contacts-and-program-information
Follow the Principle Place of Employment For:
©2015 The Payroll Advisor 31
When to begin withholding, When to remit payments (1 to 7 days after payday), Mandatory deductions, Maximum amount to be withheld (within CCPA
limits), How to allocate withholding across multiple child
support orders, Administrative fee that employer is permitted to
charge, and Other terms and conditions that may be set by state
law.
What If You Get Two for One Child
©2015 The Payroll Advisor 32
Continue to honor the first order received. Give your employee a copy of the second order. Contact the issuing agency that sent the second
withholding order and inform it that you are already sending withheld payments for the same child to another jurisdiction. Provide payment information such as the amount of the withholding and where the withholding is being sent.
Contact the issuing agency that sent the first withholding order and inform it of the second order.
Multiple Income Withholding Orders Same Employee and Different Children
©2015 The Payroll Advisor 33
Federal regulations require that some money must be paid to each order for current support if there is more than one withholding order (for different situation of the same employee). In addition, states have enacted laws specifying the method for allocating money toward current support due for each order. Thus, some money must be allocated toward all current support orders. The orders should not be paid on a "first come, first served" basis.
Methods
©2015 The Payroll Advisor 34
Prorate by allocating a percentage to each order based on the total dollar amount of current support ordered, or
Share equally by dividing the allowable disposable income by the total number of orders.
Examples later on
Priority of Deduction for Child Support
©2015 The Payroll Advisor 35
Current Child and Spousal Support
Medical Support
Child Support Arrears
Medical Support Orders
©2015 The Payroll Advisor 36
Medical Support
©2015 The Payroll Advisor 37
National Medical Support Notice is a federal form requiring enforcement of a medical support order
– Part A – Notice to Withhold Health Care Coverage, Employer Response, and Instructions to Employer
– Part B – Medical Support Notice to Plan Administrator, Plan Administrator Response, and Instructions to Plan Administrator
38©2015 The Payroll Advisor
Sections 1-6
©2015 The Payroll Advisor 39
Employer NMSN Requirements
©2015 The Payroll Advisor 40
NMSN does not need to be filed with the court Deliver copy of the NMSN to the employee within 10 days of receipt Begin coverage within 20 days of receipt of NMSN by sending Part B to
the plan administrator If coverage is not available, complete and sign the employer Response
Form and return to the appropriate agency within 20 days Current child support plus health insurance coverage must not exceed
50% of the employee’s disposable income. When this occurs, complete the Employer Response Form and send to the appropriate local child support agency within 20 days
Must notify if coverage ceases: Reason for the lapse Whether the lapse is temporary Date coverage is to resume
Let’s Do Some Child Support Examples
©2015 The Payroll Advisor 41
Calculation Example(State uses 50%)
©2015 The Payroll Advisor 42
Employee’s disposable income is $662.00Multiply by 50% x 50%Allowable Disposable Income $331.00
Employee has one current child support (CC/S) order for $200 and a health insurance premium of $125
So If We Do the Calculation
©2015 The Payroll Advisor 43
$200 CC/S + $125 health insurance premium = $325
Max. support deduction $331.00Obligation -$325.00We can take the entire obligation – no problems
Let’s add an arrearage to the equation (state allows only 50%)…
©2015 The Payroll Advisor 44
Here’s how we fix it…
©2015 The Payroll Advisor 45
Take the $200 CC/S and the $125 health insurance premium but only $6 partial arrears payment. That totals the maximum deduction allowed of $331.00
You can take more if the state law allows for arrearage percentage or has the higher federal limits
Same Disposable Income But…
©2015 The Payroll Advisor46
Order A $150 cc/s + $50 arrears = $200.00Order B $100 cc/s + $25 arrears = $125.00Order C $175 cc/s + $25 arrears = $200.00Totals $425 cc/s + $100 arrears = $525.00
We are over our maximum so the first to go is the arrears since current child support must be satisfied first
Here’s How It Is Done…47
©2015 The Payroll Advisor
Special Situations
©2015 The Payroll Advisor 48
Bankruptcy and Child Support
©2015 The Payroll Advisor 49
Even if an employee declares bankruptcy, he is still obligated to pay child support. Debts due for delinquent child support are not dischargeable in bankruptcy actions.
Several changes to the Bankruptcy law went into effect on October 17, 2005. One of the most significant changes related to child support is that the automatic stay provisions under the bankruptcy code no longer apply to the withholding of domestic support obligations from a noncustodial parent’s income or wages.
