Employers and Income Withholding
- Allocation Calculator (Updated as of May 21, 2013)
- Definition of Income Withholding
- Documents Sent to the Employer
- Method of Service
- Employer Responsibilities
- Employer Compliance with an Order/Notice
- Definition of Income
- Withholding Calculations
- Definition of Disposable Income
- Definition of Allowable Disposable Income
- Income Withholding and the CCPA
- Multiple Orders/Notices to Withhold-Same Employee and Same Child
- Multiple Orders/Notices to Withhold-Same Employee and Different Children
- Insufficient Income to Withhold Ordered Amounts
- Example: Illinois Allocation Method
- IRS Tax Levy and Child Support
- Other Garnishments and Child Support
- Bankruptcy and Child Support
- Submitting Payments
- Other state SDU Addresses
- Penalties for Noncompliance
Allocation CalculatorUse the Allocation Calculator to simplify the calculations involved in withholding the correct amounts for each order.
Macros should be enabled to allow the buttons on the calculator to operate correctly.
Definition of Income WithholdingIncome withholding is the court or administratively ordered deduction of a specified amount from a parent's income for payment of child support.
Documents Sent to the EmployerAll employers must honor an Order/Notice - Income Withholding for Support from any state. Out-of-state Orders/Notices are valid throughout the country, including U.S. territories.
The federal government requires all states to use a universal form. Illinois state law 305 ILCS 5/10-16.2 allows for the use of a universal Order/Notice - Income Withholding for Support to be sent to employers for purposes of income withholding for child support.The Order/Notice - Income Withholding for Support provides the following information:
- Employee's name, address, IV-D case number, support order number and Social Security number
- Begin date of the support order
- Various pay cycles to enable the employer to comply with Orders/Notices without varying their pay cycles
- Dollar amount required to be withheld for current support
- Dollar amount required to be paid periodically for payment of any past-due support
- Total amount to be withheld and the frequency for withholding
- Any required premium to be withheld if enrollment for a child as a beneficiary of a health insurance plan is required and, if applicable
- Name and address where the employer must send withheld payments
- Order/Notice - Income Withholding for Support (Illinois Form HFS 3683)
- Employer IWN Cover Letter (Illinois Form HFS 3598)
- National Medical Support Notice (Illinois Form HFS 3554)
- Health Insurance Reports, if employer or union-related health insurance is ordered (Illinois Form HFS 1442)
- HIPPA Privacy Letter (Illinois Form HFS 3570)
Termination of WithholdingA Terminate Withholding Packet is used to inform an employer that the employee's income should no longer be withheld, when the Order is no longer in effect and all balances are zero. In Illinois, the Termination notice is the same form as the Income Withholding for Support notice (HFS 3683) and specifies the date on which withholding should stop.
The Illinois Department of Healthcare and Family Services or the issuing agency sends the employer the following forms (as applicable):
- Order/Notice-Income Withholding for Support (Illinois Form HFS 3683)
- Employer IWN Cover Letter (Illinois Form HFS 3598)
Note: When an employer receives these forms from an out-of-state agency, they will have different numbers but similar formatting and content.
Method of ServiceThe Order/Notice - Income Withholding for Support and any accompanying documents may be served on an employer by:
- First-class mail;
- Certified mail, return receipt requested;
- Facsimile transmission or other electronic means;
- Personal delivery; or
- Other method provided by law for service of a summons.
Employer ResponsibilitiesUpon receipt of the Order/Notice - Income Withholding for Support, the employer should:
- Date stamp the documents;
- Determine if the order is "authentic;"
That is, it appears to be an authentic and complete legal document. It should include:
- The amount of child support;
- Terms for past-due support (if applicable);
- Medical support terms (if ordered); and
- Where to remit the payments.
- Give a copy of the Order/Notice to the employee if it has been issued by another state;
- Follow the terms of the order; and
- Assess fees as appropriate. (Under Illinois law, the employer can deduct and retain up to a $5 per month fee from each employee for withholding of income. The employer deducts the fee from the employee's remaining income, not the support payment.)
