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Garnishments BEYOND Child Support

Garnishments BEYOND Child Support. Speaker. Rosemarie Fraumeni, CPP Manager, Payroll American Dental Partners, Inc. rfraumeni@comcast.net. 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

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  1. Garnishments BEYOND Child Support

  2. Speaker Rosemarie Fraumeni, CPP Manager, Payroll American Dental Partners, Inc. rfraumeni@comcast.net

  3. 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

  4. Agenda • Involuntary deductions • Federal tax levy • State tax levy • Student loan • Creditor garnishment • Bankruptcy Please Complete Your Evaluation at the End of the Workshop

  5. Involuntary Deductions

  6. Involuntary deductions • Neither the employer nor employee have control

  7. Employer’s responsibilities • Is the claim valid? • Inform the employee • Are there employee exemptions? • How will it affect employee’s pay?

  8. Employer’s responsibilities • Does it exceed any limits? • Will it affect other deductions? • Review with legal department

  9. Deduction order • Child support • Bankruptcy • Federal administrative garnishment

  10. Deduction order • Federal tax levy • Student loan 6. State tax levy

  11. Deduction order • Local tax levy • Creditor garnishment 9. Voluntary deductions

  12. Federal Tax Levy

  13. 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)

  14. Why are you getting a levy? • A levy is the result of the delinquency of an employee to pay owed tax liabilities

  15. Form 668-W

  16. Form 668-W, Part 1 • For Employer

  17. 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.

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

  19. 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

  20. The federal tax levy • Wage exemption

  21. The federal tax levy • Publication 1494

  22. The federal tax levy Levy deductions lasting into successive years 2012 2013 2014 2015 2016

  23. The federal tax levy • Subtract these before determining take-home pay… • Taxes • Existing deductions • Some increases in existing deductions

  24. The federal tax levy • Post-levy deductions or increases to existing deductions lower the exempt amount

  25. The federal tax levy • Payments of any type are subject to levy

  26. The federal tax levy • When do we stop withholding?

  27. The federal tax levy • Form 668-D

  28. 50 600 3/11/12 242 X 5,000 Month

  29. When employment ends • Complete the back side of 668-W, Part 3 and return it to the IRS

  30. Voluntary agreement • Employee may contact the IRS to negotiate a voluntary agreement

  31. Voluntary agreement • Employee may file Form 2159

  32. State Tax Levy

  33. State Tax Levy CALIFORNIA – follows CCPA limits

  34. State Tax Levy NEW YORK – 10% of gross earnings

  35. State Tax Levy SOUTH CAROLINA – 25% of gross earnings

  36. State Tax Levy IOWA – 100% of disposable earnings

  37. State Tax Levy IDAHO – 100% of wages

  38. Student Loan

  39. Student Loan • Maximum deduction the lesser of: • 15% of disposable earnings, or • 30 times the federal hourly minimum wage

  40. Student Loan • Protection from discharge

  41. Student Loan • Notice before garnishment • 30 days before withholding begins

  42. Student Loan • No guidance on priorities

  43. Student Loan • Grace period after reemployment • 12 months

  44. Student Loan • Penalties • Liable for any amount not withheld plus legal costs

  45. Creditor Garnishment

  46. What is a creditor garnishment? An employee has a debt that remains unpaid

  47. What is a creditor garnishment? A wage garnishment is a legal means by which the person who is owed the money can obtain payment

  48. What is a creditor garnishment? “Wage attachment” “Income execution” “Writ” “#@% !”

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