Lump Sum Payments
©2015 The Payroll Advisor 50
If the child support enforcement agency becomes aware that the noncustodial parent is or may be entitled to a “lump-sum payment” (bonus, severance pay, etc) a separate lump sum transaction may be sent to the employer in order to obtain part or all of the payment to apply to the noncustodial parent’s support obligations.
http://www.acf.hhs.gov/programs/css/resource/bonus-and-lump-sum-payments
OCSE Portal Lump Sum Reporting Process
©2015 The Payroll Advisor 51
Employer:• Provide information about employees who are eligible to receive
a lump sum payment using one of these methods: – Enter information about each employee into the fields on the Lump
Sum Reporting screen– Upload a Microsoft Excel spreadsheet (or similar format) to report
many employees at one time• After providing pending lump sum payment information, you will:
– Receive confirmation that the information was uploaded– Be able to review errors if the information was not uploaded– Correct the errors and resubmit files– View information you reported in the last 60 calendar days
Terminating Employees
©2015 The Payroll Advisor 52
Upon termination, mail or fax a completed "Termination Notification" form to the issuing agency, OR some states will accept this information over the telephone or online. The employer should have the following information available: Employee's name, Employee's case identifier, Last known home address, New employer's address (if known), and Date of separation.
Also report for Medical Support
eTerm
©2015 The Payroll Advisor 53
Electronic Termination (eTerm) allows employers to report employee terminations online. Registered employers provide information about employee terminations (or that an individual has never worked for them) either by uploading a file or entering information in the online eTerm application.
How Employers Can Participate Employers currently registered with the Lump Sum Reporting
application on OCSE’s Child Support Services Portal are automatically enrolled in eTerm.
Employers who are not registered for the Lump Sum Reporting application should contact the Employer Services Team at employerserviceswebapp@acf.hhs.gov for a brief demonstration of the application. Once the demonstration is completed, employers can register to use both the eTerm and Lump Sum Reporting applications by completing the Employer Services Agreement and Profile form.
Rehired Employees
©2015 The Payroll Advisor 54
If the employee is temporarily laid off (i.e., due to seasonal work), retain the income withholding order that was being honored prior to the termination. The amount of time that an income withholding order is kept on file following a termination varies from state to state. For example, some states require that an income withholding order be reactivated if the employee is rehired within 90 days.
If Your Employee is Called Up for Active Duty!
©2015 The Payroll Advisor 55
For those reservists who owe child support, it would be helpful if you would:
Contact the child support agency that issued the income withholding order
Tell them that your employee-reservist has been called up to military duty
Provide the date of activation. The child support agency can then issue a new income
withholding order to the military service branch. By providing this information, you are helping your
employee avoid lapses in payment to his or her children while serving our country.
E-IWO for Child Support
©2015 The Payroll Advisor 56
Office of Child Support Enforcement working with employers and states to automate the income withholding process with electronic income withholding orders or e-IWO
2 types of implementation options
E-IWO Options
Medium to large employer who has IT resources that can commit several months to programming
IWOs sent in flat file format or .XML document
You process and make appropriate updates to payroll system
Get PDF of IWO You create acknowledgement record
whether accepting or rejecting Takes 3-5 months to implement
Receive small number of IWOs or have no IT resources
Receive an image ready PDF copy of the IWO and a prefilled acknowledgment as an excel spreadsheet or PDF
Takes 2-4 weeks to implement Need to configure server and
directories so some IT support is still needed
57
©2015 The Payroll Advisor
Option 1—System to System Option 2—No Programing Option (NPO)
58
PDF Acknowledgement Sample
XLS Acknowledgment Sample
The Employer Can Also
©2015 The Payroll Advisor 59
Notify a state when an employee is terminated
Notify a state when an employee is going to receive a lump sum payment
Employer controls when the notices are released
Contact Bill Stuart for more information:
E-mail: william.stuart@acf.hhs.gov
Phone: 518-399-9241
FEDERAL TAX LEVIES