Employer Compliance with an Order/Notice - Income Withholding for SupportOnly the employee has the right to dispute the terms of an Order/Notice - Income Withholding for Support. To contest the Order/Notice, the employee must contact the issuing agency or tribunal.
If the employer is unable to implement the withholding either because the individual named in the Order/Notice is no longer an employee or never was an employee, the employer completes the section entitled "Notification Of Employment Termination Or Income Status" of the Order/Notice and returns a copy of the page to the department or other issuing agency. If the employer is unable to implement the Order/Notice because withholding is already in place for the child based on another state's Order/Notice, the employer should contact the issuing agency.The employer must:
- Follow the issuing state's laws regarding:
- Duration and amount of child support - current and past-due;
- Medical support terms;
- Where to remit payments; and
- Payment of fees and costs charged (if any) by the child support enforcement
agency, issuing court or custodial party's attorney.
- Follow the state laws of the employee's principal place of employment regarding:
- When to begin withholding;
- When to remit payments (this can be from 1 to 7 business days after payday);
- Mandatory deductions;
- Maximum amount to be withheld (within Consumer Credit Protection Act limits);
- How to allocate withholding across multiple child support orders;
- Administrative fee the employer is permitted to charge; and
- Other terms and conditions that may be set by state law.
Note: states provide instructions and contact information with each Order/Notice.
Definition of IncomeIncome is defined as any periodic form of payment due an individual, regardless of source, including wages and salaries, commissions, bonuses, Workers' Compensation, disability, payments pursuant to a pension or retirement program, severance pay and interest. Under Illinois law, the term "income" excludes certain amounts that cannot be considered when determining pay available for child support withholding. The following amounts are excluded as income:
- Federal taxes
- State taxes
- Local taxes
- Social Security (FICA)
- Required disability contributions
- Required retirement contributions
- Mandatory union dues
- Mandated health insurance
Withholding CalculationsThere are two basic steps to determine how much to withhold for child support from an employee's income:
- Calculating disposable income
- Calculating allowable disposable income
Use the new Allocation Calculator to simplify the calculations involved in withholding the correct amounts for each order. Macros should be enabled to allow the buttons on the calculator to operate correctly.
Definition of Disposable IncomeDisposable income is the amount of earnings remaining after subtracting certain mandatory deductions from an employee's gross pay. (See Definition of Income above.) Disposable income is not necessarily the same as net pay. An employee may have a deduction taken from his or her pay that is not mandatory, such as voluntary union dues or a loan payment.
Note: Disposable Income = gross pay - mandatory deductions Definition of Allowable Disposable Income
Definition of Allowable Disposable IncomeAllowable disposable income is the maximum amount available for child support withholding. In most cases, the amount ordered to be withheld will be less than the allowable disposable income amount, and the ordered amount can be withheld without any problem. Even if the withholding order specifies a higher payment, the allowable disposable income is the most that may be withheld.
Note: Allowable Disposable Income = disposable income x CCPA % limit
Income Withholding and the CCPAThe federal Consumer Credit Protection Act (CCPA) sets limits on withholding from an employee's disposable income based on his/her current family situation and child support payment history. The CCPA protects the employee from having an excessive amount withheld. Although most states follow the federal limits, some states have enacted laws that provide even more protection of the employee's income. Employers may direct questions regarding lump-sum or irregular payments to the child support enforcement agency or court that issued the Order/Notice - Income Withholding for Support. The withholding limits set by the CCPA, and adopted by Illinois, are:
|A dependent means there is a child and/or spouse for whom the employee has responsibility. "In arrears" means the non-custodial parent owes past-due, unpaid support.|
|50%||If the non-custodial parent has other dependents and owes no arrearages or is less than 12 weeks in arrears|
|55%||If the non-custodial parent has other dependents and is over 12 weeks in arrears|
|60%||If the non-custodial parent has no additional dependents and owes no arrearage or is less than 12 weeks in arrears|
|65%||If the non-custodial parent has no other dependents and is over 12 weeks in arrears|
Multiple Orders/Notices to Withhold - Same Employee and Same ChildThe employer should honor only one withholding order for current support for a child. When an employer receives more than one order for a child, the issuing agencies, not the employer, are responsible for resolving this issue. If an employer is withholding on one order and subsequently receives a second order for the same child, the employer should:
- Continue to honor the first order received;
- Give the employee a copy of the second order;
- Contact the issuing agency that sent the second withholding order and:
- Advise that payments are already being withheld for the child named in the order and are being sent to another jurisdiction; and
- Provide payment information such as the amount of the withholding and where the withholding is being sent; and
- Contact the issuing agency that sent the first withholding order and advise of the second order.
