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Wage Garnishment Law

Jun 18, 2014

Ensuring Garnishment of Wages with Extra Help

When an employee is ordered by a court or IRS levy to have their wages used toward a legal claim such as child support, court orders, and tax liens, those payments must be handled as part of your payroll process. The payments may be made directly to the court, but sometimes they are transferred to an intermediate agency that processes the debt payments.

The court will send the employer a notice that their employee is in debt, and that the employer needs to begin garnishing their wages. It’s usually up to the employer to calculate the amount that needs to be paid, which is generally transferred on a weekly basis. Failure to follow a garnishment order can result in legal consequences for the employer. Federal law imposes fines of up to $1,000 and imprisonment for a maximum of one year for such violations.

Special State Limits for Child Support, Alimony, and Unpaid Taxes

Complicating matters, the regulations surrounding garnishment payments vary by state. Also, some state laws don’t allow wage garnishments for any reason besides child support or tax debt. Federal laws set the maximum amounts for wage garnishments. For example, the federal government allows a maximum of 25 percent of an employee’s wages to be garnished, while some states enforce lower amounts, and others limit what debts can be considered for garnishment. This amount is different where child support or alimony is concerned; then, up to 50 percent can be deducted if a wife or child is currently being supported, and up to 60 percent can be deducted if the employee is not currently making support/alimony payments.

Wow, that is a lot to consider and keep track of while being an employer and running a business!
To make sure that you’re processing garnishments within the law, Extra Help wage garnishment services calculates garnishment wages, makes deductions, and ensures the proper agency is paid by the required method, either paper check or electronic funds transfer.

Read more about more common payroll tax mistakes to avoid.