Garnishment and tax levy rules (form) [AX 2012]

Updated: August 27, 2014

Applies To: Microsoft Dynamics AX 2012 R3

Click Human resources > Common > Workers > Workers. Select a worker, click Personal information, and then click Benefits. From the list of benefits, select a garnishment or tax levy, and then click Garnishment and tax levy rules.

Use this form to set up the garnishment and tax levy types that are used to process the garnishments and tax levies that are assigned to a worker.

NoteNote

In this topic, garnishment implies both garnishments and tax levies, unless otherwise specified.

The rules for each garnishment and tax levy type are used to make sure that garnishments are calculated and processed correctly, especially when workers have multiple garnishments. Enter the details (such as the deduction amount or case number) for specific garnishments in the Maintain benefits form.

You can set up each garnishment or tax levy type only one time for each worker. When a worker has multiple garnishments, all garnishments that have the same type use the rules that are set up for that type. State and local tax levies are an exception; you can set up one state tax levy type and one local tax levy type for each state.

Because of the complexities involved in complying with applicable federal and state rules for garnishments, we recommend that you work with your organization’s legal advisors when you set up garnishment and tax levy types.

NoteNote

This topic applies only if both Payroll for Microsoft Dynamics AX 2012 and the garnishment enhancement hotfix are installed.

The garnishment enhancement hotfix may have been installed automatically if you installed a different hotfix that shares dependencies with the garnishment enhancement hotfix.

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Disposable income definitions

Open a form where you can create or delete a disposable income definition. Disposable income definitions are used to specify the amounts to exclude from a worker’s disposable income when garnishment amounts are calculated.

Disposable income definitions don’t have date-effective versions. Therefore, when a definition changes, the change takes effect when you enter it. We recommend that you don’t change any disposable income definitions that you have used. Instead, create a new disposable income definition, and then use the version settings in the Maintain benefits form to change from the old definition to the new definition on the required date for each worker. For more information, see Garnishment and tax levy setup tasks.

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Remove

Add or remove a garnishment or tax levy type for the worker.

ImportantImportant

A deduction for a garnishment can’t be made until the corresponding garnishment or tax levy type has been added.

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Type

Select one of the following garnishment or tax levy types:

  • Support order

  • Bankruptcy order

  • Federal administrative

  • Student loan

  • Creditor

  • Federal tax levy

  • State tax levy

  • Local tax levy

  • Combined garnishments

When a worker has multiple garnishments, all garnishments that have the same type use the same rules to calculate the required deductions. For state and local tax levies, a separate set of rules is set up for each combination of type and state.

You should add the Combined garnishments type when a worker is enrolled in more than one type of garnishment. That garnishment type is used to make sure that the garnishment amounts are adjusted correctly, based on the appropriate disposable income definition and any rules that might apply across garnishment types.

State

The state that a tax levy is from.

This field is available only for state and local tax levy types. It is not available for other garnishment types.

Limit method

Select one of the following options:

  • Calculate disposable income – The worker’s disposable income is calculated for garnishments of this type. The maximum amount that can be deducted from a single pay statement for all garnishments of this type is based on the calculated disposable income.

    If you select a disposable income definition for a garnishment type that uses this limit method, the earnings and benefits that are specified in the disposable income definition are excluded when the disposable income is calculated.

  • Use alternative limit – Specify the maximum amount that can be deducted from a single pay statement for garnishments or tax levies of this type.

    Caution noteCaution

    If your legal advisors direct you to use this method, they should provide the amount that you need to enter in the Alternative limit field.

Disposable income definition

The disposable income definition to use for the garnishments or tax levies of this type.

Leave this field blank if the state that controls the garnishment uses the federal rules for defining a worker’s disposable income.

In some cases, you might have to create a disposable income definition to exclude the amount of a tax levy from a worker’s disposable income. For more information, see Garnishment and tax levy setup tasks.

This field is available only when the limit method is Calculate disposable income.

Maximum withholding percent

The maximum percentage of disposable income that can be withheld for garnishments of this type. If you leave this field set to 0.0000, no deductions are made.

This field is available only when the limit method is Calculate disposable income.

