Garnishments
By: Steve H Powell & Company
Our clients continue to manage around & through the various COVID-driven, market disruptions. Very commonly, branches are closed or are, at best, operating with reduced staffing levels.
Diminished staffing can lead to breakdowns in various procedures. Being serviced with a notice of garnishment or levy is a routine occurrence, and one that may increase if fraud is found during the government’s review of various (Paycheck Protection Program) PPP loans. Be certain the institution has adequate procedures in place, and staff has had proper training regarding accepting, reporting, and answering any legal notice with which the institution may be served. While a branch manager may be well versed in the institution’s procedures, does a ‘stand-in’ branch manager know how & what to do?
As per IRC 6331 and 6332, government can levy for past due taxes. Additionally, under 6332(d)(2), the institution could incur a substantial penalty for failing to honor the levy. Within United States v. Ruff:
Upon receipt of a notice of levy, such third parties are required to surrender that property to the IRS. The notice of levy ‘gives the IRS the right to all property levied upon…and creates a custodial relationship between the person holding the property and the IRS so that the property comes into constructive possession of the government.’ Those individuals who fail to honor the levy incur liability to the government equal to the full value of the property not surrendered.
Under Georgia law, if a garnishment notice is not answered within 45 days of being served, the institution could be subject to a judgement for the total amount of the garnishment. Per O.C.G.A. 18-4-90 (2010) Entry of default judgment upon failure of garnishee to file answer to summons; opening of default:
In case the garnishee fails or refuses to file an answer by the forty-fifth day after service of the summons, the garnishee shall automatically be in default. The default may be opened as a matter of right by the filing of an answer within 15 days of the day of default and payment of costs. If the case is still in default after the expiration of the period of 15 days, judgment by default may be entered at any time thereafter against the garnishee for the amount claimed to be due on the judgment obtained against the defendant.
Diminished staffing can lead to breakdowns in various procedures. Being serviced with a notice of garnishment or levy is a routine occurrence, and one that may increase if fraud is found during the government’s review of various (Paycheck Protection Program) PPP loans. Be certain the institution has adequate procedures in place, and staff has had proper training regarding accepting, reporting, and answering any legal notice with which the institution may be served. While a branch manager may be well versed in the institution’s procedures, does a ‘stand-in’ branch manager know how & what to do?
As per IRC 6331 and 6332, government can levy for past due taxes. Additionally, under 6332(d)(2), the institution could incur a substantial penalty for failing to honor the levy. Within United States v. Ruff:
Upon receipt of a notice of levy, such third parties are required to surrender that property to the IRS. The notice of levy ‘gives the IRS the right to all property levied upon…and creates a custodial relationship between the person holding the property and the IRS so that the property comes into constructive possession of the government.’ Those individuals who fail to honor the levy incur liability to the government equal to the full value of the property not surrendered.
Under Georgia law, if a garnishment notice is not answered within 45 days of being served, the institution could be subject to a judgement for the total amount of the garnishment. Per O.C.G.A. 18-4-90 (2010) Entry of default judgment upon failure of garnishee to file answer to summons; opening of default:
In case the garnishee fails or refuses to file an answer by the forty-fifth day after service of the summons, the garnishee shall automatically be in default. The default may be opened as a matter of right by the filing of an answer within 15 days of the day of default and payment of costs. If the case is still in default after the expiration of the period of 15 days, judgment by default may be entered at any time thereafter against the garnishee for the amount claimed to be due on the judgment obtained against the defendant.