State Wage Garnishment

States are able to garnish wages for non-payment of various “state-related” debts. In most cases, wage garnishment is a last-ditch effort by the State to retrieve monies from an individual for debts that are owed and being neglected by that individual. Unpaid state taxes and child support arrearages are at the top of most state lists regarding egregious behavior which will not be tolerated and can lead to wage garnishment. In most cases, the State would rather the individual pay their debt; come up with a suitable payment plan that will, in a timely manner, solve the debt issue satisfactorily; or offer a suitable settlement amount of the debt – that can be taken care of quickly – to end the conflict between the State and the individual. State wage garnishment actually costs the State money in legal paperwork and maintenance by state workers or other contracted agencies. States will usually try to work with the individual.

You may prevent a state wage garnishment letter by coming to terms with the state such as a payment plan or a settlement plan prior to a state wage garnishment letter being sent. It is imperative that the agreed-to terms are adhered to strictly to prevent wage garnishment. Most states will not agree to stop a state wage garnishment with a state installment agreement. That time has passed. Most states, when presented with a scenario of “hardship”, will agree to lower the amount due during each pay period or modify the wage garnishment terms. Some States, acknowledging a “hardship”, may provide an individual with a state offer in compromise resolution to state tax debt.

Social Security, and other legally mandated monies, such as disability, cannot be garnished by the State.

Delinquent balances can include state taxes, penalties, fees, and interest. Additionally, delinquent balances can also include non-tax debts to state agencies and courts. Court-ordered child support and Workers’ Compensation Insurance Premiums are high on the lists that keep track of debts and arrearages to the State and the various agencies it supports, in whole or in part.

There is a hierarchy in the “wage garnishment” process as far as which “wage garnishment” takes precedence in the search of monies owed by an individual, or, in the case of Workers’ Compensation Insurance Premium, a business. The Federal Internal Revenue Service (“IRS) takes precedence over state programs and agencies. The IRS can issue a wage garnishment letter to collect on federal tax balances. State tax wage garnishments take precedence over all other wage garnishments or levies such as Civil Court case awards and damages. Only Federal tax debt and court-ordered child support payments take precedent over State tax wage garnishments.

The rules and regulations regarding state wage garnishment vary from state to state. The State’s wage garnishment letter provides your employer with the formula for calculating the amount to be held from each paycheck to satisfy a delinquent balance. Issues regarding child-support arrearages incur a greater value than issues such as delinquent tax payments. Typically, the state wage garnishment could be up to 25% of an individual’s paycheck for delinquent tax payments, etc. Child support arrearages, however, are garnished in the best interest of the child. States can hold up to 50% from each paycheck for child support arrearages; and, up to 60% if the individual has no other dependents to support.

The state wage garnishment letter will inform an employer how much of a delinquent balance is owed. The employer will continue to garnish wages from each paycheck until the delinquent amount due is satisfied in full. It should be noted that, if the ability to satisfy the delinquency earlier than anticipated presents itself, the individual may be able to settle for a lesser-than-full amount owed.

If you are a self-employed individual the state will send the state wage garnishment letter to your customers and Accounts Receivable clients. Should the customer or account client owe you money, the state wage garnishment letter will instruct each client in your Accounts Receivables to pay their debt to you to the State instead – up to 100% of the amount the customer or client owes you.

State Wage Garnishment is a preventable situation through good faith open dialogue, the development of scenarios to successfully cure the financial issue and adhering to the agreement that will develop between states and citizens.