60©2015 The Payroll Advisor
Federal Tax Levies
©2015 The Payroll Advisor
Form 668-W Notice of Levy on Wages, Salary and Other Income
Amount of deduction based on Publication 1494
Chart lists amount exempt from levy
Deduct from “take home pay”
61
Form 668-W
©2015 The Payroll Advisor
Six part form (Part 6 retained by IRS)Part 1—Employer’s copyParts 2-5 Given to employeePart 2 & 5 – Employee’s copies to keepParts 3-5 require employee to complete information Part 3 and 4 are returned to employer within 3 days If not received use married filing separately plus one
personal exemptionDo not use Form W-4Use same chart even if year changes unless employee
submits new form
62
63©2015 The Payroll Advisor
Allowances On Part 3
©2015 The Payroll Advisor
Employee completes this partEmployee counts as one exemption
as wellYou may add the employee if they
fail to do so since you have the social security number
SSN must be there for all exemptions or they don’t count
64
Answering Back
©2015 The Payroll Advisor
Form 668-W has a required response back from the employer
Send in with the first payment
Make copies for yourself for when employee terminates
65
What is Meant by Take Home Pay
©2015 The Payroll Advisor
Subtract the following in calculating take home pay:TaxesVoluntary and involuntary deductions in effect before
the levy is receivedIncreases in preexisting deductions beyond the
employee’s controlCondition of employment deductions that come after
the levy is receivedDirect deposit is not counted
66
Determining Amount Exempt from Levy
©2015 The Payroll Advisor
Publication 1494 is used to determine the amount exempt from levy
Changes each yearUse the exemptions and
filing status the employee submitted on the Form 668-W
67
Federal Tax Levy Calculations
Employee Charlie receives $1,300 every two weeks. A tax levy of $15,000 is received. Charlie claims married filing jointly with 2 exemptions. He has the following deductions:
Fit $100.00SS $ 77.50Medicare $ 18.13SIT $ 40.00401(k) plan 3% $ 39.00Health Ins. $ 50.00Total $324.63
68
©2015 The Payroll Advisor
ExampleCalculations
Tax Levy Would Calculate
©2015 The Payroll Advisor
Take Home Pay $975.37($1,300 - $324.63)
Exempt from Levy $792.31(From 2015 Chart)
Amount subject to levy $183.07($975.37 - $792.31)
69
Stopping the Levy
©2015 The Payroll Advisor
Must receive Form 668-DIRS wants you to continue
to withhold until release is received even if it exceeds amount on levy
Call when you are getting close!
70
Between Employees and the IRS
New at the IRS—online payments
Employee fills out application online
Makes payments online Must still get Form 668-D to
the employer Can encourage employees
to use
Form 2159 “Payroll Deduction Agreement”
Totally voluntary on both sides
Still need release form to stop original levy
Three-Part Form Can encourage employees
to file
71
©2015 The Payroll Advisor
Online Payments Form 2159
Federal Agency Debt Collections, State Tax Levies, Creditor Garnishments, Voluntary Wage Assignments, Bankruptcies and Student Loans
OTHER GARNISHMENTS
72©2015 The Payroll Advisor
Federal Agency Debt Collections
©2015 The Payroll Advisor
Fail to pay nontax debt such as vendor, federal retirement, federal salary and social security benefits
Subject to CCPA as well as Debt Collection Improvement Act of 1996Uses 15% of disposable and includes health insurance as
mandated deductionHas priority if served first over federal tax levy but not
child supportBegin when it says and end when release is received
73
State Tax Levies
©2015 The Payroll Advisor
CCPA limits do not apply to state tax levies under 15 USC 1673(b)(1)(c)
COULD BE 25% of disposable or the amount that exceeds 30 times the federal minimum hourly wage
COULD BE anything they want it to be—Example KY allows employee to keep $125/week Plus $60 for each dependent
COULD come on a tax levy form or COULD be a letter
74
State Tax Levies
©2015 The Payroll Advisor
Disposable income could match federal or may not even give a definition
May have priority over other creditor garnishments or it may not
Answer back may or may not be required
May be able to collect a feeRead the garnishment carefully
75
Creditor Garnishment Calculation
©2015 The Payroll Advisor 76
Tony has a creditor garnishment of $1,000 to honor and has $700 in disposable income and is paid biweekly:
Creditor Garnishment Calculation
©2015 The Payroll Advisor 77
Step 1: Check the chart
Step 2: Determine the lesser of disposable income minus 30 times federal minimum wage or 25% of disposable income: Disposable income minus 30 times minimum wage:
$700 - $217.50 = $482.50 25% of disposable income: 25% x $700 = $175
$175.00 is the lesser of these two amounts. We can take the $175 to satisfy the garnishment
But What if There’s a Child Support Order?
