**INACTIVE POLICY**

For Current Policies:
Policy Table of Contents

 

                      UNIVERSITY OF VIRGINIA
           FINANCIAL AND ADMINISTRATIVE POLICIES MANUAL



TITLE:  PAYROLL:  DEBT PAYMENTS                    POLICY:  XII.F.2x
                                                         
         
General

Payroll, upon receipt of legal documentation, is required by law to
withhold monies from an employee's wages to satisfy certain debts.

Payroll will notify an employee, by letter, of a debt withholding
concerning either a garnishment, tax lien, bankruptcy, or wage
assignment.  Employees should also receive prior notification of a
debt collection by the issuing court or authorized agency.

Garnishment

A garnishment summons is issued by a General District Court on
behalf of a creditor to recover a legal debt owed by an employee.

The Payroll Department is legally bound to withhold or garnish an
employee's wages as instructed by the court.

Payroll calculates disposable earnings by subtracting federal,
state, and social security taxes from an employee's expected gross
pay.

The maximum portion of disposable earnings subject to garnishment
is the LESSER OF:

 25% of the disposable earnings, or
 30 times the federal minimum hourly wage per week.  (Currently
 this is: biweekly, $255.00; semi-monthly, $276.50; monthly,
 $553.00)
Payroll deducts the lesser amount of the two calculations and
continues to garnish wages until either the entire amount is
satisfied, the due date on the garnishment summons is reached, or
the garnishment is released by the court by written notification.

Payroll remits the withheld garnishment amounts to the appropriate
court on behalf of the employee.

Bankruptcies

     General

 A bankruptcy decree is issued by a United States Bankruptcy Court
 on behalf of an employee to prevent further voluntary or
 involuntary debt collections.                                
   
     Chapter 7 Bankruptcy

 Generally, a Chapter 7 Bankruptcy decree accompanied by an Order
 Staying Levy or Garnishment stays any existing or future
 garnishments or liens against an employee's wages for a specific
 time period.

 Garnishment or tax levy funds withheld by Payroll following the
 bankruptcy petition date are remitted to the employee.  Debt funds
 withheld before the petition date that have not been remitted will
 be remitted according to the Bankruptcy Court's instructions.

     Chapter 13 Bankruptcy

     A Chapter 13 Bankruptcy decree accompanied by an Order Staying
 Levy or Garnishment stays any existing or future garnishment or
 lien against an employee's wages until release.

 Debt funds held by Payroll are remitted to an appointed trustee as
 instructed by the Bankruptcy Court.  Additionally, Payroll may be
 ordered to withhold a specified amount from an employee's paycheck
 for a specific number of months and remit the funds to the
 trustee.

Tax Liens

 General

 Tax liens are issued by the Internal Revenue Service (IRS) and
 state tax departments to recover delinquent taxes, penalties, and
 interest charges.

     Federal Tax Levy

 Payroll is required, by law, to withhold wages for an IRS tax levy
 based on the number of exemptions claimed by an employee.

 Payroll will notify an employee of a federal tax levy, IN WRITING,
 and include a statement of personal exemptions.  Employees have
 seven calendar days to complete this form and return it to
 Payroll.  Payroll will start to withhold at the maximum rate (one
 personal exemption) if the form is not received within this time
 period.

 Payroll will continue to withhold for a federal tax levy until 
 released by written notification from the IRS or an order staying
 levy or garnishment from a bankruptcy court.
         
     Virginia Tax Levy

 Payroll is required, by law, to withhold an employee's ENTIRE NET
 PAYCHECK for a tax levy issued against them by the Virginia
 Department of Taxation.  Net paycheck is defined, for this
 purpose, as an employee's gross wages minus any EXISTING payroll
 deductions and federal, state, and social security taxes.

 Payroll will notify an employee, IN WRITING, of a state tax levy
 issued against them.

     Payroll will continue to withhold an employee's net paycheck 
 until the debt is satisfied or is released by written notification
 from the Virginia Department of Taxation or an order staying levy
 or garnishment from a bankruptcy court.


Wage Assignments

A wage assignment is a voluntary withholding of a specific amount
of wages between an employee and a creditor to satisfy a debt
payment.

Wage assignments most frequently are payments to the University of
Virginia Hospital for hospital debts or to the Department of Social
Services for child support payments.

Payroll will withhold a specific dollar amount each pay period to
satisfy the wage assignment agreement and remit the amounts as they
are withheld.

Questions concerning the contracted amount to be withheld should be
FIRST directed to the agency issuing the wage assignment.


ISSUED BY:                                                 03/12/92 
Assistant Comptroller for
Accounting Operations          12.6.2.1