1099 self employed wage garnishment laws?

[CourtClerk]

A true IC payor, has no idea what their subcontractor's net income is. They have no idea what their subcontractor's payroll expenses and business expenses are. Therefore they could easily violate federal law by garnishing more than federal law allows.

And there is a remedy for this, at least in CA. The OP could easily file a claim of exemption if he found the amount fell out of guideline, or.... here's a thought, bring it up at the time of the order. One assumes that at the time of the order, the court has all of the information necessary to make an order that falls within the law. If circumstances change, then modify.

As an accountant, and as a tax professional, and as someone who has been an employer or has been responsible for following federal law as CFO for a company, I am extremely uneasy about the idea of garnishing IC income.

However, as an employer or business owner in the State of CA, you'd have no choice or find yourself under civil penalty.

As a taxpayer however, I am glad to see that IC income is also being garnished for CS.

Me too...

 

[nextwife]

That doesn't bother me if child support was calculated based on tax returns and then they go ahead an garnish it from IC payments.

However, if it somehow gets set based on IC payments, it could be grossly unfair. I have tax clients who have hundreds of thousands of dollars of IC payments, but after paying their employees and their business expenses, may only net 20% of that.

Well, I could see many cases where this creates a HUGE problem.

Example: Payor is a small home builder. The title company who is disbursing the construction draws is REQUIRED by the lender to receive lien waivers in exchange for payment to the sub contractors. The homeowner who is building the home is entitled to a completed home free and clear of sub contractor liens- that cannot happen if the homebuilder's payments are garnished. Subs and materialmen are supposed to be first dollar.

The additional problem is that is subs and material suppliers don't get paid once the contractor gets paid, they will not provide services in the future and the business will fall apart altogether.

 

[ConcerndStepmom]

ConcerndStepmom,

If the contractor is a "regular" contractor who sees a weekly/biweekly/semimonthly checks, I as an employer, am REQUIRED to garnish that check, whether it is an "employee" or a "contractor". It says that specifically on the garnishment orders that cross my desk.

And yes, I am talking FLORIDA.

Now, if it is just an occasional vendor check, it wouldn't see a garnishment from Florida. It comes under the radar when I've filed 1099-MISC with the IRS.

My Ex was a sub contractor whom built houses for one contactor (construction company) in our county as well as surrounding counties for 6 years. Never once was his CS garnished and yes there was/is a garnishment order in place due to his failure to pay CS.