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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
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Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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I need a fed and ca tax attorney. Question is Subject

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I need a fed and ca tax attorney. Question is:

Subject: Gov/Green book re: garnishment of electronically transmitted federal funds such as SS & Vet disability.
Present new rule did not include Fed or State tax liens
There was a public comment period for the rule which extended through May 24, 2011.
I would like to know what the results of this comment period was and if the Fed & State tax liens would be covered under the new garnishment rules protection of electronically transmitted funds.

Jax Tax : The result of the comments is that such income can be offset at 15% but once in a bank, it cannot be levied.
Jax Tax : I don't quite understand the question regarding liens, but this propossal only covers the leving of funds from the protected source. It does not prevent the filing of the notice of tax lien.
Jax Tax : In all it is just formalizing IRM sections that already require descretion when levying the source of funds and subsequently levying the accounts that the exempt amount is deposited in.

This is the info extracted fro the"green book" no. 2 specifically:





31 CFR Part 212

Frequently Asked Questions and Answers



1. After establishing a protected amount, can a financial institution

deduct its garnishment fee from the nonprotected funds before sending

funds to the court, or only from what's left over? What if charging a

garnishment fee would create an overdraft? Under the rule, a

garnishment fee can be charged or collected only on the date of the

account review. If a protected amount is established, a garnishment

fee can be charged or collected if there are nonprotected funds

against which the fee can be charged.

Section 212.6(h) of the rule states that a “financial institution may

not charge or collect a garnishment fee against a protected amount,

and may not charge or collect a garnishment fee after the date of

account review.” The creation of an overdraft to apply a fee

necessarily involves the collection of that fee after the date of

account review, which the rule prohibits.




2. Are tax levies subject to the rule? Currently, the requirements of the

rule are triggered by the receipt of a “garnishment order,” which is

defined as an order issued by a court or a state child support

enforcement agency. Accordingly, Federal or State tax levies issued

directly by a taxing authority are not subject to the rule. Treasury

is seeking public comment on all aspects of the rule, including

whether levies should be included in the definition of “garnishment

order.” The comment period for the rule extends through May 24, 2011



confusion on "liens" I mean't "levies" sorry.


I understand that once money is in bank it's protected.


questions, what do you mean by offset by 15%, isn't there a maximum amount in ea account that's protected and everything over is taken. does this action happen every 30 days for the protected amount or?

Jax Tax :

I thought that you may have meant levies. It is a pretty common mistake.

Jax Tax :

I am not sure what an EA account is, but the 15% is the amount that can be withheld through FMS prior to the electronic payment. This is why the rule is being discussed. SSI and other payments are subject to 15% levy through FMS. Now that they want to require electronic payment, they want to ensure a rule that was once discretionary is in full effect protecting the remaining 85% from being attached through bank levy.

Jax Tax :

As far a 1. Goes. The garnishment takes first so the fee would have to be charged against remaining funds or over drafted which goes to question 2.

Jax Tax :

Under 212.3, tax levies are considered garnishments and subject to the rule.

Jax Tax :

That is the thought based on the majority of comments.

Jax Tax :

This is what you are asking, right. What comments regarding the rule are stating?

Jax Tax :

Were you aware of the purpose? The fact that there is another option FMS 15% to collect these debts, and that is why the amounts received are protected?

Jax Tax :

Hopefully I answered your question. I believe they will broaden the rule to include all garnishments including tax. I can almost guarantee it. If you have any other questions or I have not addressed you question, please let me know. If not , feel free to comment after acceptance.


What is the FMS 15% to collect these debts mean ? What is the relationship of this to the protected amounts ? My interpretation of item 2 below:


(Accordingly, Federal or State tax levies issued

directly by a taxing authority are not subject to the rule).



This says to me that my ss and vet ath deposits are not ptotected?


typo ath is ACH


I did not see the top of your reply. the only thing left is what is FMS and will it concern me with ACH deposits?

Jax Tax :

FMS is the Federal Management System. They can levy these payment sources at 15% prior to payment to the individual. These regs speak to levies on financial accounts.

Jax Tax :

The broadened rule will likely include tax levies. Currently they do not.


does the state have anything to do with fms?


ie state can't get at my money before it's dispersed rite?

Jax Tax :

Yes. All debt can be collected through FMS.

Jax Tax :

Up to 15% if you owe tax. If you owe tax to the State, you can provide them with a financial statement and be placed in a hardship status which will prevent all levy action.



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