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#1967454 - 10/07/14 01:51 PM Garnishment/Levy/Federal Benefits-Is this correct?
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Joined: Nov 2008
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In the mountains
Is this correct? -

The rules for garnishment of federal benefits always applies except for requests from the United States and state child support enforcement agencies. However, these must still include in the request the "Notice of Right to Garnish Federal Benefits". If the notice is not included in the request, then we must conduct a "look back" and determine if there is a "protected amount".

Therefore -

> Child Support Enforcement - exempt if notice is present
> Execution/Garnishment General Sessions Court - applies
> Department of Revenue Levy - applies - even if instructions state that funds are payable immediately - we still have two days per the following footnote in the exam manual - Financial institutions will not violate state law by utilizing the two-day period because the rule preempts any state requirement
that an order be processed on the day of receipt. See 78 FR at
32104.
> IRS Levy - exempt because US and will not include the required notice (because the IRS can do whatever they want smirk )

We can assess our fee for processing the requests if we disclose in some manner (is included in our TIS) ahead of the garnished/levied amount, but never against the protected amount; except for IRS Levies where they specifically state that we cannot subtract a processing fee from the amount we send them.

Thanks in advance for your help...
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#1967772 - 10/07/14 07:52 PM Re: Garnishment/Levy/Federal Benefits-Is this correct? Likes to Comply
John Burnett Offline
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John Burnett
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You can assess your processing fee ahead of or from the garnished amount if state law says that is what you can do.

The IRS is exempt because the regulation says it is exempt, not because it can do whatever it wants.

Only direct deposited benefits may become protected funds, and only those with the required identifying characters in their ACH records.

Funds transferred out of the original receiving deposit account lose any protected status under the regulation.
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#1967776 - 10/07/14 07:56 PM Re: Garnishment/Levy/Federal Benefits-Is this correct? Likes to Comply
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In the mountains
Thanks for the response...also my IRS comment was meant as a joke...
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#1967779 - 10/07/14 07:58 PM Re: Garnishment/Levy/Federal Benefits-Is this correct? Likes to Comply
John Burnett Offline
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John Burnett
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Yes, I looked again, and it earned a chuckle, 'tho I rarely think of the IRS as being in the least funny.
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#1997452 - 02/21/15 02:49 PM Re: Garnishment/Levy/Federal Benefits-Is this correct? Likes to Comply
sunnyflowers Offline
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North Carolina
I can not seem to find the answer to this question....if bank receives garnishment order for a non account holder.....what is done? Notice back to sender? Thanks!

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#1997453 - 02/21/15 02:59 PM Re: Garnishment/Levy/Federal Benefits-Is this correct? sunnyflowers
Elwood P. Dowd Offline
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Whatever you determine the answer to be, it will have nothing to do with the protections afforded to federal benefit payments discussed above.

A garnishment is a state court order; i.e. your response must be to the court or the officer of the court who issued the order. Generally, the instructions are contained in the order. So, read them. If there are none, consult with your attorney and develop a uniform response that is short and to the point; e.g. "no assets found," "garnishee unknown," "non customer," etc. (Make certain whatever you say is indisputably accurate.)

In the two states where I am fully familiar with the processes, failure to respond would be contempt of court.

The instructions to the IRS levy clearly indicate what you are to do if you do not hold any assets belonging to the taxpayer.

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#1997467 - 02/22/15 01:41 AM Re: Garnishment/Levy/Federal Benefits-Is this correct? Likes to Comply
sunnyflowers Offline
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North Carolina
Ken, Thank you so much! This info is very helpful.

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