Minnesota Wage Levy Checklist: Understanding State
Tax Collection
Introduction
State wage levy is a collection tool the Minnesota Department of Revenue uses when a taxpayer owes unpaid state income taxes. A wage levy order directs your employer to withhold
25 percent of your disposable income from each paycheck and send it directly to the state to satisfy your tax debt. This enforcement action occurs after the state has sent billing notices and provided at least 30 days' advance notice before implementing the levy under Minnesota
Statutes governing collection procedures.
What This Issue Means
A wage levy order is a legal instruction from the Minnesota Department of Revenue to your employer requiring the deduction of money from your disposable wages. The order specifies that 25 percent of your disposable earnings will be withheld and continues until your tax debt is paid or the state issues a levy release notice. Once your employer receives the order, they must comply and begin withholding immediately from each subsequent paycheck, regardless of your leave-of-absence status.
Why the State Issued This
The Minnesota Department of Revenue uses wage levy as a collection method for unpaid state income taxes when other efforts have not resolved the debt. The state sends billing notices and provides due-process notification at least 30 days before pursuing a levy, allowing taxpayers to pay or make arrangements. If a taxpayer does not respond to notices or arrange payment, the state may issue a wage levy order as a form of direct enforcement under Minnesota law.
What Happens If This Is Ignored
Continuing to ignore a wage levy order does not cause it to stop or go away on its own. Your employer will continue withholding 25 percent of your disposable earnings from every paycheck as long as the order remains in effect. The state may pursue additional collection actions, including placing a lien on your property, initiating bank account garnishment, intercepting tax refunds, or taking funds from your credit union accounts.
What This Does NOT Mean
A wage levy order does not mean your employment is at risk or that you will be terminated for this reason. Federal law under 15 U.S.C. Section 1674 prohibits employers from discharging an
employee because their earnings are subject to garnishment for any one indebtedness. A wage levy does not mean criminal charges are being filed, as it is a civil tax collection tool, not a criminal matter involving the Minnesota Judicial Branch.
Understanding Wage Levy vs. Other Garnishments
State tax wage levies differ from creditor garnishments for consumer debts, medical bills, or child support arrears. While creditor garnishments follow the Minnesota Rules of Civil Procedure and require a garnishment summons and court order, state tax levies operate under a different authority in Minnesota Statutes. The Minnesota Department of Revenue can levy an employee’s wages directly without obtaining a judgment from the Minnesota Judicial Center, making this enforcement tool more immediate than traditional garnishment law processes.
Step-by-Step Checklist: Actions After Receiving a Wage
Levy
Step 1: Review the Wage Levy Notice Completely
Read the entire wage levy notice carefully to identify the amount being withheld, the specific tax year involved, and the contact information provided by the Minnesota Department of Revenue for questions or assistance.
Step 2: Verify the Debt Information
Check whether the debt belongs to you and whether the tax year listed is correct by comparing the notice against any previous correspondence. Confirm the amount matches prior notices you may have received from the Department of Revenue regarding this outstanding tax liability.
Step 3: Save Department Contact Information
Locate and save the Minnesota Department of Revenue contact phone number and mailing address from the notice so you can reach the collections division if you need to provide information or discuss your legal problem.
Step 4: Gather Financial Documentation
Collect recent pay stubs showing disposable wages, bank statements from your credit union or bank account, monthly expense records including child support obligations, and any evidence of financial hardship if you plan to request relief or temporary suspension.
Step 5: Contact the Department Promptly
Call the Minnesota Department of Revenue as soon as possible to explain your situation and ask about available options, such as a temporary suspension based on financial hardship, even though payment plans cannot stop an existing levy.
Step 6: Understand Payment Plan Limitations
Recognize that once the Minnesota Department of Revenue issues a wage levy, you cannot stop it by entering into a payment agreement through the online form. However, discussing your situation may lead the Department to consider other relief options.
Step 7: Request Hardship Consideration
Ask specifically about hardship provisions or temporary suspension if your financial situation qualifies you for a pause in the levy, providing documentation of income, expenses, including supporting a spouse or dependent child, and any circumstances causing severe financial difficulty.
