A
garnishment is a means of collecting a monetary
judgment against a
defendant by ordering a third party (the
garnishee) to pay money, otherwise owed to the
defendant, directly to the
plaintiff. In the case of collecting for taxes,
the law of a jurisdiction may allow for collection without a
judgment or other court order.
United States
Wage garnishment
Wage garnishment, the most common type of
garnishment, is the process of deducting money from an employee's
monetary compensation (including
salary),
sometimes as a result of a
court order.
In the
United
States
, some such garnishments are limited by federal law
to 25 percent of the disposable
income that the employee earns. Wage garnishments
continue until the entire debt is paid or arrangements are made to
pay off the debt. Garnishments can be taken for any type of debt
but common examples of debt that result in garnishments include:
When served on an
employer, garnishments
are taken as part of the
payroll process.
When processing payroll, sometimes there is not enough money in the
employee's
net pay to satisfy all of the
garnishments. In such a case, the correct order to take a
garnishment must be satisfied. For example, in a case with federal
tax, local tax, and credit card garnishments, the first garnishment
taken would be the federal tax garnishments, then the local tax
garnishments, and finally, garnishments for the credit card.
Employers receive a notice telling them to withhold a certain
amount of their employee's wages for payment and cannot refuse to
garnish wages.
Wage garnishment can negatively affect credit, reputation, and the
ability to receive a loan or open a bank account.
At present
four U.S. states — North
Carolina
, Pennsylvania
, South
Carolina
and Texas
— do not
allow wage garnishment at all except for debts related to taxes,
child support, federally guaranteed student loans, and
court-ordered fines or restitution for a crime the debtor
committed. Several other states observe maximum thresholds
that are lower than the 25 percent maximum provided by federal law.
States may also prohibit garnishment altogether in certain
circumstances.
For example, in Florida
the wages of
a person who provides more than half the support for a child or
other dependent are exempt from garnishment altogether (though this
exemption is subject to waiver). Loans
and negotiations with creditors can also help debtors to avoid wage
garnishment.
In many states when the person is an employee or appointee of a
governmental unit the writ is called a Writ of
Sequestration. These are processed by the
courts in the same manner as garnishments and are subject to the
same wage exemptions.
The debtor has a remedy if he/she believes the Garnishment is
improper under the law. That remedy is a Motion To Quash the
writ.
Debtors can have multiple writs of garnishment against their wages
but most states follow the
first to serve rule. The first
to serve rule is that the employer must honor the garnishments one
at a time in the order that they were served on the employer.
A typical garnishment statutory scheme can be seen in
Missouri
Supreme Court Rule 90[80307].
Attachment
The other type of garnishment, also known as
attachment,
(or
attachment of earnings),
requires the garnishee to deliver all the defendant's money and/or
property in the hands of the garnishee at the time of service of
process to the court, to be paid over to the plaintiff. Since this
type of garnishment is not continuing in nature, but is not subject
to the type of restrictions that apply to wage garnishment, it is
most often used against banks, or other persons or companies that
incur liquidated obligations in the regular course of business. The
garnishment should never begin during the pay period but should
begin on the following pay period
U.S. federal tax rules
In the context of garnishments under U.S. federal tax law, there
are only a few requirements that must be met before the
Internal Revenue Service (IRS)
starts a wage garnishment:
- The IRS must have assessed the tax and must have sent a written
Notice and Demand for Payment;
- The taxpayer must have neglected or
refused to pay the tax within the time prescribed in the notice;
and,
- The IRS must have sent a Final Notice of Intent to Levy and
Notice of Your Right to A Hearing (levy notice) at least 30 days
before the levy.
A garnishment by the Internal Revenue Service is a form of
administrative levy. In the case of an IRS levy, no court order is
required.
The IRS may serve the Final Notice in person, may leave the notice
at the taxpayer’s home or usual place of business, or may send it
to the last known address by certified or registered mail. The IRS
is required to send the Final Notice to the last address known to
the agency. The taxpayer does not need to actually receive the
notice for the notice to be effective. Many taxpayers never
actually receive the final notice. Those taxpayers may not realize
they are in danger of receiving a levy until their wages are
actually garnished.
See also
References
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