Question regarding federal and state tax levy.

[taxdude71]

I have a client that currently has a tax levy filed against his wages. He was recieving the federal mandated amount exempt from levy. The state of Wisconsin also filed a levy against his wages. The accountant that is in charge of payroll has decieded to withold for the WI levy in addition to the federal levy. So instead of getting $365 take home he will be getting around $270. I think this is wrong, but have had very little in the way of help from the state of Wisconsin. Anyone out there run into something like this? Is this right, or should be still get the $365?

[Nashville]

First Come, First Serve

All payrolls that I have had involvement with have been on the "first come, first serve" basis. The Federal mandated exempt amount should not be compromised. If there were multiple garnishments or levies, and employee was already down to the exempt amount, I would not accept any further garnishments, and answer to the creditor would be that his claim was pre-empted to the extent that could not be reduced further.

There may be an order of priority to various types of levies, such as child support may supplant a creditor's garnishment, etc. but if this is the case, leave this to the courts to slug it out. A garnishment/levy should not be accepted without a court order or other governmental writ to begin with.

But I will add that ALL of my experience has been in Tennessee and Alabama - don't know a thing about anything different which may exist in Wisconsin.

[taxmandan]

The payroll accountant may be right, your state may have a lower exempt amount than the federal. You should be able to find out from the WI labor/employment office what that amount is that he can keep, or it may even be on the levy paperwork from the state.