Step 8: Explore Wage Levy Exemptions
Inquire whether your income includes protected sources such as Minnesota Family Investment
Program benefits, medical assistance payments, or life insurance proceeds that may qualify for wage levy exemptions under federal minimum hourly wage protections outlined in the United
States Code.
Step 9: Document All Communications
Keep detailed records of all correspondence, including copies of letters sent, notes from phone conversations, and dates, times, representative names, and specific details of what was discussed or agreed upon for each interaction with the Department.
Step 10: Monitor Your Paychecks Regularly
Check each paycheck to confirm the levy amount withheld is exactly 25 percent of your disposable income as stated in the notice, and report any discrepancies immediately to your employer and the Minnesota Department of Revenue.
Step 11: Continue Filing Annual Returns
File your annual state income tax returns on time, even though a wage levy is in effect, because ongoing tax filing obligations remain unchanged, and failing to file creates additional problems and potential penalties affecting your account status.
- Ignoring the wage levy order: The levy will not disappear on its own, and your
- Not contacting the Department immediately: The Minnesota Department of Revenue
- Believing payment plans stop existing levies: The Minnesota Department of
- Failing to report errors in levy amounts: If the levy amount is incorrect, the debt is
- Confusing state tax levies with other garnishments: State tax wage levies operate
- Assuming automatic levy release: The state releases wage levy orders only when the
- State tax notice review and response
- Penalty and interest reduction options
- Payroll and trust fund tax assistance
- Payment plan and relief eligibility review
- Representation with state tax agencies
Step 12: Track Debt Reduction Progress
Request periodic account statements from the Minnesota Department of Revenue showing your current balance and how much of your debt has been paid through wage levy payments to monitor progress toward satisfaction and eventual levy release notice.
Understanding Bank Levy vs. Wage Levy
A bank levy is a collection tool that allows the Minnesota Department of Revenue to seize funds directly from your bank account or credit union. Unlike continuous wage levies, a bank levy is typically a one-time seizure of available funds when the levy is served on the financial institution. The state may use both wage levies and bank account garnishment simultaneously to collect outstanding tax debts, though an automatic stay through bankruptcy can halt these collection actions.
Common Mistakes to Avoid employer is legally required to comply with the withholding order under Minnesota law.
Failing to respond leaves enforcement actions in place and may result in additional collection measures, including a bank levy on your accounts or the seizure of other assets. may not be aware of financial hardship, including obligations to support a spouse, a dependent child, or child support payments. Reaching out promptly opens the possibility of discussing relief options or temporary suspension based on demonstrated need, and you can access legal help through Self-Help Centers at the State Law Library.
Revenue explicitly states that once a wage levy is issued, entering into a payment agreement through the online form or ACH credit arrangement cannot stop the levy.
Payment arrangements negotiated before a levy is issued may prevent garnishment, but they cannot halt an existing levy already in effect on an employee’s wages. inaccurate, or your income includes exempt sources protected under federal minimum wage provisions, reporting this immediately allows the Department to investigate.
Waiting to address discrepancies prolongs incorrect withholding and delays resolution of the underlying issue with your account that may require third-party verification. differently from creditor garnishments for medical bills, delinquent student loans, or child support arrears that require service of garnishment summons and follow the Minnesota
Rules of Civil Procedure. Understanding these distinctions prevents confusion about your rights, exemptions, and available remedies under garnishment law and helps you respond appropriately to each collection type. debt is paid in full through wage levy payments or when you request and the Department grants relief. Assuming the levy will end without action results in prolonged withholding until the entire debt is satisfied through continued wage deductions from your disposable wages.
Where to Find Legal Help
If you need assistance understanding your rights or responding to a wage levy, several resources provide legal help. The State Law Library, located on Rev. Dr. Martin Luther King Jr.
Blvd. in St. Paul, offers Self-Help Centers with information about collection procedures. The
Minnesota Judicial Branch website includes a Help Topics Homepage with guidance on garnishment law. Organizations like LifeBack Law provide consultation services for taxpayers facing collection actions, including wage levies and bank account garnishment.
Closing
A wage levy order is serious enforcement, but understanding the process helps you respond effectively and explore available options. The Minnesota Department of Revenue may consider hardship relief in appropriate circumstances, though payment plans cannot stop an existing levy.
Staying informed, responding to notices, and maintaining communication with the collections division will help you manage this situation until the debt is satisfied.
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