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Private Employer Frequently Asked Questions on Income Withholding

Published: July 1, 2011
Information About:
Employers
Topics:
Income/Wage Withholding
Types:
FAQs

1. Is there a maximum amount of money that may be withheld from an employee's paycheck?

Yes, for all income withholdings, the upper limit on what may be withheld is based on the Federal Consumer Credit Protection Act (CCPA). The federal withholding limits for child support and alimony are based on the disposable earnings of the employee.

The Federal CCPA limit is 50% of the disposable earnings if the employee supports a second family and 60% if the employee does not support a second family. These limits increase to 55% and 65% respectively if the employee owes arrearages that are 12 weeks or more past due.

States may choose a lower limit. Check with your state to determine exact limits. (About two-thirds of the states use the federal limits, and about one-third cap the withholding at 50% regardless of second families or arrearage amount.)

2. How soon must employers send the child support payment that was withheld from an employee's paycheck?

Employers need to send payment of the withheld wages within seven (7) business days, at the most, of paying wages to the employee. The state where the employer is located may set a shorter time limit for submitting the payment.

3. What should the employer do if the employee tells the employer the withholding is for the wrong amount or that income should not be withheld?

The employee should contact the state child support enforcement agency or court that issued the order if he/she disputes it. The employer should make it clear that by law, until the employer is otherwise notified, the employer must comply with the terms of the withholding order as issued.

4. May employers combine the child support payments from several employees into one check?

Yes, employers may send one check each pay period to cover all child support withholdings for that pay period if:

They are all being sent to the same State Disbursement Unit (SDU), and the employer itemizes the amount withheld from each employee, the date each amount was withheld, and a required identifier such as the case number.

5. Must all payments be sent to the SDU?

Yes, all payments withheld by employers/income withholders must be sent to the SDU, except those issued by a Tribal child support agency or those entered before January 1, 1994. This applies to those orders enforced by a child support enforcement (CSE) agency and those orders resulting from divorces or private court actions. Payments for spousal support only are not generally paid to the SDU although some states do allow it.

6. How will the employer know when to stop income withholding for an employee?

The employer should continue withholding until the child support enforcement (CSE) agency or court notifies the employer to change or stop the withholding.

7. Income withholding requires extra paperwork for the employer. May the employer charge a processing fee to the employee?

Most states allow the employer to charge the employee an administrative fee for processing the income withholding. Employers may contact their child support enforcement (CSE) agency to learn what the administrative fee is in their state. Note that the total amount the employer withholds for child support plus fees may not exceed the maximum amount permitted under the Federal Consumer Credit Protection Act (CCPA).

8. What if the fee plus the child support payment exceeds the maximum allowable amount under CCPA?

If the fee plus the child support exceeds the maximum amount allowed to be withheld under the CCPA, the employer may take the entire amount of its administrative fee and make the child support payment less than the amount in the IWO. The amount of support that was not paid (because the employer deducted the administrative fee) becomes part of the arrears owed by the noncustodial parent.

9. The employer received an IWO from a child support enforcement (CSE) agency in another state. Must the employer send payments directly to the other state?

Yes. Under the Uniform Interstate Family Support Act (UIFSA), employers are required to honor an IWO from another state as long as the order appears to be "regular on its face."

10. What does "regular on its face" mean?

"Regular on its face" means that any reasonable person would think it is valid. The 2011 version of the IWO form clarifies this term by saying that an IWO is regular on its face

  • if it is payable to the SDU,
  • if required, a copy of the underlying order containing an income withholding clause is included,
  • the amount to withhold is a dollar amount,
  • the form has not been altered nor has invalid information been entered, and
  • it contains all of the necessary information to process the IWO.

Effective May 31, 2012, the IWO must be on the federal form, OMB 0970-0154, to be "regular on its face".

11. How does the employer handle child support withholding when the employee already has garnishments or other income attachments against the paycheck?

Child support withholdings take priority over all other claims against the same wages except federal tax liens that were entered before the child support order was established. When there are garnishments or income attachments other than federal tax liens, the employer may honor the garnishments or income attachments only after satisfying the child support obligation (to the maximum allowed limit of the CCPA). If the allowable limit for the other type of garnishment has been reached, there may be no funds available to apply to the second garnishment.

12. What should the employer do if it has received both an Internal Revenue Service (IRS) levy and a child support IWO for an employee?

The employer should notify the Child Support Enforcement Agency that a federal tax (IRS) levy was received in addition to the IWO. The child support enforcement (CSE) agency can inform the employer if the underlying child support order was in fact established prior to the date that the IRS levy was entered. If the underlying order was not established prior to the IRS levy, the child support agency should then contact the IRS to determine if the levy may be modified to allow withholding of any child support.

13. If I have additional questions, where can I find answers?

You can find more answers on the Employer Services page. You may also email the Employer Services Team at employerservices@acf.hhs.gov.