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Protected Funds Apply to Child Support Levies?

Answered by: 
John Burnett

Question: 
I recently did an e-train webinar, regarding California Levies/Subpoenas as my credit union is located in California and Oregon. In this e-training the instructor told us that protected funds do not apply to child support levies. I have been to many seminars regarding levies and subpoenas and I have never been told this. I was taught of course that IRS levies do not apply to protected funds, but never child support. Does this rule only apply to California or to all states?
Answer: 

Under ยง 212.4 of the Treasury Department's regulation, "Garnishment of Accounts Containing Federal Benefit Payments" (31 CFR part 212), a federal agency or a state child support agency can affix the Notice of Right to Garnish Federal Benefits that is provided in Appendix B of the regulation. When a bank receives a garnishment order with that Notice attached, the bank does not apply the regulation, and makes no determination whether or not there are protected funds (as defined in the regulation). Thus, child support levies or garnishment orders (if the Notice is attached or part of the levy/garnishment order) are exempt from coverage by the rule, in all states.

First published on 04/14/2019

Filed under: 
Compliance
Filed under compliance as: 
Levy
Garnishment

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