Ignoring your state tax obligation sets the stage for state collection efforts, including wage garnishments. Moving out of state does not protect you from the debt, nor will it prevent a wage garnishment if the state you owe taxes in chooses to pursue the debt. Understanding how garnishments for taxes work and what to do about them will help you avoid financial trouble.
Incurring the Debt
When you work in a state that collects state income tax, a portion of your paycheck is calculated and sent to the state department of revenue each pay period. Claiming too many dependents, self-employment and your filing status all impact the amount you must pay in state income tax. Paying less than you are responsible for results in a debt for state income tax.
Moving to Another State
Moving out of state, whether in an attempt to avoid the tax debt, or simply as a life or work decision, does not absolve the debt. You remain liable until the debt is paid in full or a court removes your liability. The state in which you owe taxes simply has to track your employment through investigation, Social Security number searches and other means. Once the state locates your employment, it will move to garnish your wages.
No Court Order Needed
State and other government entities differ from typical creditors, in that they do not need to appear in a local court and obtain a wage garnishment order. The state in which you owe the taxes has the ability to perform a manual garnishment, which takes little more than preparing the garnishment paperwork and presenting it to your employer. Once presented with the garnishment order, your employer has no choice but to comply or the state you owe will take the money from the employer. In some cases, a refusal to comply with a state garnishment order can be prosecuted criminally.
What They Can Take
Each state sets its own limits regarding how much of a paycheck can be taken for a garnishment. Generally, the law allows 25 percent of your disposable income to be removed from your check and sent to a creditor. Disposable income is the money you receive after taxes, Social Security and any other legally mandated monies are withheld. State tax debts take precedence over all other garnishments except federal tax debt. Though most state tax garnishments call for a 25 percent garnishment, state and federal tax debts are not bound by a limit and can take as much as it desires from your paycheck. Resolving your state tax debt after you move from the state is the best way to avoid complications including the garnishment of your wages in your new state.
- CarreonandAssociates.com: Wage garnishment laws, earnings protection & seeking help
- Bankrate.com: How wage garnishment works By Jenny C. McCune; September 2002
- Department of Labor. "Garnishment." Accessed Feb. 13, 2020.
- Michigan Legal Help. "An Overview of Garnishment." Accessed Feb. 13, 2020.
- Cornell Law School Legal Information Institute. "Consumer Credit Protection Act of 1968 -15 U.S. Code § 1673.Restriction on Garnishment." Accessed Feb. 13, 2020.
- Cornell Law School Legal Information Institute. "Consumer Credit Protection Act of 1968 - 15 U.S. Code § 1672.Definitions." Accessed Feb. 13, 2020.
- Department of Labor. "Fact Sheet 30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III," Page 2. Accessed Feb. 13, 2020.
- United States Department of Labor. "Minimum Wage." Accessed Feb. 13, 2020.
- Department of Labor. "Fact Sheet 30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III," Page 3. Accessed Feb. 13, 2020.
- California Courts. "If You Do Not Pay Your Judgment." Accessed Feb. 13, 2020.
- Office of the U.S. Courts. "Discharge in Bankruptcy – Bankruptcy Basics." Accessed Feb. 13, 2020.
- Cornell Law School Legal Information Institute. "United States Bankruptcy Code - 11 U.S. Code § 523.Exceptions to Discharge." Accessed Feb. 13, 2020.
Candace Webb has been writing professionally since 1989. She has worked as a full-time journalist as well as contributed to metropolitan newspapers including the "Tennessean." She has also worked on staff as an associate editor at the "Nashville Parent" magazine. Webb holds a Bachelor of Arts in journalism with a minor in business from San Jose State University.