Setting up federal levy garnishments

Show expandable text

To set up an employee with a federal levy garnishment and have the application make the appropriate calculations during payroll check entry, follow these steps.

See also: Garnishment overview

Setting up a vendor as a payroll agent for a federal levy garnishment

You will need to add or modify a payroll agent vendor to receive the garnishment deduction.

  1. To add a new vendor, choose Setup > Vendors and click the Add button. Or, for an existing vendor, click the Edit button.
  2. Enter vendor information as usual.
  3. In the Identification section of the Main tab, select Payroll Agent in the Vendor type field.
  4. In the Payment Preferences section, make your selections based on how you will submit the payment.
    • If you're paying by check, select Check.
    • If you're making the payment outside of Accounting CS, select Payment.
    • If you're paying via direct deposit, select Direct Deposit and then, in the Direct Deposit tab, enter valid direct deposit information for the vendor.
  5. Click Enter to save your changes to the vendor.

Setting up federal levy payroll items

The first step is to create a payroll item for the client to use for employees with federal levy garnishments.

  1. Add a new deduction item for the client.

    Note: If the agent that will collect the payments doesn't appear in the Agent drop-down list, you will need to set one up in the Main tab of the Setup > Vendors screen. You must specify the vendor as a Payroll Agent vendor type for it to become available as the agent for deduction items.

  2. In the Special Type section of the Main tab of the Payroll Items screen, choose the Garnishment option and select Federal levy from the drop-down list.

    Special type Federal levy
  3. Click Enter to save your changes.

Adding the new deduction item to the employee record

  1. In the Setup > Employees > Payroll Items tab, make the new garnishment deduction item active for the employee by marking its checkbox in the Deductions grid.
  2. Click the Ellipsis button button for the new deduction item.
  3. Enter or select the appropriate information in the Federal Levy Information section of the Main tab of the Employee Payroll Item Settings dialog.
  4. Save the employee payroll item information.

Note: You can include deduction items in the calculation of disposable income for an employee if the deduction item was in effect for the employee before the federal levy was received. To do so, mark the Subtract from federal levy basis checkbox in the Federal levy section of the Employee Payroll Item Settings dialog.

Activating additional exemptions for a federal levy

If a recipient is over 65 years of age, blind, or has a blind spouse, you can activate an additional exemption for the federal levy. Refer to IRS Publication 1494 for more information about this exemption.

  1. Choose Setup > Employees and select that employee.
  2. If the employee is over 65, be sure their date of birth is entered in the Personal tab.
  3. In the Payroll Items tab click the Ellipsis button next to the federal garnishment deduction item.
  4. In the Federal Levy Information section of the Employee Payroll Item Settings dialog, change the number of personal exemptions, if appropriate.
  5. Click OK in the dialog and then Enter in the Employees screen to save your changes for the employee.


Limits are not restricted by the Consumer Credit Protection Act (CCPA)

  • The order of federal levies take a second priority after wage withholding for child support, if the child support order is received prior to the levy.
  • A levy on wages or salary is continuous from the time of the levy until the liability (taxes, interest, and penalties) is satisfied.
  • The amount exempt from levy is determined by adding the standard deduction to the number of personal exemptions and dividing that amount by the number of pay periods in the year for that employee (52 for employees paid weekly, 26 for employees paid bi-weekly, 24 for employees paid semi-monthly, etc.) Because the annual amount allowed for the standard deduction and personal exemptions generally change each year, so does the amount exempt from levy.
  • To simplify the calculation, the IRS publishes a table and makes it available in IRS Publication 1494, Table for Figuring Amount Exempt from Levy on Wages, Salary, or Other Income. 

Was this article helpful?

Thank you for the feedback!