Alternative limit

The maximum amount that can be deducted from a single pay statement for garnishments of this type. The amount should be provided by your legal advisors. If you leave it blank, no amount will be deducted for garnishments of this type.

This field is available only when the limit method is Use alternative limit.

Multiple garnishment method

Select the option to use if the amount of the deduction for garnishments of this type has to be split among multiple garnishments. This happens when the combined amount of the deductions exceeds the maximum amount that is allowed for garnishments of this type:

  • None – The amount that is deducted for each garnishment is not adjusted based on the worker having multiple garnishments of the same type. The amounts might still be adjusted to make sure that the total deductions for all garnishments and administrative fees don’t exceed the maximum amount that the law allows for.

  • Pro rata – Each garnishment gets a proportionate amount of the amount that is deducted.

    Example

    A worker has two garnishments of the same type. The initial deduction amount is 100.00 for the first garnishment and 400.00 for the second garnishment, for a total of 500.00. The maximum amount that can be deducted is 250.00. Because that amount is half of 500.00, the amount that is deducted for each garnishment is reduced by half: 50.00 is deducted for the first garnishment and 200.00 is deducted for the second garnishment.

  • Equal – Each garnishment gets an equal part of the amount that is deducted.

    Example

    A worker has three garnishments of the same type. The initial deduction amount is 150.00 for the first garnishment, 250.00 for the second garnishment, and 100.00 for the third garnishment. The maximum amount that can be deducted is 300.00. Each garnishment receives 100.00.

  • First in – The garnishments are satisfied in the order in which the worker was enrolled in them. This option is typically used for tax levies. It may be used for other types as well.

    Example

    A worker has three garnishments of the same type. The initial deduction for the first garnishment that the worker was enrolled in is 150.00, the initial deduction for the second is 250.00, and the initial deduction for the third is 100.00. The maximum amount that can be deducted is 250.00. The deduction for the first garnishment is 150.00. That is subtracted from the maximum amount, leaving 100.00 for the second garnishment. Once that amount is deducted, the maximum amount has been reached, and the third garnishment receives nothing.

ImportantImportant

If the court order doesn’t specify which method to use, check with your legal advisors for clarification. Typically, if the orders have the same type but are from different states, the laws in the state where the employee works apply.

For example, a worker who is located in Washington has three support orders — two from California and one from Idaho. The rules for Washington apply to all three orders. If the worker in Washington had two support orders from California and a creditor garnishment from Idaho, the support orders would use the California rules and the creditor garnishment would use the Idaho rules.

Multiple maximum

The maximum percentage of disposable earnings that can be withheld for garnishments of this type when there are multiple garnishments.

This field is not used for tax levies. For other garnishment types, the value in this field limits the total deductions for this garnishment type.

For more information, see Garnishments, tax levies, and administrative fees.

Exempt disposable income

After the disposable income is calculated, this amount is used to further reduce the allowable deduction, based on IRS publication 1494 and applicable state requirements.

For most states, this field is 0.00. For more information, contact your legal advisors.

Exempt earnings

Before the disposable income is calculated, this amount is used to reduce the earnings that the disposable income is calculated from, based on applicable state requirements.

For most states, this field is 0.00. For more information, contact your legal advisors.

Minimum wage

Minimum wage multiplier

The weekly minimum wage and minimum wage multiplier to use to calculate the garnishment amount. The minimum wage can be either the Federal minimum wage or a state minimum wage.

For more information, see the state rules for the garnishment type or contact your legal advisors.

Allow reduction

Select this check box if deduction amounts for this garnishment type can be reduced to stay within the mandated limit for all garnishment types.

This check box is typically cleared for support orders because support orders can’t be reduced by the legal limit that applies to other garnishment types. If the amount for the support order is more than the legal limit, the full amount of the support order is still deducted, and nothing can be deducted for garnishments of any other type.

This check box is typically selected for student loans because they can be reduced to comply with the legal limit.

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Add

Open a form where you can add a comment that is related to garnishments and tax levy types for the worker. The most recent comments are displayed first.

It is a best practice to add a comment any time that you add, remove, or modify a garnishment or tax levy type for a worker.

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