EPY: Oregon Tax Levy Not Calculating as Expected (Doc ID 659596.1)

Last updated on DECEMBER 18, 2015

Applies to:

PeopleSoft Enterprise HRMS Payroll for North America - Version 8 SP1 and later
Information in this document applies to any platform.

Symptoms

Issue #1:
Two Oregon Department of revenue tax levy garnishments were entered for an employee (different tax years).  The application did not limit the deducted amount to 25% as is required.  Instead it took 25% for each. 

Issue #2:

An employee has multiple garnishments which include Child Support , a Writ, a Federal Tax Levy , and an Oregon State Tax Levy. The Support orders have the highest priority, Writ second, Federal Tax Levy next, then the OR State Tax Levy.

The support orders are taken, there is insufficient disposable earnings to take either the Writ or Federal Tax Levy. As such, it is expected that 25% of DE to be deducted the OR State Tax Levy based on the following statute:

150-18.385 Oregon Department of Revenue Tax Garnishments and Orders to Withhold Child or Spousal Support (1) The Department of Revenue is authorized to continuously garnish up to 25 percent of an employee's disposable earnings to recover delinquent state tax debt. Concurrently, a district attorney or the Division of Child Support of the Department of Justice is authorized to request the courts to order the withholding of delinquent and current child or spousal support from an employee's disposable earnings. (2) Under ORS 18.385(4), the maximum disposable earnings subject to garnishment is reduced by an order to withhold wages for child or spousal support under ORS 25.378, 419B.408 or 419C.600 or ORS Chapter 110. Normally, any other existing garnishments would then be limited to 25 percent of disposable earnings after subtracting the order to withhold wages. However, ORS 18.385(6) specifies that, for garnishments to pay state tax debt, the provisions of ORS 18.385(4) do not apply. Therefore, a garnishment to pay state tax debt would be calculated upon disposable earnings and not reduced by an order to withhold child or spousal support.

Cause

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