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Income Withholding

Definitions Specific to Income Withholding

A payor of funds is any person or entity that provides funds to an obligor, including an employer, an independent contractor, payor of worker's compensation benefits or unemployment benefits, or a financial institution.

Business day means a day on which state offices are open for regular business.

Arrears are amounts owed under a support order that are past due.

Order Requirements

Every support order must address income withholding. Whenever a support order is initially entered or modified, the full amount of the support order must be subject to income withholding from the income of the obligor. If the obligee or obligor applies for either full IV-D services or for income withholding only services from the public authority responsible for child support enforcement, the full amount of the support order must be withheld from the income of the obligor and forwarded to the public authority.

A payor of funds is required to implement income withholding on receipt of an order for or notice of withholding. The notice must be on a form provided by the commissioner of human services.

Collection Services

Either the obligee or obligor may at any time apply to the public authority for either full IV-D services or for income withholding only services.

For those persons applying for income withholding only services, a monthly service fee of $15 must be charged to the obligor. This fee is in addition to the amount of the support order and is withheld through income withholding. The public authority will encourage the application for full child support collection services.

If the obligee is not a current recipient of public assistance, the person who applied for services may at any time choose to terminate either full IV-D services or income withholding only services regardless of whether income withholding is currently in place. The obligee or obligor may reapply for either full IV-D services or income withholding only services at any time. Unless the applicant is a recipient of public assistance, a $25 application fee is charged at the time of each application.

When a person terminates IV-D services, if an arrearage for public assistance exists, the public authority may continue income withholding and use any other enforcement remedy for the collection of child support, until all public assistance arrears are paid in full. Income withholding is an amount equal to 20 percent of the support order in effect at the time the services terminated.

Payor of Funds Responsibilities

An order for or notice of withholding is binding on a payor of funds upon receipt. Withholding must begin no later than the first pay period that occurs after 14 days following the date of receipt of the order for or notice of withholding. In the case of a financial institution, preauthorized transfers must occur in accordance with a court-ordered payment schedule.

A payor of funds withholds the amount specified in the order or notice of withholding and amounts specified by law and remits the amounts withheld to the public authority within seven business days of the date the obligor is paid the remainder of the income. The payor of funds indicates the Social Security number of the obligor, the case type indicator as provided by the public authority, and the date the obligor is paid the remainder of the income. The obligor is considered to have paid the amount withheld as of the date the obligor received the remainder of the income.

A payor of funds may combine all amounts withheld from one pay period into one payment to each public authority, but must separately identify each obligor making payment.

A payor of funds cannot discharge, or refuse to hire, or otherwise discipline an employee as a result of wage or salary withholding authorized by the income withholding statutes. A payor of funds is liable to the obligee for any amounts required to be withheld. A payor of funds that fails to withhold or transfer funds is also liable to the obligee for interest on the funds at the rate applicable to judgments, computed from the date the funds were required to be withheld or transferred.

A payor of funds is liable for reasonable attorney fees of the obligee or public authority incurred in enforcing the liability. A payor of funds that has fails to comply with the requirements is subject to contempt sanctions. If the payor of funds is an employer or independent contractor, a court may award the obligor twice the wages lost as a result of a violation. If a court finds a violation, the court will impose a civil fine of $500 or more.

If a single employee is subject to multiple withholding orders or multiple notices of withholding for the support of more than one child, the payor of funds must comply with all of the orders or notices to the extent that the total amount withheld from the obligor's income does not exceed the limits imposed under the Consumer Credit Protection Act. The law gives priority to amounts designated in each order or notice as current support as follows:

  1. if the total of the amounts designated in the orders for or notices of withholding as current support exceeds the amount available for income withholding, the payor of funds allocates to each order or notice an amount for current support equal to the amount designated in that order or notice as current support, divided by the total of the amounts designated in the orders or notices as current support, multiplied by the amount of the income available for income withholding; and
  2. if the total of the amounts designated in the orders for or notices of withholding as current support does not exceed the amount available for income withholding, the payor of funds pays the amounts designated as current support, and allocates to each order or notice an amount for past due support, equal to the amount designated in that order or notice as past due support, divided by the total of the amounts designated in the orders or notices as past due support, multiplied by the amount of income remaining available for income withholding after the payment of current support.

