BASIC (09-04)

PR 04505.049 Utah

A. PR 05-006 (Utah) State of Utah Notice of Lien-Levy for Past Due Child Support NH-David L. J~, ~ (Your reference number S2D8B52:JMA)

DATE: October 4, 2004

1. SYLLABUS

This particular notice of lien-levy issued by the state of Utah against back benefits of this claimant should not be honored because the notice is not expressly authorized by the modification of the anti-assignment provision at 42 U.S.C. § 659 and accompanying regulations at 5 C.F.R. § 581 et seq. The notice, therefore, is beyond the income withholding permitted by those provisions, is unlawful under the relevant portions of the Consumer Credit Protection Act (CCPA) 15 U.S.C. §§ 1671-1677, and is arguably impermissible under State law.

2. OPINION

QUESTION PRESENTED

You have requested an opinion on whether SSA must comply with a notice of lien-levy issued by the Utah Office of Recovery Services (ORS) for past due child support.

Short Answer

We do not believe that the notice of lien-levy against back benefits of this claimant should be honored because the notice is not expressly authorized by the modification of the anti-assignment provision at 42 U.S.C. § 659 and accompanying regulations at 5 C.F.R. § 581 et seq. The notice, therefore, is beyond the income withholding permitted by those provisions, is unlawful under the relevant portions of the Consumer Credit Protection Act (CCPA) 15 U.S.C. §§ 1671-1677, and is arguably impermissible under State law.

Facts

The available facts in this case indicate that on August 25, 2004, ORS served a "Notice of Lien-Levy" on the Social Security Office in Salt Lake City, Utah. The notice demanded payment of $26,689.79 from Mr. J~ DIB for past due child support (Notice of Lien-Levy from ORS, August 25, 2004).

After an ALJ reversal, Mr. J~ past due benefits were released to him on July 23, 2004. At this time, Mr. J~ receives $623 each month in DIB, subject to his $67.00 Medicare premium, for a total monthly benefit of $556.00.

Federal Law

The Social Security Act prohibits alienation or assignment of benefits, such as execution, levy, attachment or garnishment. See 42 U.S.C. § 407(a). However, there are two narrow exceptions to the anti-assignment provision. First, Title II benefits are subject to withholding in accordance with State laws enacted pursuant to subsections (a)(1) and (b) of 42 U.S.C. § 666 (2000), and to any other "legal process" for the enforcement of alimony or child support obligations. See id. § 659(a). Subsections (a)(1) and (b) of 42 U.S.C. § 666 do not mention any procedure for collecting alimony or child support other than income withholding subject to the percentage limitations of the CCPA, codified at 15 U.S.C. § 1673. "Legal process" is defined as "any writ, order, summons or similar process in the nature of garnishment" issued by a court or administrative agency. See 42 U.S.C. § 659(i)(5)(A)(i) (emphasis added). The regulations at 5 C.F.R. § 581 et seq., and POMS also do not authorize any form of Title II benefits assignment other than income withholding in the nature of garnishment for the limited purposes stated.

Second, 26 U.S.C. §§ 6331 and 6334(c) permit the Internal Revenue Service to levy upon Social Security benefits only for collection of Federal income taxes.

Utah State Law

Utah law permits garnishment of a debtor's earnings by ORS to enforce child support obligations. See Utah Code Ann. § 62A-11-312.5(3)(a) (2004). A writ of garnishment in Utah cannot seek more than 50% of a debtor's disposable income. See id. § 62A-11-316(4). Utah R. Civ. P. 64D(d)(vii) (2004) exempts Social Security benefits from "earnings" subject to garnishment, except when sought to satisfy child support obligations. However, notices of lien-levy, are treated separately from garnishments. Utah Code Ann. § 62A-11-304.1(h)(i) (2004) permits ORS to secure assets to satisfy past-due support by (i) intercepting or seizing periodic or lump sum payments from (A) a state or local government agency, and (B) judgments, settlements, and lotteries.

DISCUSSION

We do not believe that the Agency is obligated to pay the Utah ORS in accordance with this notice of lien-levy. This notice is not expressly authorized by 42 U.S.C. §§ 659 and 666 or the accompanying regulations at 5 C.F.R. § 581 et seq., and is beyond income withholding permitted by those provisions. In addition, the notice of lien-levy is unlawful under the relevant portions of the CCPA. Finally, this notice is also arguably impermissible under State law.

