Enforced Collections
A A
Attachment
Attachment and Garnishment
Enforced collection by reaching intangible
personal property belonging or due to the
taxpayer.
Wages
Salaries
Rents
Bank deposits
Proceeds from levy
Attachment and Garnishment
The Price is Right!
Court orders or special authorization by
governing body is not necessary.
For each process served, a fee of $15.00 can
be added to the account (NCGS§ 7A-311).
The fee is collected as part of the tax. In
cases of multiple actions (garnishment and
attachment) the taxpayer’s service fee is only
added once.
The Garnishee
This is the person who has possession of the
taxpayer’s property or owes the taxpayer
money.
The moment the notice of attachment and garnishment is served on the garnishee, any property in his hands are
frozen, and the garnishee pays it out to the taxpayer at his own peril.
Once the notice is served, the garnishee must remit amounts of money or property sufficient to satisfy the tax claim as
these amounts become due the taxpayer.
• Additional notices not necessary unless claim is not
The Garnishee
When the property subject to attachment
and garnishment is wages or other
compensation for personal services, the
garnishee (employer) is directed to remit
only 10% of the wages per pay period.
If the employer remits more than 10%, it’s
not the collector’s concern - it is a matter
between the employer and the taxpayer.
The Notice
Must meet requirements of G.S. 105-368(b) and
contain:
1. Name, address & (if known) Social Security number or federal tax identification number of the taxpayer.
2. The amount of taxes, penalties, interest, costs, and the year or years for which the taxes were imposed.
3. The name of the taxing units.
4. A brief description of the property to be attached. 5. A copy of the applicable law (G.S. 105-366 and 368).
Service of Notice
May be served by the tax collector, deputy tax
collector, employee of the tax collector, sheriff,
or deputy sheriff.
May be served in person to a responsible party.
Personal service is a good idea if the garnishee is new to this concept.
Registered or certified mail.
Service by first class mail is NOT authorized.
Service of Notice
On whom must the notice be served?
“upon the taxpayer and the person owing or
having in his possession the wages, rents, debts,
or other property sought to be attached…” (G.S.
105-368(b)
Personal service: delivered directly to the
garnishee or the taxpayer, or to a responsible
person residing at the address.
If mailed: registered or certified mail with return
receipt requested.
Service of Notice
If the garnishee is a corporation, the notice must be delivered or mailed to:
“an officer, director, or managing agent of the
corporation or…copies thereof (must be left) in the office of such officer, director, or managing agent with the person who is apparently in charge of the office.”
Statute does not require the taxpayer and garnishee to be served simultaneously.
If the subject of the attachment is a bank account, common sense dictates serving the bank first.
If the subject is wages, serving the taxpayer first may allow him to avoid the embarrassment of the
Response to Notice
Garnishee has 10 days in which to respond.
If no defense or setoff, the garnishee must remit the amount demanded to the extent of the garnishee’s obligation to the taxpayer.
If a defense or setoff is raised, G.S. 105-368(d) requires the garnishee to state such in writing under oath and send two copies to the collector by certified mail within 10 days of service.
A “defense” is any legal impediment; for example, the taxpayer is not employed by the garnishee, or the bank account is closed.
A “setoff” is a private obligation between the taxpayer and garnishee whereby the taxpayer owes a debt to the
Response to Notice
If a defense or setoff is asserted, the collector
must decide whether to allow it.
If accepting it in whole or part, the collector must notify the garnishee within 10 days of receiving the statement; the
garnishment is discharged by the amount involved in the defense or setoff accepted.
If not allowing the defense or setoff, the collector must provide the garnishee written notice within 10 days of receiving the garnishee’s statement.
At the same time, the collector must file copies of the original notice, the garnishee’s response, and the
collector’s objections in the appropriate division of the General Court of Justice. These documents will serve as a complaint in a civil action against the garnishee.
Response to Notice
Taxpayers may raise defenses in the same manner as
provided for the garnishee.
Possible defenses include the taxes are paid, the tax is a result of a double or incorrect listing, did not own the property on January 1, etc.
If the garnishee does not respond within 15 days after
service, G.S. 105-368(e) provides that the collector may
file the garnishment documents in the appropriate
division of the General Court of Justice and request
that a judgment be entered against the garnishee.
Response to Notice
A letter or telephone call could remind the
garnishee of the seriousness of ignoring the
garnishment.
If court action becomes necessary, the fees and
costs of the action are paid by the loser.
