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What You Should Know About FTB Wage Garnishments
An Earnings Withholding Order for Taxes (EWOT) is a continuing wage garnishment on earnings due to a taxpayer from an employer and is subject to the provisions of the Code of Civil Procedure Section 706.010 et seq. Court action is not required, except when we desire to reach more than the established 25 percent of disposable income (Code of Civil Procedure Section 706.076) or to levy on the earnings of a nonliable spouse.
An EWOT creates a levy upon the earnings of the taxpayer in the amount of the taxpayer’s outstanding personal income tax liabilities. The term "earnings" means compensation payable by an employer to an employee for personal services performed by such employee, whether designated as wages, salary, commission, bonus, or otherwise. It does not include periodic payments pursuant to a pension or retirement program.
The employer shall not withhold from any pay period that ends prior to the 10th day after receipt of the EWOT. However, if a pay period ends on the 10th or subsequent day after receipt, the earnings of that period are subject to withholding. Generally, the employer shall continue to withhold until the amount specified in the order is paid or we withdraw the order. The EWOT is a continuing levy on the taxpayer's earnings until the amount on the order is satisfied or the order is terminated.
On liabilities for which we have a state tax lien and after compliance with relevant provisions of the R&TC, including the Taxpayer Bill of Rights, we issue an EWOT against a taxpayer when, for example, the taxpayer:
- Has not responded to a demand for payment.
- Has previously promised to pay and failed to do so.
- Has a history of delinquency.
- Does not make a full disclosure of their financial condition when required to do so.
- Defaults on an installment agreement.
Priority of EWOTs
The relative priorities of various orders used to levy wages are:
- An earnings assignment order for support.
- A withholding order for child or spousal support.
- An EWOT. The Code of Civil Procedure Section 706.077 states that only one EWOT for state taxes can be deducted at one time (regardless if the amount of the first EWOT is less than 25 percent). As between an IRS garnishment and an EWOT, the first in time has priority.
- An earnings withholding order for other nontax debt and civil judgments.
When taxpayers are unable to pay the total amount of taxes owed, we urge them to enter into an installment agreement. In most cases this can prevent the issuance of an EWOT.
Steve Sims, EA
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