Multiple Orders/Notices to Withhold - Same Employee and Different ChildrenAn employer may receive multiple Order/Notices - Income Withholding for Support for the same non-custodial parent (different children/families). Federal regulations require that if the payment withheld is not sufficient to cover the full amount of current support due for all the Orders/Notices, each family must receive some portion of the payment. States have laws/procedures specifying how the payment should be allocated among the families. When an employer receives multiple Orders/Notices for the same non-custodial parent and Illinois is the employee's principal place of employment, the employer must withhold according to Illinois law for allocating payments. The employer must not withhold on a "first-come, first-served" basis. (See Example: Illinois Allocation Method below.) An employer must withhold and pay over child support before all other garnishments, with one exception. The only withholding that takes precedence over a child support withholding is a federal (IRS) tax levy entered before the underlying child support order was established. When determining precedence, the employer must consider the date the underlying child support order was established and not the date the Order/Notice was served on the employer. (See discussion of IRS Tax Levy and Child Support below.)
Insufficient Income to Withhold Ordered AmountsIf the income available for withholding under the federal Consumer Credit Protection Act is insufficient to cover the total child support payment(s), as ordered, then the employer withholds amounts, using the following priorities:
- Current child support
- Health coverage premium
- Past due support
- Notice of Levy (wage garnishment)
If there is enough allowable disposable income to pay multiple orders, the employer withholds and pays over the full amount of all obligations due for each order. Sometimes, however, an employee's earnings do not stretch far enough to pay all of his or her obligations. If there is not enough allowable disposable income, the employer follows the allocation method of the employee's principal state of employment to determine how much to withhold and pay over for each order. Illinois law requires the employer to prorate the withholding by allocating a percentage to each order based on the total dollar amount of current support ordered.
Example: Illinois Allocation Method
|Assume the employee's allowable disposable income is $180.|
|Case Facts||Monthly Income/Payment|
|Order A current support:||$ 90|
|Order B current support:||$ 75|
|Order B past due support:||$ 15|
|Order C current support:||$ 62|
|There is not enough allowable disposable income ($180) for the employer to withhold the entire amount of current support due for all three orders ($227). The employer cannot withhold for the past due support payment.|
|Withholding Type||Total Monthly Withholdings|
|Total current support:||$227|
|Total past due support:||$ 15|
Allocation:The employer allocates a percentage of the payment to each order based on the total dollar amount of all of the current support obligations. First, the employer adds the total current support due on all withholding orders. ($227) Next, the employer divides the current monthly support amount for each order by 227 to obtain the allocation percentage to apply to the allowable disposable income.
|Order A||$90.00 ÷ 227 = 39.65%|
|Order B||$75.00 ÷ 227 = 33.04%|
|Order C||$62.00 ÷ 227 = 27.31%|
The employer then multiplies the $180 allowable disposable income figure by the applicable percentage to obtain the payment for each order.
|Order A||$180 x 39.65% = $71.37|
|Order B||$180 x 33.04% = $59.47|
|Order C||$180 x 27.31% = $49.16|
IRS Tax Levy and Child SupportAn IRS tax levy takes precedence over a child support withholding order only if the tax levy was entered before the child support order was established. The priority determination between a child support withholding order and an IRS tax levy depends on the date the original child support order (as opposed to the Order/Notice - Income Withholding for Support) was established.
If the employer does not have the original order date (the underlying order, not the Order/Notice - Income Withholding for Support), the department recommends the following:
- If the employer receives an Order/Notice - Income Withholding for Support for an employee who already has a federal tax levy in place, the employer will contact the issuing child support agency. The child support agency can then contact the IRS to discuss an alternate payment plan.