©2015 The Payroll Advisor
Tony's child support withholding obligation is 180.00/week. Deduct $180 for child support from Tony's $700 payDifference between allowed amount for garnishment and the child support deduction taken: $175 - $180 = -$5The child support deduction of $180 has already exceeded the allowed amount for garnishment; therefore nothing may be withheld for Tony's creditor garnishment.
78
Let’s Do One Where He Has the Money
©2015 The Payroll Advisor
Tony's child support withholding obligation is $140/week. His weekly disposable income is $1,000. Deduct $140 for child support from Tony's $1,000 pay Determine the lesser of:
Disposable income minus 30 times minimum wage:$1000 - $217.50 = $782.50
25% of disposable income: 25% x $1000 = $250$250 is the lesser of these two amounts.
Difference between allowed amount for garnishment and the child support deduction taken:$250 - $140 = $110
$110 can be withheld for Tony's creditor garnishment79
State Limits
©2015 The Payroll Advisor 80
State(s) RequirementDE, 15% of wagesIL 15% of gross wages or amount which disposable earnings exceed 45 times of the higher of federal or state
minimum wage
WI 20% of disposable earningsAL, AZ, CA, CO, DC, GA, ID, IN, KS, KY, LA, MD, MS, MO, MT, NE, NY, OH, OK, OR, SC, TN, UT, VT, WY
Lesser of 25% of disposable or amount exceeds 30 times federal minimum wage
WALesser of 25% of disposable or amount exceeds 35 times federal minimum wage
CT, IA, ME, MN, NM, ND, VA, Lesser of 25% of disposable or amount exceeds 40 times the higher of federal or state minimum wage
NV, NH, Lesser of 25% of disposable or amount exceeds 50 times the higher of federal or state minimum wage
WV, Lesser of 20% of disposable or amount exceeds 30 times federal minimum wag
SD, Lesser of 20% of disposable or amount exceeds 40 times federal minimum wag
AK, FL, HI, States limits within code based on dollar amountsAR, MI, NC, No limits set in codeMA, $125 exempt from levy each pay periodNJ $48 per week are exempt; 10% if wages exceed $7,500 per yearPA, TX Not permitted except in certain circumstancesRI Up to $50 are exempt from attachment
More State Examples
©2015 The Payroll Advisor
Alaska: Notwithstanding the increased exemption amounts provided for weekly disposable earnings and cash and other liquid assets, the exemption for weekly disposable earnings is $743 and the maximum monthly exemption for cash and other liquid assets is $2,970
Florida: up to $750 per week of the disposable earnings of a head of family are exempt from attachment or garnishment. Disposable earnings greater than $750 a week cannot be attached or garnished unless the employee agrees in writing;
Hawaii: The maximum that employers can withhold is 5 percent of the first $100 of disposable wages per month, 10 percent of the next $100 per month, and 20 percent of all sums in excess of $200 per month. Disposable earnings are the amount of earnings remaining after the deduction of any amount required by law.
81
However, In North Carolina…
©2015 The Payroll Advisor
The courts of North Carolina are not permitted to order an employer to withhold wages for other types of debts such as car loans, credit card debt, and other personal debt items. While the North Carolina courts are not permitted to garnish wages based on these debts, creditors in other states may be able to get an order of garnishment under their own states’ laws. It is not a violation of the North Carolina Wage and Hour Act for an employer to withhold an employee’s wages if required to do so by law. If a court from another state issues a valid order under that state’s laws requiring an employer to withhold a North Carolina employee’s wages for payment of a debt, the employer does not violate the North Carolina Wage and Hour Act by obeying that order.
