Instructions for Employers
An Attachment and Garnishment for Taxes may be served when our records indicate that you or your firm has a financial relationship with an individual that owes past-due taxes. An attachment and garnishment requires that you turn over monies (and any other intangible property) subject to the attachment and garnishment to the North Carolina Department of Revenue until the taxpayer’s debt is satisfied. Employers or other garnishees with questions concerning their responsibilities may review Employer’s Frequently Asked Questions or contact the Department at 1-888-352-0116. Taxpayers wanting to discuss or resolve their tax debt should contact a case resolution specialist at 1-877-252-3252.
NC Gen. Stat. §105-242(b) states:
Intangible property that belongs to a taxpayer, is owed to a taxpayer, or has been transferred by a taxpayer under circumstances that would permit it to be levied upon if it were tangible property is subject to attachment and garnishment in payment of a tax that is due from the taxpayer and is collectible under NC Gen. Stat. §105-241.22. Intangible personal property includes bank deposits, rent, salaries, wages, property held in the Escheat Fund, and any other property incapable of manual levy or delivery. NC Gen. Stat. §105-242.1 sets out the procedure for attachment and garnishment of intangible property.
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.
The Secretary may submit to a financial institution, as defined in NC Gen. Stat. §53B-2, information that identifies a taxpayer who owes a tax debt that is collectible under NC Gen. Stat. §105-241.22 and the amount of the debt. The Secretary may submit the information on a quarterly basis or, with the agreement of the financial institution, on a more frequent basis. A financial institution that receives the information must determine the amount, if any, of intangible property it holds that belongs to the taxpayer and must inform the Secretary of its determination. The Secretary must reimburse a financial institution for its costs in providing the information, not to exceed the amount payable to the financial institution under NC Gen. Stat. §110-139 for providing information for use in locating a non-custodial parent.
No more than ten percent (10%) of a taxpayer's wages or salary is subject to attachment and garnishment. The wages or salary of an employee of the United States, the State, or a political subdivision of the State are subject to attachment and garnishment.
NC Gen. Stat. §105-242.1 states:
(a) Notice. – NC Gen. Stat. §105-242 specifies when intangible property is subject to attachment and garnishment. Before the Department attaches and garnishes intangible property in payment of a tax, the Department must send the garnishee a notice of garnishment. The notice must be sent in accordance with the methods authorized in NC Gen. Stat. §105-241.20 or, with the agreement of the garnishee, by electronic means. The notice must contain all of the following information, unless the notice is an electronic notice subject to subsection (a1) of this section:
(1) The taxpayer's name
(2) The taxpayer's social security number or federal identification number.
(3) The amount of tax, interest, and penalties the taxpayer owes.
(4) An explanation of the liability of a garnishee for tax owed by a taxpayer.
(5) An explanation of the garnishee's responsibility concerning the notice.
(a1) Electronic Notice - Before the Department sends an electronic notice of garnishment to the garnishee, the Department and the garnishee must have an agreement that establishes the protocol for transmitting the notice and provides the information required under subdivisions (4) and (5) of subsection (a) of this section. An electronic notice must contain the information required under subdivisions (1), (2), and (3) of subsection (a) of this section.
(b) Action. – A garnishee must comply with a notice of garnishment or file a written response to the notice within the time set in this subsection. A garnishee that is a financial institution must comply or file a response within 20 days after receiving a notice of garnishment. All other garnishees must comply or file a response within 30 days after receiving a notice of garnishment. A written response must explain why the garnishee is not subject to garnishment and attachment. A written response must explain why the garnishee is not subject to attachment and garnishment.
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.
(c) Release. – A notice of garnishment sent to a financial institution is released when the financial institution complies with the notice. A notice of garnishment sent to all other garnishees is released when the Department sends the garnishee a notice of release. A notice of release must state the name and social security number or federal identification number of the taxpayer to whom the release applies.
(d) Financial Institution. As used in this section, the term 'financial institution' has the same meaning as in NC Gen. Stat. §53B-2.
- 10% of an employee’s gross salary or wages must be withheld and remitted on a monthly basis until paid in full.
- All other types of property, such as contract payments, bank deposits, rents, etc. are subject to 100% attachment and garnishment and should be remitted upon receipt of the garnishment or when due to be paid to the taxpayer.
- The Department will furnish written notification that the garnishment has been released when the liability is paid in full or is withdrawn by the Department. You are required to continue withholding funds until you receive a written release from the Department.
- Financial Institutions as defined in NC Gen. Stat. §53B-2 are released from garnishment upon complying with the notice.
- If the employee separates from your employment, you are required to notify the Department immediately. Please mail or fax the garnishment with a completed Separation of Employment Notification Coupon. You must withhold under the terms of the garnishment from any remaining wages due and owing to the employee.
- Garnishment payments withheld should be remitted to the Department of Revenue every 30 days.
- You are encouraged to make the payments online at www.dornc.com. Click on Collections Past Due Taxes under Quick Links. This is the best way of ensure payments are posted timely and accurately. The Department accepts Visa or Mastercard credit/debit cards and bank draft payments through its web site. Payments through bank draft are free.
- Payments can be made by telephone at 1-877-252-3252 using bank draft, debit or credit card.
- If you do not wish to pay electronically, you must include information to clearly identify the taxpayer's account with each payment. Enclosed you will find a set of Garnishment Payment Coupons that must be fully completed and returned with each payment. You may print additional coupons from our website. Payments and remittance coupons should be addressed as follows:
Wage Garnishment Processing Unit
NC Department of Revenue
PO Box 25000
Raleigh, NC 27640-0150