Employer's Frequently Asked Questions

If you have additional questions that are not addressed below, please contact our Employer Garnishment Inquiry Line at 1-888-352-0116 or your local Collection Division Office. Taxpayers/employees with questions or concerns about the liability or the garnishment should contact a case resolution specialist at 1-877-252-3252.

Payment Remittance

How often must I remit payments?

Garnishment payments withheld should be remitted to the Department of Revenue every 30 days until the liability shown due on the garnishment together with accrued interest is paid in full.

Where do I send payments for amounts withheld from employees’ checks?

We encourage you to make the payments online. This is the best way of ensuring that payments are posted timely and accurately. Payments can be made online by bank draft and credit or debit card using MasterCard or Visa. There is no fee for choosing the bank draft method. There is a convenience fee for choosing to remit by credit/debit card. The fee is calculated as $2.00 for every $100.00 increment of your tax payment.

If you do not wish to pay electronically, you must include information to clearly identify the garnished employee’s account with each payment. A set of payment coupons was included with the garnishment that must be fully completed and returned with each paper-check payment. You may print additional coupons from our website. Alternately, you may use a legible photocopy of the front of the garnishment.

Paper-check payments and remittance coupons should be addressed as follows:

Wage Garnishment Processing Unit
NC Department of Revenue
PO Box 25000
Raleigh, NC 27640-0150

How does the employer know if a garnishment is paid in full?

Once the liability is paid in full, the Department sends a garnishment release letter to the employer. If the Department has issued multiple garnishments for a single employee, separate release letters will be mailed for each garnishment. The employer may also contact the Department at 1-888-352-0116 if they believe that they are close to paying out the garnishment and need a final balance.

I have checks for garnishment payments that have not cleared my bank. What should I do?

Garnishment payments should normally take no more than 30 days to clear your bank. If you have checks that have taken more than 30 days to clear, please contact the Department at 1-888-352-0116 for instructions.

What do I do if I sent a garnishment check by mistake to the Department of Revenue that should have been sent to another Agency?

Contact the Department at 1-888-352-0116.

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Withholding Requirements

How much do I need to withhold from the employee’s pay?

NC Gen. Stat. §105-242(b) requires that you withhold from the employee’s gross salary and wages under the terms of the garnishment until it is satisfied. The Department requires that 10% of monthly gross salaries and wages be withheld and remitted to the Department.

What are “salaries” and “wages” as it applies to the 10% limitation on the garnishment?

Salaries and wages are any amounts paid to an employee that would typically be reported on a W-2 or NC-2 form. NC general statutes do not allow the Department of Revenue to require more than 10% of monthly gross salaries and wages to be deducted from paychecks.

Can a garnishment attach to payments or other assets that are not reported on a W-2 or NC-2 and are not considered salaries and wages? Are these subject to any garnishment limitations?

The garnishment attaches bank accounts, rents, royalties, contract payments, deposits, accounts receivables and all other intangible property incapable of manual levy. These amounts are not subject to the 10% limitation. The full amount of these types of payments that would otherwise be paid to the taxpayer must be garnished and remitted to the Department of Revenue.

For example, an employee of a bank may also have deposit accounts at the bank. In this case, the bank must remit 100% of any deposits to the Department of Revenue. Additionally, the bank must withhold 10% of the employee’s gross salaries or wages until the liability shown due on the garnishment, together with accrued interest, is paid in full.

Can I deduct the full amount of the garnishment from one check?

NC general statutes do not allow the Department of Revenue to require more than 10% of monthly gross salaries and wages to be deducted from paychecks. Other checks to the taxpayer, such as rents, accounts receivables, deposits and contract payments are not subject to the 10% limitation. The full amount of these types of payments that would otherwise be paid to the taxpayer must be garnished and remitted to the NC Department of Revenue.

Can I charge my employee an administrative fee for handling the garnishment?

NC Gen. Stat. §105-242 does not specifically address this. Consult your attorney for advice.

Will the Department allow the employer to pay the debt in full as a loan to the employee?

The Department can only require the employer to withhold 10% of monthly gross salaries and wages. The Department will accept payment in full or additional voluntary payments from the taxpayer at any time. Payments will be accepted directly from the taxpayer, his spouse, or from any other third party, including an employer, that decides to make additional payments on the taxpayer’s behalf. The Department of Revenue is in no way a party to any loans made between the taxpayer/employee and any other third party, including an employer. Funds that are posted towards a taxpayer’s debt cannot be refunded as a result of default on a third party agreement.

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Termination/Separation of Employee

I received a garnishment concerning a person that is no longer employed by my company. What do I do?

If the employee terminates, please mail or fax the garnishment with a completed Separation of Employment Notification Coupon. The mailing address is Central Collection Unit – P.O. Box 1168 – Raleigh, NC 27602-1168 and our fax number is 919-733-1231.

We were garnishing the wages of an employee that recently quit. What are the company’s responsibilities if the company still owes the person a last paycheck and payment for vacation leave earned but not taken?

