A wage levy, sometimes referred to as a garnishment, is a legal action the Minnesota Department of Revenue uses to collect up to 25 percent of a debtor’s disposable wages to pay an unpaid tax or other state agency debt. Once the levy begins, a debtor cannot enter into a payment agreement to stop the levy.
The wage levy notice to an employer directs them to complete the form online using e-Services
. The employer is asked to calculate how much “additional withholding” will be taken from the debtor’s wages, taking into consideration any setoffs
and adverse interests
An alternate disclosure should be completed if the employer is unable to comply with our wage levy and the debtor is not earning wages due to termination, layoff or leave of absence. The form requests information regarding dates, new employment, if applicable, as well as the debtor’s last known address and phone number.
Links to Wage and Alternate Wage Levy Disclosure Forms as well as instructions on how to submit them using e-Services are listed under the Related Information section on the right side of this page.
A setoff occurs when an employer applies funds from a debtor’s wages toward the balance of any outstanding loans owed by the debtor to the employer. An employer must prove that the loan against further wages was made by the employee at least 30 days before the department’s levy. If the setoff is not proved, the department’s levy has priority over the setoff. View the statute, Minnesota Statutes, section 270C.67
Adverse interests are other levies and/or garnishments against the debtor that may reduce the amount that the department’s levy can take. A third party
may have an adverse interest in the debtor’s wages. The adverse interest must be listed on the disclosure, including which assets are subject to the deduction.
There are some exemptions to the wage levy; for more information, see M.S. 550.37
If the debtor can show that the levy will cause financial hardship
, the department may consider a wage levy reduction.
The department will release a levy when:
- The debtor is exempt from the levy.
- The debt is paid in full.
- If there is an adverse interest or setoff that prevents a payment.
- The debtor files bankruptcy.
If a new debt is added after a levy is issued, that debt is not included in the levy. Due process must be served on the new debt while the levy continues. When the current levy is paid in full, if the debtor has not contacted the department and made payment arrangements, we will send a levy notice to the debtors employer for the new debt.