Sam Brotman, JD, LLM, MBA December 16, 2013 5 min read

IRS Wage Garnishment Protocol

Wage garnishment is the most common type of garnishment, or attachment to earnings and/or assets. Wage garnishment is defined as the process of deducting money from an employee’s wages, or monetary compensation, as a result of a court order or related equitable procedure. A wage garnishment will continue until the entire debt is paid. There are common examples of different types of debts that result in wage garnishment. These types include child support, defaulted student loans, taxes, and unpaid court fines.

When employers receive a notice to withhold part of an employee’s wages, the garnishment becomes a part of the payroll process. Employers are required to make the deductions until the debt is satisfied. Title III[1] of the Consumer Credit Protection Act (CCPA) is an administrator of the Wage and Hour Division (WHD). The statute “protects employees from discharge by their employers because their wages have been garnished for any one debt, and it limits the amount of an employee’s earnings that may be garnished in any one week” (DOL.gov, “Wages and Hours Worked: Wage Garnishment,” 8/16/2013). Title III applies to those employees receiving earnings for personal services; earnings are specific to “wages, salaries, commissions, bonuses, and period payments from a pension or retirement program, but ordinarily does not include tips” (“Wages and Hours Worked: Wage Garnishment”).

For example, employers can only deduct the lesser of 25 percent of disposable earnings “or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage prescribed by Section 6(a)(1) of the Fair Labor Standards Act of 1938” (“Wages and Hours Worked: Wage Garnishment”). As of July 24, 2009, the federal minimum wage is $7.25 per hour. According to the Department of Labor, disposable earnings are defined as the amount (of earnings) legally left over after required deductions, which include the standard following:

  • Federal, state, and local taxes
  • Social Security
  • Unemployment insurance
  • State employee retirement

The deductions above are required by law. The deductions that are not required by law include union dues, health and life insurance, and charitable contributions (“Wage and Hours Worked: Wage Garnishment”).

However, Title III allows for the garnishment of wages at a greater amount when it comes to child support, bankruptcy, and/or federal or state tax payments (“Wages and Hours Worked”). Fifty-percent of an employee’s wages can be garnished for child support, provided the “employee is supporting a current spouse or child, who is not the subject of the support order, and up to 60 percent if the employee is not doing so. An additional five percent may be garnished for support payments over 12 weeks in arrears” (“Wages and Hours Worked: Wage Garnishment”). Title III is not applicable to certain bankruptcy court orders. Title III doesn’t affect voluntary wage assignments, which are defined as those activities where the employee voluntarily turns over their earnings to a creditor. With this in mind, wages and assets are never safe because they can be attached legally to satisfy a tax liability.

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[1] Title III, Consumer Credit Protection Act (CCPA) (15 USC §1671 et seq. (PDF); 29 CFR Part 870).

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Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
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