The employer must withhold 10% of the monthly gross salaries and wages due to the employee and remit it to the Department. Funds owed upon separation of employment, such as payments for vacation leave, are generally reported on form W-2 or NC-2 and should be treated as salaries and wages for state tax garnishment purposes.

The employer must also notify the Department that the taxpayer is no longer employed. See the question above for more information on notifying the Department of the separation.

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Garnishment Priority

How does the employer respond if it receives multiple garnishments from the Department of Revenue for the same employee?

The employer must withhold 10% of the monthly gross salaries and wages due to the employee and remit it to the State. The employer should pay out the oldest garnishment prior to moving to the next period. The Department will send a garnishment release letter to the employer once the final payment for the oldest garnishment has posted. Upon receiving a release letter for an older Department of Revenue garnishment, the employer should begin withholding for the next Department of Revenue garnishment.

How do I determine which wage garnishment to honor if my employee has multiple wage attachments (IRS, Child Support, etc.) in force?

The NC wage garnishment runs concurrently with other types of garnishments. By service of the NC State tax garnishment, 10% of the taxpayer’s monthly gross salaries and wages must be withheld and submitted to the Department. This requirement is not offset by other wage attachments.

What if after deducting payments required by multiple garnishments, the employee will receive no pay?

The employer should contact the Department of Revenue at 1-888-352-0116.

My payroll manual states that no more than 25% of disposable income can be garnished from an employee’s wages?

A provision in Title III of the Consumer Credit Protection Act (CCPA) – 15 USC § 1673 (a) – protects employees by limiting the amount of earnings that may be garnished in any workweek or pay period. However, 15 USC §§ 1673(b)(1)(B) & (C) specify that garnishment restrictions do not apply to bankruptcy court orders and debts due for federal and state taxes. Therefore, 10% of the taxpayer's monthly gross salaries and wages must be withheld for and remitted to the NC Department of Revenue, even where the 25% CCPA cap is exceeded as a result of other wage attachments. Consult your attorney for advice about the CCPA cap and how receipt of the NC tax garnishment may impact other wage attachments.

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Miscellaneous Questions

May I require the employee to pay the balance in full or terminate him or her to avoid having to withhold garnishment payments?

Consult your attorney for advice.

What are the consequences to the employer for refusal to honor the garnishment?

A person who is in possession of intangible property that is subject to attachment and garnishment is the garnishee and is liable for the amount the taxpayer owes. The liability applies only to the amount of the taxpayer's property in the garnishee's possession, reduced by any amount the taxpayer owes the garnishee. If a garnishee fails to respond to a garnishment, the Department may proceed to enforce the garnishee's liability for the tax by sending the garnishee a notice of proposed assessment in accordance with NC Gen. Stat. §105-241.9.

Within 30 days after receiving a notice of garnishment, a garnishee must comply with the garnishment or file a written response to the notice. A written response must explain why the garnishee is not subject to garnishment and attachment. Upon receipt of the written response, the Department must contact the garnishee and schedule a conference to discuss the response or inform the garnishee of the Department's position concerning the response. If the Department does not agree with the garnishee on the garnishee's liability, the Department may proceed to enforce the garnishee's liability for the tax by sending the garnishee a notice of proposed assessment in accordance with NC Gen. Stat. §105-241.9.

What if the employer fails to stop the garnishment after the balance is paid in full?

The employer should return any amounts to the employee that it is still holding. Any overpayments remitted to the Department will be refunded directly to the taxpayer/employee.

How do I respond if the employee advises me that the taxes have been paid in full?

The employer should advise the employee to contact the Department at 1-877-252-3252. The employer must continue to withhold payments until receipt of a garnishment release letter from the Department.

What should I advise the employee to do if the employee would like to pay the taxes rather than having their wages garnished?

The employer should advise the employee to contact the Department at 1-877-252-3252 or visit our Internet site. Payment can be taken over the phone or online using bank draft, MasterCard or Visa credit/debit cards. The employer must continue to withhold payments until receipt of a garnishment release letter from the Department.

What is the difference between the “total due” and the “estimated payout” amount on the garnishment? Why do some garnishments have a “Pay This Amount” line while others have an “Estimated Payout Amount”?

The Department uses two different garnishment forms. The form used depends on whether or not the 20% collection assistance fee imposable under NC Gen. Stat. §105-243.1(d) is assessed. Sometimes this fee is not assessed until after garnishments are served.

If the fee has not been imposed at the time that the garnishment is served, the form will show an “estimated payout” amount. The estimated payout amount includes the amount payable when the garnishment is served, together with the 20% collection assistance fee that will be imposed and interest forecasted through the date shown on the garnishment. “Total Due,” only includes fees, penalties and interest assessed on the day the garnishment was issued.

If the fee has already been imposed, the garnishment form includes a “Pay This Amount” balance. The current balance due on this form includes the 20% collection assistance fee and interest up to the date of the service of the garnishment.

The employee’s name does not match with the social security number on the garnishment.

The employer should contact that Department at 1-888-352-0116 for instructions.

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