When an order for or notice of withholding is in effect and the obligor's employment is terminated, the obligor and the payor of funds notifies the public authority of the termination within 10 days of the termination date. The termination notice includes the obligor's home address and the name and address of the obligor's new payor of funds, if known.

A payor of funds may deduct one dollar from the obligor's remaining salary for each payment made pursuant to an order for or notice of withholding to cover the expenses of withholding.

Financial Institutions

If income withholding is ineffective due to the obligor's method of obtaining income, the court orders the obligor to identify a child support deposit account owned solely by the obligor, or to establish an account, in a financial institution located in Minnesota for the purpose of depositing court-ordered child support payments. The court orders the obligor to execute an agreement with the appropriate public authority for preauthorized transfers from the obligor's child support account payable to an account of the public authority.

The court orders the obligor to disclose to the court all deposit accounts owned by the obligor in whole or in part in any financial institution. The court may order the obligor to disclose to the court the opening or closing of any deposit account owned in whole or in part by the obligor within 30 days of the opening or closing. The court may order the obligor to execute an agreement with the appropriate public authority for preauthorized transfers from any deposit account owned in whole or in part by the obligor to the obligor's child support deposit account if necessary to satisfy court-ordered child support payments. The court may order a financial institution to disclose to the court the account number and any other information regarding accounts owned in whole or in part by the obligor.

An obligor who fails to comply or stops payment or revokes authorization of any preauthorized transfer is subject to contempt of court procedures.

The financial institution executes preauthorized transfers for the deposit accounts of the obligor in the amount specified in the order. A financial institution is liable to the obligee if funds in any of the obligor's deposit accounts identified in the court order equal the amount stated in the preauthorization agreement but are not transferred by the financial institution in accordance with the agreement.

Subsequent Income Withholding

For cases in which the public authority is providing child support enforcement services to the parents, the income withholding takes effect without prior judicial notice to the obligor and without the need for judicial or administrative hearing.

Withholding happens when:

  1. the obligor asks the public authority in writing;
  2. the obligee or obligor serves on the public authority a copy of the notice of income withholding, a copy of the court's order, an application, and the fee to use the public authority's collection services; or
  3. the public authority commences withholding according to Minnesota law.

For cases in which the public authority is not providing child support services to the parents, income withholding takes effect when an obligee requests it by making a written motion to the court and the court finds that previous support has not been paid on a timely consistent basis or that the obligor has threatened expressly or otherwise to stop or reduce payments.

Within two days after the public authority commences withholding, the public authority sends to the obligor at the obligor's last known address, notice that withholding has commenced. The notice must include the information provided to the payor of funds in the notice of withholding.

Contesting Income Withholding

The obligor may contest withholding on the limited grounds that the withholding or the amount withheld is improper due to mistake of fact. If the obligor chooses to contest the withholding, the obligor must do so no later than 15 days after the employer commences withholding.

The income withholding must remain in place while the obligor contests the withholding.

If the court finds a mistake in the amount of the arrearage to be withheld, the court will continue the income withholding, but it will adjust the amount of the arrearage to be withheld in accordance with the mistake.

If more than one order for or notice of withholding exists involving the same obligor and child, the public authority enforces the most recent order or notice. An order for or notice of withholding that was previously implemented ends as of the date of the most recent order. The public authority notifies the payor of funds to withhold under the most recent withholding order or notice.

Arrearage Order

The court may order the payor of funds to withhold amounts to satisfy the obligor's previous arrearage in support order payments. This remedy does not exclude the availability of other remedies to enforce judgments. The employer or payor of funds withholds from the obligor's income an additional amount equal to 20 percent of the monthly child support or maintenance obligation until the arrearage is paid.

Notwithstanding any law to the contrary, funds from certain income sources, whether periodic or lump sum, are not exempt from attachment or execution upon a judgment for child support arrearage.