A judgment against the garnishee means they
are now liable for all costs of the court action
PLUS the taxes, interest, costs and penalties
included in the garnishment.
What if the taxpayer’s property is no longer in the hands of the garnishee?
Garnishment/Attachment Tidbits
May a tax collector attach bank accounts or wages when
the bank or employer is located outside of the taxing
unit? Or when the taxpayer has left the taxing unit?
If the garnishee is in the taxing unit but the taxpayer has left, the tax collector can attach the property in the garnishee’s hands.
Taxpayer can be served notice by sending a copy of
the notice to the sheriff of the county in which the
taxpayer is known (or believed) to be.
Good luck if the taxpayer is out of state!
Garnishment/Attachment Tidbits
What if the garnishee - and therefore the property to be
attached - is outside the taxing unit, within North Carolina?
Provisions of G.S. 105-364
Governing board’s order of collection has the force and effect of a judgment; a valid judgment may be executed anywhere within the state.
G.S. 105-368(h) provides for the attachment of the wages of state employees - such notice is served in Wake County.
Set-offs must be filed in the county in which the garnishee resides. This implies that garnishees may reside outside the taxing unit.
Express provision is made in Chapter 1 attachment statutes for attaching a defendant’s property located anywhere in the state.
Rent Attachment
How do you know the taxpayer owns rental
property?
Things to look for:
Owns multiple properties
Mailing address is different than property address
Accurint search for property address shows
separate individual than taxpayer residing on the
property
Rent Attachments
Serve the taxpayer-property owner and the renter.
It is good practice to serve the renter in person as
they generally have questions and concerns about
paying their rent to the tax office and not the owner.
The renter(s) will be required to pay his/her rent to
the tax office each month until all outstanding taxes
are paid in full.
When the tenant is served, they tend to start making
phone calls to the owner or property manager – so let
them help you get the bill paid!
Escheats Garnishments
Unclaimed funds held by the North Carolina
State Treasurer can be garnished by serving
them as the garnishee and serving the
taxpayer.
1 out of 6 citizens in North Carolina currently
have unclaimed funds being held in their
name (
www.nccash.com
)
Garnishments can be done on individual
and business taxpayers (even businesses
who have gone out of business)
Tips for Escheats Garnishments
Procedure - also falls under GS §105-368 “the tax
collector may attach wages and other
compensation…including property held in the
Escheat Fund”
Remember that the claims at the Treasurer’s office
are by last known addresses of the individual
(according to holder, or company who turned over
the funds). Submit paperwork listing the known
addresses of the taxpayer that match the address
on nccash.com with your garnishment form.
Never use the claim from on the Treasurer’s
website.
Address Example
The address on our system
Address Example
We had to verify if Omar ever lived at the
address the Treasurer had listed. We searched on
Accurint using our taxpayer’s known SS#.
Address Example
We were able to find that the Omar on our
system matches the Omar on theirs.
Since his current mailing address does not match
what they have on file, we will send our
garnishment form (with his current address) and
also a cover letter giving them the address that
matches what is on their system.
Escheats Garnishments
These entities represented here today currently have unclaimed
property with the State Treasurer!
Alamance County Tax Admin Carteret County Tax Collector City of Concord
Forsyth County Tax Administration Henderson County Tax Admin
Lincoln County Tax Collector Nash County Tax Collector
Rockingham County Tax Depart
Stanley County Tax Stokes County Tax Union County
Vance County Tax Admin Village of Lake Park
Special Notes
How to Find the property:
•
Tax listings
•
Copies of checks
•
Ask the bank
•
Utility payments
•
Lists of employees
•
Internet
•
Employment Security Commission
•
Rent rolls
Special Situations
Garnishing Salaries & Wages of Government
Employees
Employees of the State of North Carolina and Local Government Employees
State Employees: The notice of garnishment must be served upon the taxpayer and on the head or chief fiscal officer of the department, agency,
instrumentality of institution which employs the taxpayer.
Local Government Employees: The notice must be served upon the taxpayer and the officer charged with making up the payrolls.
Public School Employees: The notice must be served on the taxpayer and on the payroll officer of the school administrative unit.
Special Situations
Federal Employees
Federal employees no longer enjoy immunity to state garnishment orders.
Federal Employees subject to garnishment:
All civil service employees in the executive branch. All members of the armed forces (discussed later). Members of the Federal judiciary, employees of clerks’ offices, judges.
