For Immediate Release:

Saturday, October 12, 2013

Do you get more garnishment orders today than you have in the past? Yes. You are not alone.

Most employers report an increase in the number of employee garnishment orders they must manage. In many cases an employer can be held liable for mishandling a garnishment order up to the full amount of the balance due, particularly with tax levies and family support orders.
So what is an employer to do? There are some basic policies that can be implemented to verify that all garnishment orders are accounted for and implemented properly.

1. Designate a single individual to receive all garnishment orders if possible.
2. Develop a system to track the receipt and implementation of garnishment orders.
3. Institute a monitoring system to keep track of in force garnishments.

While these are broad guidelines they will assure we are tracking, from receipt to completion, garnishment orders. But the bigger challenge may be actually implementing the garnishment order and keeping them in the correct priority while not exceeding the maximum limitations placed by federal law.
There is a priority for garnishment orders. Garnishments must be taken in this order.

1. Family Support
2. Bankruptcy
3. Federal Tax Levy
4. Administrative Wage Garnishment (Federal Student Loan)
5. Administrative Wage Garnishment (Other federal guaranteed loans)
6. State Tax Levy
7. State Guaranteed Student Loan
8. Local Tax Levy
9. Creditor Garnishment

Employers must implement garnishment orders in the order of priority. The challenge is that we cannot deduct from an employee?s disposable income more than is allowed under the Consumer Credit Protection Act.
As an example, we have an employee who has a creditor garnishment, creditor garnishments are capped at 25% of disposable income, what happens if we receive a family support garnishment that is going to require 50% of the employee?s disposable income?

1. Do we continue to withhold the creditor garnishment and ignore the family support order?
2. Do we do some type of calculation and try to withhold both?
3.  Do we stop the creditor garnishment and begin the family support order garnishment?

The correct answer is number 3. We have a FREE quick reference guide to garnishments that lists the priority and federal limits allowed for each type of garnishment. If you would like a copy of this quick reference guide email Gary@IlluminareGroupInc.com and in the subject line put ?quick reference guide?. I will send that out to you right away.
If you have questions regarding how to prioritize garnishment orders or any payroll or employee benefit issues then contact me at 615-542-1919 or send me an email to Gary@IlluminareGroupInc.com.
Gary Garner
IRS CIRCULAR 230 — DISCLOSURE NOTICE: IRS Circular 230 regulates written communications about federal tax matters between tax advisors and their clients. To the extent the preceding correspondence and/or any attachment is a written tax advice communication, it is not a full ?covered opinion?. Accordingly, this advice is not intended and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS regarding the transaction or matters discussed herein.