Are relocation expense payments subject to child support ganishment?

[siadkowski]

I am inquiring regarding the rules for relocation expenses that employer reimburses or makes a direct payment to 3rd party. Per 5 CFR 581.104 relocation expenses are not subject to garnishment, but this applies to federal employees. Does the CFR apply to private company employees?

 

[Michael Wechsler]

I am inquiring regarding the rules for relocation expenses that employer reimburses or makes a direct payment to 3rd party. Per 5 CFR 581.104 relocation expenses are not subject to garnishment, but this applies to federal employees. Does the CFR apply to private company employees?

I would assume that the treatment of reimbursement for expenses directly related to relocation are probably not considered "income" for the purposes of wage garnishment. If this was the case, then one would see a double dipping, e.g. salary which may have been subject to garnishment (and a percentage of that paycheck taken) is used to pay expenses related to relocation and, when later reimbursed, would again be subject to garnishment again. That doesn't make sense to me.

You can find the Illiinois Code of Civil Procedure using the link, which says:

Illinois law related to wage garnishment and Illinois law related to exemption of personal property to garnishment will provide you with the answers you seek. Following the logic above, I don't believe that the relocation expenses would fall within wages.

Illinois 735 ILCS 5/12-803
Sec. 12-803. Wages subject to collection. The wages, salary, commissions and bonuses subject to collection under a deduction order, for any work week shall be the lesser of (1) 15% of such gross amount paid for that week or (2) the amount by which disposable earnings for a week exceed 45 times the Federal Minimum Hourly Wage prescribed by Section 206(a)(1) of Title 29 of the United States Code, as amended, or, under a wage deduction summons served on or after January 1, 2006, the minimum hourly wage prescribed by Section 4 of the Minimum Wage Law, whichever is greater, in effect at the time the amounts are payable. This provision (and no other) applies irrespective of the place where the compensation was earned or payable and the State where the employee resides. No amounts required by law to be withheld may be taken from the amount collected by the creditor. The term "disposable earnings" means that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld. I'm not sure and what I am telling you is just an educated guess since the logic is usually the same. This is what I can find.

Illinois 735 ILCS 5/12-804
Sec. 12-804. Exemptions from deduction orders. Benefits and refunds payable by pension or retirement funds or systems and any assets of employees held by such funds or systems, and any monies an employee is required to contribute to such funds or systems are exempt and are not subject to a deduction order under Part 8 of Article XII of this Act. A plan governed by the Employee Retirement Income Security Act of 1974 shall be considered a retirement fund for purposes of this Part 8.
(Source: P.A. 87-1252.)

 

[siadkowski]

Relocation expense payment subject to child support ganishment

Thank you for the quick reply. i understand the double dipping of the reimbursements. What about if the company pays for the temp housing and the tax assistance of the relocation money? This money never crosses my hands (paid directly to 3rd party) and temp housting is a requirement of my work.
My company has me on a temp long term project, where they pay directly to my 3rd party for my temp housing. I still maintain my primary residence in Illinois, and commute to Houston for work temporarily. Company provides taxable housing while in the temp location, being Houston. Normal work location is in the Gulf of Mexico on a ship. But since the ship is in the build stage, all operations people are temp housed in Houston until delivery date. Per IRS rules, these temp relocation payments are taxable as they are over 12 months.

 

[army judge]

Thank you for the quick reply. i understand the double dipping of the reimbursements. What about if the company pays for the temp housing and the tax assistance of the relocation money? This money never crosses my hands (paid directly to 3rd party) and temp housting is a requirement of my work.
My company has me on a temp long term project, where they pay directly to my 3rd party for my temp housing. I still maintain my primary residence in Illinois, and commute to Houston for work temporarily. Company provides taxable housing while in the temp location, being Houston. Normal work location is in the Gulf of Mexico on a ship. But since the ship is in the build stage, all operations people are temp housed in Houston until delivery date. Per IRS rules, these temp relocation payments are taxable as they are over 12 months.

You should consult a CPA or tax attorney, as income taxes and taxable income are quite complex.
The penalties are even more draconian, if you make one misstep.
Perhaps your company can offer you tax guidance, as was the case for me several times in my life.

 

[siadkowski]

does 5 CFR 581.104 apply to private company employees

You should consult a CPA or tax attorney, as income taxes and taxable income are quite complex.
The penalties are even more draconian, if you make one misstep.
Perhaps your company can offer you tax guidance, as was the case for me several times in my life.

Thank you for the quick reply. Would anybody know the application of 5 CFR 581.104, wages that are not subject to garnishment for federal employees? Per this CFR, certain reimbursements, employer payments are not subject to child support garnishment. If so, should the same apply to private company employees for state controlled child support? The do not believe that Fed employee can be exempt from certain child support garnishment, as that would say that private employees will pay more child support then fed employees. I have been looking for case law that has addressed this topic, especially in the Gulf of Mexico states, but this has not been questioned before. The Ex is treating the 3rd party taxable relocation as wage income, including the tax assistance, and wants child support back pay.

 

[army judge]

Thank you for the quick reply. Would anybody know the application of 5 CFR 581.104, wages that are not subject to garnishment for federal employees? Per this CFR, certain reimbursements, employer payments are not subject to child support garnishment. If so, should the same apply to private company employees for state controlled child support? The do not believe that Fed employee can be exempt from certain child support garnishment, as that would say that private employees will pay more child support then fed employees. I have been looking for case law that has addressed this topic, especially in the Gulf of Mexico states, but this has not been questioned before. The Ex is treating the 3rd party taxable relocation as wage income, including the tax assistance, and wants child support back pay.

Allow me to be more clear. You don't want tax advice that you act on from the Internet. Taxes and child support are very person specific. You need your own tax attorney or CPA. I also suggest you speak to a family law attorney.

The court is not going to hold in any regard information from the Internet.

 

[siadkowski]

thank you for your advise. I understand about info provided on the internet. All I am trying to do is prevent having to go to appeals court. Research is long and tedious process, so I am hoping to find people that have lived through similar issues, to share lessons learned.

 

[Michael Wechsler]

There may be limitations on the amount that an employer can reimburse an employee with regard to relocation expenses before it becomes taxable income that must be reported. There is also a distance requirement as well. Perhaps you should go right to the source - the IRS - with regard to how they handle moving expenses - Publication 521, Moving Expenses. The take a look at how Illinois handles it, which may be similar. Here is the Schedule NR IL-1040 for Illinois, which makes mention of moving expenses. It may also depend upon whether you are moving from one state to another and which state is the destination state. May not be so simple and might require a little more information.