Absent an order to the contrary, if an arrearage exists at the time a support order would otherwise terminate, income withholding continues in effect or may be implemented in an amount equal to the support order plus an additional 20 percent of the monthly child support obligation, until all arrears have been paid in full.

Lump-Sum Payments

Before transmittal to the obligor of a lump-sum payment of $500 or more, including severance pay, accumulated sick pay, vacation pay, bonuses, commissions, or other pay or benefits, a payor of funds who has been served with an order for or notice of income withholding is required to do the following:

  1. notify the public authority of the lump-sum payment that is to be paid to the obligor;
  2. hold the lump-sum payment for 30 days after the date on which the lump-sum payment would otherwise have been paid to the obligor; and either
  3. on order of the court, and after a showing of past willful nonpayment of support, pay any specified amount of the lump-sum payment to the public authority for future support; or
  4. pay the lesser of the amount of the lump-sum payment or the total amount of the judgment and arrearages upon service by United States mail of a sworn affidavit from the public authority or a court order.

Interstate Income Withholding

On receipt of an order for support entered in another state and the specified documentation from an authorized agency, the public authority will implement income withholding. A payor of funds in Minnesota will withhold income under court orders for withholding issued by other states or territories.

An employer receiving an income withholding notice from another state is required to withhold and distribute the funds as directed in the withholding notice and apply the law of the obligor's principal place of employment when determining:

  • the employer's fee for processing an income withholding notice;
  • the maximum amount permitted to be withheld from the obligor's income; and
  • deadlines for implementing and forwarding the child support payment.

An obligor may contest withholding.

Order Terminating Income Withholding

An order terminating income withholding must specify the effective date of the order and reference the initial order or decree that establishes the support obligation and will be entered once the following conditions have been met:

  1. the obligor serves written notice of the application for termination of income withholding by mail upon the obligee at the obligee's last known mailing address, and a duplicate copy of the application is served on the public authority;
  2. the application for termination of income withholding specifies the event that terminates the support obligation, the effective date of the termination of the support obligation, and the applicable provisions of the order or decree that established the support obligation;
  3. the application includes the complete name of the obligor's payor of funds, the business mailing address, the court action and court file number, and the support and collections file number, if known; and
  4. after receipt of the application for termination of income withholding, the obligee or the public authority fails within 20 days to request a contested hearing on the issue of whether income withholding of support should continue clearly specifying the basis for the continued support obligation and, ex parte, to stay the service of the order terminating income withholding upon the obligor's payor of funds, pending the outcome of the contested hearing.

Termination by the Public Authority

If the public authority determines that income withholding is no longer applicable, the public authority notifies the obligee and the obligor of intent to terminate income withholding.

Five days following notification to the obligee and obligor, the public authority issues a notice to the payor of funds terminating income withholding, without a requirement for a court order unless the obligee has requested an expedited child support hearing.

Contract for Service

The public authority responsible for child support enforcement may contract for services, including the use of electronic funds transfer.

Waiver

If the public authority is providing child support and maintenance enforcement services and child support or maintenance is not assigned, the court may waive the income withholding requirements if:

  • one parent demonstrates and the court determines there is good cause to waive income withholding or to terminate a previous order for or notice of income withholding. The court will make written findings to include the reasons income withholding would not be in the best interests of the child. In cases involving a modification of support, the court must also make a finding that support payments have been timely made; or
  • the obligee and obligor sign a written agreement providing for an alternative payment arrangement that is reviewed and entered in the record by the court.

If the public authority is not providing child support and maintenance enforcement services and child support or maintenance is not assigned, the court may waive income withholding if the parents sign a written agreement.

If the court waives income withholding, the obligee or obligor may at any time request income withholding.

Nonliability for Payor of Funds

A payor of funds who complies with an income withholding order or notice of withholding that appears regular on its face is not subject to civil liability to any individual or agency for taking action in compliance with the order or notice.

Electronic Transmission

Orders or notices for withholding may be transmitted for enforcement purposes by electronic means.

Timing of Automated Enforcement Remedies

The public authority must make reasonable efforts to ensure that automated enforcement remedies take into consideration the statutory time periods.