CPS Garnishments & Levies 3

Question 1

What is an Income Withholding Order (IWO) used for in payroll processing?

Accepted Answer

Ordering the employer to deduct and remit child or spousal support payments from wages

Answer

Directing the employer to withhold additional federal income taxes at the employee's request

Answer

Notifying the employer of a change in the employee's tax filing status

Answer

Authorizing an employer to recover overpaid wages from future paychecks

Question 2

Under federal law, within how many business days after the employee's payday must an employer remit withheld child support payments?

Accepted Answer

7 business days

Answer

3 business days

Answer

10 business days

Answer

15 business days

Question 3

When an employee receives IRS Form 668-W, what must the employee submit to the employer to determine the exempt amount from the levy?

Accepted Answer

The Statement of Exemptions and Filing Status (Part 3 of Form 668-W)

Answer

A new Form W-4 with updated allowances

Answer

Form 1040-ES showing estimated tax liability

Answer

A written hardship letter to the IRS

Question 4

A 'writ of garnishment' is best described as:

Accepted Answer

A court order directing a third party such as an employer to withhold and remit funds owed by a debtor

Answer

A voluntary wage assignment signed by the employee to pay a creditor

Answer

An IRS notice assessing additional taxes against an employee

Answer

A state agency order suspending an employee's professional license for non-payment

Question 5

Which statement correctly describes a 'continuing levy' versus a 'one-time levy' in the context of wage garnishments?

Accepted Answer

A continuing levy attaches to each successive paycheck until the debt is satisfied; a one-time levy applies only to a specific payment

Answer

A continuing levy applies only to the next paycheck; a one-time levy covers all future earnings

Answer

Both levy types apply to all future wages simultaneously

Answer

A continuing levy requires court renewal each pay period; a one-time levy does not

Question 6

If an employee subject to a child support withholding order is paid bi-weekly, how should the employer determine the CCPA withholding limit that applies to the order?

Accepted Answer

Use the weekly limit multiplied by 2 to reflect the bi-weekly pay period

Answer

Use the weekly limit and divide it by two for each paycheck

Answer

Apply the weekly limit directly without adjustment

Answer

Apply only the state-specific limit regardless of federal rules

Question 7

Which of the following actions is an employer legally required to take when it receives a child support Income Withholding Order for an employee who has already reached the maximum CCPA withholding limit due to another support order?

Accepted Answer

Notify the issuing agency that the maximum withholding limit is in effect and process the new order when capacity allows

Answer

Immediately return the new IWO to the issuing agency as unenforceable

Answer

Terminate the older support order to make room for the new one

Answer

Withhold amounts exceeding the CCPA limit to ensure both orders are satisfied simultaneously