We hope this brochure answers most of your questions. If you have other questions or concerns, please visit our Website at www.ftb.ca.gov or call us at our toll-free number: (800) 689-4776. We have representatives available Monday through Friday between 7:30 a.m. and 5 p.m. Join the electronic funds transfer revolution! We are requesting that business payroll offices use electronic funds transfer to transmit payments of Earnings Withholding Orders for Taxes. This program allows participating businesses to replace the check-writing process with electronic funds transfer for most payments. If, as an employer, you submit a large number of payments of Earnings Withholding Orders for Taxes, and you would like to participate in this program, please visit our Website at www.ftb.ca.gov or call us at (916) 845-4025. FRANcHISE TAx BOARD PO BOx 942867 SAcrAMEnTO, cA 94267-0011
Franchise Tax Board
We created this brochure to answer the questions we receive most often from employers. If you have questions we do not answer here, you will find contact information at the end of the brochure. 1. How do I compute disposable earnings? You compute disposable earnings by subtracting the following from gross earnings (these deductions are required by law): • • • • Federal income tax Social security State income tax State disability
SEMI-MONTHLY PAY PERIOD* DISPOSABLE EARNINGS $1 to $334.75 $334.76 to $446.33 WITHHOLD AMOUNT Do not withhold any amount All amounts over $334.75 up to 25% maximum disposable earnings 25% maximum of disposable earnings
$446.34 and up
* FOR A TWO-WEEK OR MONTHLY PAY PERIOD, DOUBLE ALL AMOUNTS EXCEPT 25%.
Note: Do not subtract the following from gross earnings to determine the amount of earnings to be withheld: • • • • 401(k) contributions Health deductions Court-ordered assignment for support Voluntary deductions
4. Where and when is the amount withheld sent? Amounts withheld from your employee’s previous monthly pay periods should be sent to: FRANCHISE TAX BOARD PO BOX 942867 SACRAMENTO, CA 94267-0011 Payments should be sent no later than the 15th of each month. 5. My employee states that withholding 25% of the wages will create a hardship. Can payroll adjust the deduction? No. Only the Franchise Tax Board can reduce the amount to be withheld on the order. Provide your employee with your payroll fax number, and encourage him or her to call us at (800) 689-4776. In many cases, we can arrange a payment plan. If a payment plan is arranged, we will release the order. If we release the order, we will fax and mail you the release.
Earnings Withholding Order for Taxes
2. Does an order apply to bonuses and commissions? Yes 3. How much do I withhold? You can use the following tables as a guideline to determine what amount of an individual’s disposable earnings is subject to garnishment by law.
ONE-WEEK PAY PERIOD*
Commonly Asked Questions from Employers
FTB 1014 (rEV 09-2006)
DISPOSABLE EARNINGS $1 to $154.50 $154.51 to $206.00
WITHHOLD AMOUNT Do not withhold any amount All amounts over $154.50 up to 25% maximum of disposable earnings 25% maximum of disposable earnings
$206.01 and up
6. Your levy cost my company money. Is there any way I can recover these expenses? You can deduct $1.50 from the employee’s pay for each payment made on the Earnings Withholding Order. However, if your employee qualifies for an installment agreement, we will release the order. (See the answer to question number 5.) 7. My employee already has another levy in place. What should I do with the order that your department has issued? • If the existing levy is from a state agency, and is for a liability other than taxes (such as Department of Motor Vehicles fees) then pay our order. Our order has priority and the non-tax levy is put on hold until our order is paid in full or released. • If the existing levy is from a civil judgment (such as small claims court) then pay our order. Our order has priority and the civil judgment is put on hold until our levy is paid in full or released. • If the existing levy is for a courtordered levy of wages for child or spousal support that is less than 25% of your employee’s disposable earnings then pay our order. However, pay us the remaining amount not to exceed 25% of their disposable earnings. For example, if the courtordered levy takes 13% of disposable earnings, send us an amount not to exceed 12% of disposable earnings.
• If the existing levy is from a courtordered levy of wages for child or spousal support that is equal to 25% of your employee’s disposable earnings then do not pay our order. A court-ordered levy that takes 25% of disposable earnings has priority over our order. • If the existing wage levy is from the Internal Revenue Service and is less than 25% of your employee’s disposable income then pay our order. However, pay us the remaining amount not to exceed 25% of your employee’s disposable income. • If the existing wage levy is from the Internal Revenue Service and is equal to 25% of your employee’s disposable income then do not pay our order. The IRS levy that takes 25% of disposable income has priority over our order. • If the existing levy is from another state taxing agency (such as the Employment Development Department or the Board of Equalization) then do not pay our order. Our order is not effective. Please complete Part 2 of our order and return it to us within 15 days from the date you received it. 8. Do I need to call the Franchise Tax Board when I receive your order? No. Please complete part 2 of the order and return it with the payment (if applicable) to us using the envelope provided.
9. The employee is no longer with my company. What should I do with the order? • If the employee no longer works for you and left within the past 12 months, complete part 2 of the order and return it using the envelope provided. • If the employee is expected to return to work within 12 months of the date of termination, you must begin to withhold wages as directed on part 1, when the employee returns to work.
14. I have no record of this employee. What should I do? return part 2 of the order indicating that you have no record of this employee. 15. I have been honoring a Franchise Tax Board order and have just received a new one. What should I do? If you receive a second order from our department, continue to pay on the first garnishment. The second garnishment is not effective. Please complete part 2 of the second order and return it to us within 15 days in the envelope provided. 16. I have received orders for more than one employee. Can I send one check? Yes. On your check you must identify the employee’s name, social security number, tax years, and the amount withheld for each employee. 17. My employee has told me that other arrangements have been made with the Franchise Tax Board. What should I do? Make payments as directed by the order. We will notify you if payments are to be stopped or adjusted. 18. My employee filed bankruptcy, brought me the court documents, and told me to stop sending payments to the Franchise Tax Board. What should I do? Please call us at (916) 845-4750. We will analyze whether your employee’s bankruptcy impacts our levy. We may need the employee to provide us the bankruptcy documentation before we make a final determination.
10. My employee told me that his or her spouse is also being garnished. Do I still need to garnish my employee? Yes. 11. The employee is on a leave of absence, out on workers’ compensation, or out on disability. What should I do? The order remains in effect even if there are no earnings. Complete part 2 of the order and begin to withhold when the employee returns to work. 12. The social security number on your order does not match the number I have for the employee. What should I do? Please call us at (800) 689-4776. We will analyze the account to determine the correct name and number. 13. The name of my employee does not match the name on your order. However, the social security numbers are the same. What should I do? Please call us at (800) 689-4776. We will analyze the account to determine the correct name and number.