Congressional staff members, members of Congress. Employees of the Postal Service.
Garnishments should be served in a manner similar to those for State employees.
Special Situations
Federal Employees
The federal statutes allow 30 days for the agency to respond (taxpayer still only has 10 days).
Special procedures for members of the uniformed forces (the armed forces, commissioned corps of the Public Health Service and the National Oceanic and Atmospheric Administration).
The tax on which the garnishment is based must be “determined by the final judgment of a court of
competent jurisdiction.” Therefore, the garnishment must be in the form of a judgment.
Special Notes
Bank Accounts
Although a bank cannot be forced to reveal whether a particular taxpayer has funds on deposit, the bank
does not appear to be prohibited from releasing this information to the tax collector.
Word of advice - develop a relationship with the bank employees that deal with your attachments.
Procedure is same as for other intangibles:
Serve the bank FIRST, then the taxpayer.
Special Notes
Garnishment of Wages - General Practices
In January most collectors request each major employer to submit lists of its employees with full names and
addresses (G.S. 195-368(I)).
If the list is not furnished, G.S. 105-368(I)(2) states that failure to comply is a misdemeanor.
It is also a misdemeanor for a collector to release the names on such lists to unauthorized persons or to allow the lists to be used for purposes other than the collection of taxes.
Employers are not required to provide Social Security numbers.
Special Notes
Garnishment of Wages - General Practices
Lists are compared with unpaid bills.
Results are usually large numbers of very accurate garnishments.
Many collectors - as an administrative practice - simply stop calculating interest as of the date a garnishment is served. This is not allowable by statutes .
A well-designed tax listing form is a good way to ask for employers, telephone numbers, and Social Security
numbers.
The Employment Security Commission allows tax collectors to have access to their database for
Special Situations
Certain Benefits are Exempt from Attachment
and Garnishment.
Social Security & Veteran’s Benefits Are Exempt Before and After Payment!
Worker’s compensation, retirement benefits for teachers, local and state employees, unemployment compensation benefits are all exempt from DIRECT garnishment.
These funds can be attached after deposit in a bank account.
Special Situations
The State and Federal Government may
also file garnishments.
No provision for a State or Federal garnishment to be satisfied before a local collector’s garnishment takes effect.
Taxpayer may argue that the REMAINING portion of his income should be subject to the garnishment.
Other Collections
A ANotices
Creative
Ideas
Effective Notices!
Last Notice before Advertisement Required to provide notice to the January 6th owner by statute. Some jurisdictions use this notice as their second notice and advertisement notice combined. Consider how many of your taxpayers pay when they receive this warning! Pre‐foreclosure notices sent to taxpayer and Mortgage LienholderBonus Notices!
Don’t have bank account information on your taxpayer?
Try sending the taxpayer a bluff bank attachment letter!
Bonus Notices!
Bonus Notices!
Bonus Notices!
Bonus Actions!
Utilize technology! Durham County uses a
system by ELSAG – a license plate recognition
system.
Cameras mounted to the Deputies Vehicles read license plates that are delinquent and placed in the database for collection.An alert sounds, letting
the Deputy know that
there is a car with
delinquent taxes due.
The Deputy leaves one
of these notices letting the
taxpayer know they have
24 hours to pay their
Bonus Actions!
Consider turning delinquent accounts over to
an outside collection agency
A taxpayer receiving a letter from a collection
agency threatening to turn their delinquent
taxes over to the credit bureau can be a very
effective tool.
Teamwork!
GS §105-364 Collection of taxes outside the taxing unit
It is the duty of the Collector!
If the taxpayer has no personal or real property subject to
taxation in the taxing unit but has personal property in another taxing unit in North Carolina.
Or, if the taxpayer has removed from the taxing unit, leaving no personal or real property subject to the tax lien there, and is
known to be in another taxing unit in North Carolina.
The Tax Collector shall forward the tax receipt with certification stating that the taxes are unpaid for collection to the Tax
Collector of the taxing unit where the taxpayer is known to have personal property.
Teamwork!
Durham County received certification of taxes on Lee’s 24 Hour Towing for $11,259.61 on March 3, 2010 from Orange County.
Durham County attached a fee of 10% (GS §105-364(c)(1) and served a levy on Lee’s 24 hour Towing.
On April 1, 2010, Orange County was paid in full ($11,259.61) and Durham County received the 10% ($1,125.95) which was paid into the general fund.