- If the employer receives a federal tax levy for an employee who already has a child support withholding order in place, the employer will contact the IRS and tell them a withholding order is already being honored. The IRS may then elect to contact the issuing child support agency.
- Assignment of wages
- Non-tax federal debt
- State and local tax levies
- Creditor garnishment
- Federal tax levy after the child support order date
Other Garnishments and Child SupportAn employer must withhold on an Order/Notice - Income Withholding for Support before any other garnishment. When an employer is ordered to withhold income for child support and a garnishment is also in place, the employer:
- Deducts the child support withholding from the employee's wages; and
- Determines the lesser amount of:
- The difference between the weekly disposable income (before the child
support withholding) and 30 times the minimum wage [30 x $8.25 = $247.50]
- If the income is paid biweekly, multiply the minimum wage times 60 [60 x $8.25 = $495].
- If the biweekly disposable income is less than $495 or the weekly income is less than $247.50, no withholding for garnishment may be made.
- Or 25% of the weekly disposable income.
- The difference between the weekly disposable income (before the child support withholding) and 30 times the minimum wage [30 x $8.25 = $247.50]
For examples of how to apply these guidelines, see the Federal Office of Child Support Enforcement's Employer Services Web site.
Bankruptcy and Child SupportEven if an employee declares bankruptcy, he or she is still obligated to pay child support. Debts due for delinquent child support are not dischargeable in bankruptcy actions. An employer may be notified, however, that it is no longer responsible for withholding the payments because a trustee of the bankruptcy court has taken over this task.
The employer should continue the withholding until official notification from the agency or bankruptcy court is received. The employer should also notify the child support agency that a bankruptcy order has been received and notify the bankruptcy court that a child support order is in place. The employer must always follow the payment instructions received from the bankruptcy court.
Submitting PaymentsFederal regulations require employers to submit child support withheld within seven (7) business days of the scheduled pay date or the date the income would have been paid or credited to the employee. The issuing agency provides specific instructions for submitting payments on the Order/Notice - Income Withholding for Support and will send subsequent notification when an employer should redirect payments.
Unless otherwise directed in the Order/Notice employers should submit income withholding payments to:
P.O. Box 5400
Carol Stream, IL 60197-5400
When directing payments to the Illinois State Disbursement Unit, the employer must provide the following information for each payment for each separate order:
- The Illinois court where the order was entered
- The case/docket number
- The employee's name
- The employee's Social Security number
- The payment amount for each employee and each case/docket number if the employee has more than one order
Employers who withhold for several employees may combine all amounts withheld into a single payment. The employer must send with the remittance a listing of the employees' names and provide all the information as listed above for each withholding.
The employer continues withholding amounts stated in the Order/Notice until the termination date or until service of a new Order/Notice for the same child(ren).
The termination date for required deductions from the employee's income pertains only to the current child support amount and does not apply to arrearages or delinquencies.
When Illinois is the issuing agency and an employee leaves or is terminated, the employer completes the section entitled "Notification Of Employment Termination Or Income Status" of the Order/Notice - Income Withholding for Support and returns a copy of the form to the department. When another state is the issuing agency, the employer will follow the instructions provided with the Order/Notice.
Other State SDU AddressesFor information about requirements of other states' disbursement unit view the U.S. Department of Health and Human Services Administration for Children and Families Web site.
Penalties for NoncomplianceIf an employer willfully fails to withhold or pay over income pursuant to a properly served Order/Notice - Income Withholding for Support, that employer may be held liable for the total amount willfully not withheld or paid over.
If an employer knowingly fails to pay any amounts withheld within seven (7) business days of the date income is paid/credited to the employee, the employer may be subject to a penalty of $100 for each day that the withheld amount is not paid to the obligee or public office after the period of seven (7) business days has expired.
Failure of an employer, on more than one occasion, to pay an amount withheld to the obligee or public office within seven (7) business days of the date the income is to be paid/credited to the employee creates a presumption that the employer knowingly failed to pay the amounts.
An employer cannot discharge, discipline, or refuse to hire, or otherwise penalize an employee because of the employer's duty to withhold child support obligations. If an employer does so, the employer may be ordered to reinstate and/or provide restitution to the employee and may be fined up to $200.