82
State Fees
©2015 The Payroll Advisor
Collection of a fee for the employer is sometimes permitted—states with no provisions to collect fees include: AL, AK, CO, CT, DE, HI, ID, KY, MD, MA, MS, MT, NE, NM, NY, OH, SC, VT,
WV, WYSome states have special provisions for fees such as: IA only permits witness fees NH only permits for collection of overpayment of SUI benefits NC permits only for debts to public hospitals or public assistance
payments PA for collection of taxes only TN permits for public employers only May also be a fee to collect for the state or court or plaintiff in the
case…Read the garnishment
83
State Fees
©2015 The Payroll Advisor 84
State Fees Permitted
Arizona $5 each pay period from nonexempt earningsArkansas $2.50 per pay periodCalifornia $1.50 for each payment District of Columbia $2.00 for withholding order
Florida $5.00 for 1st deduction, $2.00 each deduction thereafterGeorgia $50 or 10% of amount paid into court (whichever is greater) but not to exceed $100 as reasonable attorney’s fees or expenses
Illinois 2% of amount to be deductedIndiana Larger of $12 or 3% of total amount to be deducted ½ of fee from employee, ½ of fee from amount due creditor
Kansas $10 for each 30-day periodLouisiana $3 from nonexempt income each payment garnishment is in effectMaine $1 per check issued and forwarded to creditorMichigan $6 fee paid by plaintiff at the time a writ of garnishment is servedMinnesota $15 paid by creditor to employer at time of service of garnishmentMissouri Greater of $8 or 2% of amount withheld. Taken from employee’s wagesNevada $5 paid by creditor to employer at time a writ of garnishment is served. Employer entitled to$3 per pay period not to exceed $12 per month
New Jersey 5% for compensation towards expenses and services in processing each payment
North Dakota $10 paid by creditor when employer is served with garnishment summonsOklahoma $10 from employee’s funds for answering a garnishment summonsOregon $2 processing fee for each week a payment is made unless withholding reduces below minimums. Must collect after last payment is made Rhode Island $5 paid by employee for each writ of garnishmentSouth Dakota $15 for garnishee summons being servedTexas Lessor of actual costs or $10 from disposable earningsUtah $10 for a single garnishment or $25 for continuing garnishment paid by creditor directly to employer
Virginia $10 for each garnishment summons servedWashington $10 processing fee for 1st disbursement and $1 for each subsequent disbursement. $20 for first payment; if continuing lien $10 at time of second
payment
Wisconsin $15 garnishee fee from creditor for each garnishment or extension
Voluntary Wage Assignment
©2015 The Payroll Advisor
Are not the same thing as a court-ordered garnishment
Are voluntary so not covered under CCPA limitsCan be revoked at any time by employee so watch
for thisState sets the limit and the rulesState can forbid employer to honor, especially for
“small loans”
85
Bankruptcy
©2015 The Payroll Advisor
Governed by the federal Bankruptcy ActChapter XIII bankruptcy orders take priority over any
other claim against wages including child support and tax levies
Should be included in bankruptcy—verify Get releases when required—child supportNotify courts if child support is involved-No more
automatic stays for child support
86
Student Loans
©2015 The Payroll Advisor
Higher Education Act amended to allow for garnishment of wages to repay student loans
15% of disposable or 30 times federal minimum wage which ever is less
Multiples can use the 25% garnishment limitDisposable pay is the same under CCPA except
mandated deductions include health insurance
87
But They Do Not Include…
©2015 The Payroll Advisor
A Wage Garnishment Worksheet is included with the Wage Garnishment Order to assist payroll in calculating disposable pay and the wage garnishment amount.
Also website http://fmsq.treas.gov/debt/AWG_calc.html
88
©2015 The Payroll Advisor 89
Handling a Student Loan Garnishment
©2015 The Payroll Advisor
ED first notifies the employer that debtor pay must be withheld by sending a Wage Garnishment Order (SF-329B) form
Provides the debtor’s name, address, and social security number as well as instructions for withholding.
The employer then: completes and returns the Employer Certification (ED-329D) within 20 days of receipt
Begins withholding the amount directed in the order—usually within 10 days
Remit within 3 days after withholding
90
©2015 The Payroll Advisor 91
©2015 The Payroll Advisor 92
93©2015 The Payroll Advisor
94©2015 The Payroll Advisor
But What if the Employee is Gone?
©2015 The Payroll Advisor
If the debtor is no longer employed by your organization when you receive the Order, simply indicate this on the form and return it to ED or call the Administrative Wage Garnishment Branch at 404-562-6013.
95
©2015 The Payroll Advisor 96
X
Complete here
Complete here Complete here
Then Each Quarter…
©2015 The Payroll Advisor
ED will send the employer an Employment Confirmation Report to obtain any information needed regarding any changes to the employment status of the debtor. The Report lists the debtor/employee's account balance. Keep in mind that the balance shown on the Report reflects interest that has accrued since the Order was issued. In addition, ED has used part of the amounts withheld and paid to ED to defray collection costs ED incurs in collecting the debt.Questions or account balance call (404) 562 -6013.
Are There Any Questions?
©2015 The Payroll Advisor 98
Recommended