Child Support and Wage Garnishments
Upon the receipt of a Notice of Levy/Writ of Execution or an Order to Withhold Income for Child Support, the State of Montana is legally obligated by federal and state law to withhold money from an employee's paycheck for child support or unpaid student loans, taxes, or other bad debts.
Upon service of the legal paperwork, written notification will be sent to the employee documenting when the income withholding will begin and which company has the legal order. If there is any question on exactly what the withholding is for, the employee must contact the Plaintiff or Child Support Agency directly. Central Payroll only receives an order that money is owed and the amount that must be deducted from the paycheck.
Child Support
All Child Support will be deducted on the next payday after Central Payroll receives notification, and a letter is sent to the employee describing the process and the start date of the Child Support deduction. By the time the employee receives a letter from our payroll office, the employee is already aware of the monthly support obligation as informed by Child Support Enforcement.
It is the policy of the State of Montana to deduct the full monthly amount due for Child Support from the first paycheck of each month, up to 50% of the employee's disposable earnings. Any remaining balance will be deducted from the subsequent paychecks in the month. The deductions are taken as an after-tax deduction and show up on the pay stub as Child Support &/or Wage Garnish.
Disposable Earnings = Gross Pay - State Share - Taxes - Mandatory Retirement
Example: An employee's monthly obligation is $630.00. The following is a breakdown of the earnings calculation:
Gross Pay:
$
1603.54
State Share:
-$
295.00
Taxes:
-$
164.02
Retirement:
-$
91.32
Disposable Earnings
$
1053.20
X 50%
x
.50
Deduction (amount deducted
on the first payday each month)$
526.60
Monthly Obligation:
$
630.00
Amount paid for month
$
526.60
Remaining Balance (amount
deducted on the second payday)$
103.40
With all new Child Support orders, no matter if from out of state, a court order, or issued from Montana CSED, all payments deducted from employees' pay will be sent to the Montana Child Support Enforcement Division. See MCA 40-5-907 and MCA 40-5-909 for more information.
Child Support will continue to be deducted until a termination notice is received in Central Payroll. If you know your support obligation should be terminated or lowered soon due to a child's birthday, high school graduation, etc., please make contact with your caseworker directly to remind of change in status. If notice is not received prior to payroll running and money being sent to Child Support Enforcement, Central Payroll cannot refund any money and employee must wait for CSED to refund the money.
For more information check out the Montana Child Support Enforcement Division web page and their Frequently Asked Questions page.
Wage Garnishments
Garnishments are processed first by order of precedence, and then by order received. In Montana, the order of precedence is: 1) IRS Tax Levy 2) Student Loans 3) State tax levies and other creditor garnishments. If the employee also has a Child Support Order to withhold, it has priority over garnishments (the Child Support obligation is also taken into consideration when calculating IRS levies).
Wage garnishments will normally be deducted on the next payday after Central Payroll receives notification, as long as the legal documents are received soon after the Pay Period end date. This allows enough time for a letter to be sent to the employee that notes the Plaintiff, the start date of the deduction and the expiration date of the garnishment. If another garnishment is currently active, the next garnishment will begin as soon as the first one is paid in full or expires (sometimes on the same paycheck), therefore the date noted on the notification letter is just an estimation of the start date.
All deductions are taken on a biweekly basis (free pay periods still have garnishments deducted from them.) The deductions are taken as an after-tax deduction and show up on the pay stub as Child Support &/or Wage Garnish.
Creditor Garnishments / MT Department of Revenue Tax Levy
These garnishments are served on the State of Montana by a Process Server (the same person who served the employee with court paperwork/notices to appear in court) or Department of Revenue Agent. In the State of Montana, these garnishments are good for 120 days, and if not paid in full by the time of expiration the paperwork is re-served to the court and renewed.
The Federal Consumer Credit Protection Act (CCPA) limits the amount that may be garnished to either 25% of the employee's weekly disposable (net) income or the amount by which the employee's weekly disposable income is more than 30 times the federal minimum wage, whichever is less. The calculation is as follows:
Disposable Earnings = Gross Pay - State Share - Taxes - Mandatory Retirement
Example: of 25% of Disposable Earnings
Gross Pay:
$
1603.54
State Share:
-$
295.00
Taxes:
-$
164.02
Retirement:
-$
91.32
Disposable Earnings
$
1053.20
X 25%
x
.25
Deduction
$
263.30
This is the standard calculation for which most garnishments are figured. The second part of the CCPA is utilized for employees with disposable earnings less than $468.00. If the above calculation results in Disposable earnings of less than $351.00, no garnishment is taken, but if the calculation results in earnings between $468.00 and $351.00, the deduction is the difference between the disposable earnings and $351.00.
Example:
Gross Pay:
$
850.00
State Share:
-$
295.00
Taxes:
-$
77.25
Retirement:
-$
38.30
Disposable Earnings
$
439.45
CCPA guidelines
-$
351.00
Deduction
$
88.45
Student Loan Garnishments
Upon receipt of Student Loan Garnishment paperwork, a letter and official paperwork is sent directly to the employee's mailing address.
These are calculated in the same manner as other garnishments, with a couple of exceptions. Most student loan deductions are calculated at 10% of disposable earnings instead of 25%, but the US Department of Education garnishments are calculated at 15% of disposable earnings. The paperwork you receive from the issuing Student Loan agency will note which percentage will be used in the calculation.
Student Loans do not have an expiration date, they continue until paid in full or released by the issuing agency.
IRS Tax Levies
Upon receipt of the Tax Levy, a letter and official paperwork is sent to the employee. The employee must fill out the paperwork and return completed forms to Central Payroll as soon as possible. This garnishment deduction will begin on the next available payday, whether the paperwork is filled out or not.
Until the completed forms are received in Central Payroll, the exempt amount will be figured as married filing separate with one exemption, leaving the employee with a $344.23 biweekly paycheck. The only way to increase the amount of money received each payday is to fill out the IRS paperwork claiming additional exemptions, but the paperwork must still be filled out even if the employee doesn't have any extra exemptions.
The deduction amounts are calculated based on the exemption grid sent with each tax levy. Only exemptions claimed on the IRS tax levy forms are used to calculate the deduction amount (the exemptions an employee claims on the W-4 has no bearing on this IRS tax levy).
We are legally required to comply with this order. Any disputes or concerns about the garnishment must be dealt with by the IRS directly by calling the 800 number noted on the IRS tax paperwork (or contact the local IRS office).
These garnishment restrictions do not apply to bankruptcy court orders, debts due for federal and state taxes, and voluntary wage assignments.
Check out the US Department of Labor Fact Sheet for more information on garnishments.
The State of Montana Employee Benefits offers Employee Assistance as part of the Benefits package. Although most people think of Employee Assistance as just a counseling program, it is much more than that. Reliant Behavioral Health (RBH) offers free and discounted financial and legal assistance as well. Utilizing this benefit may help you make arrangements for current garnishments and avoid garnishments from occurring in the future.
Please take a moment to check out RBH's website at www.ReliantBH.com and see what they have to offer you.