The modification of the anti-assignment provision at 42 U.S.C. § 659 allows income withholding "in accordance with State law enacted pursuant to subsections (a)(1) and (b) of section 666 of this title . . . and to any other legal process brought[] by a State agency administering a program under a State plan approved under this part." See 42 U.S.C. § 659(a) (emphasis added); see also Memorandum, State of Utah Notices of Lien-Levy for Past Due Support, RCC Region VIII (R~-B~) to ARC, SSA, April 30, 2004. Likewise, the regulations state that legal process must be accomplished pursuant to State procedures in effect pursuant to subsections (a)(1) and (b) of section 666 of Title 42. See 5 C.F.R. § 581.202(b). As mentioned previously, subsections (a)(1) and (b) of section 666 only mention income withholding subject to the limitations of the CCPA, and neither the statute nor the regulations mention any other mechanism by which States or private parties can seize Social Security benefits to satisfy child support obligations. See 42 U.S.C. § 666(a)(1), (b); 15 U.S.C. § 1673(b); see also 5 C.F.R. § 581 et seq. Income withholding permissible under section 659 must not exceed the limits of section 1673(b) of the CCPA. See 42 U.S.C. § 666(b)(1). In this notice, the amount demanded, $26,689.72 exceed any limitations for income withholding.

Moreover, "any other legal process" is defined as any "writ, order, summons or similar process in the nature of garnishment." See 42 U.S.C. § 659(i)(5)(A)(i) (emphasis added). For the following reasons, we do not believe that the notices of lien-levy in this case is "in the nature of garnishment." While garnishments and notices of lien-levy are both procedures by which property of an obligor in possession of a third party is sought to satisfy child support obligations, the similarities end there. See Utah Code Ann. §§ 62A-11-312.5, 62A-11-304.1(h)(i). A garnishment is the only method the Utah statutes permit to seize "earnings," the definition of which expressly includes Social Security benefits when sought for satisfaction of child support obligations. Furthermore, as discussed above, a notice of lien-levy is a one-time attempt to seize specific property in its entirety, while garnishment is limited to 50% of the obligor's disposable earnings, and when used to enforce child support can be "continuing" over a period of time until the obligation is satisfied. See Utah Code Ann. §§ 62A-11-304.1(h)(i), 62A-11-316(4); see also Utah R. Civ. P. 64D(a)(iii), (d)(vii), (v), 69(b). Therefore, we do not believe that this notice of lien-levy is "in the nature of garnishment," insofar as it seeks a one-time seizure of the claimant's property.

Because the modification of the anti-assignment provision or waiver of sovereign immunity does not authorize any other procedure other than those in the "nature of garnishment" for income withholding of Social Security benefits, subject to CCPA limitations in order to satisfy child support obligations, and because the notice of lien-levy is "not in the nature of garnishment," we believe that the Agency is not required to honor it. No legal proceeding, including garnishment, may be brought against the United States absent a waiver of sovereign immunity. See Millard v. United States, 916 F.2d 1, 2 (Fed. Cir. 1990) (citing United States v. Mitchell, 445 U.S. 535, 538 (1980)).

This notice also may be an impermissible means of seizing Social Security benefits under State law. As discussed above, under Utah law, ORS is authorized to "secure assets to satisfy past-due support" by "intercepting or seizing periodic or lump-sum payments" from "a state or local government agency, including unemployment compensation, worker's compensation, and other benefits" and "judgments, settlements, and lotteries." See Utah Code Ann. § 62A-11-304.1(h)(i). Social Security Title II benefits are not from "a state or local government agency," nor are they a judgment, settlement or lottery. In the case of this claimant, he receives a monthly benefit of $772 per month, which cannot be classified as a "judgment, settlement or lottery." Therefore, this notice of lien-levy against a monthly benefit is arguably also improper under Utah law.

CONCLUSION

Accordingly, we advise that the Agency is not required to honor this notice because it (a) is not expressly authorized by 42 U.S.C. §§ 659 and 666 or the accompanying regulations at 5 C.F.R. § 581 et seq.; (b) violates the provisions of the CCPA, 15 U.S.C. §§ 1671-1677; and (c) is arguably impermissible under State law.

Deana R. E~-L~
Acting Regional Chief Counsel

By:__________________________
Laura R~-B~
Assistant Regional Counsel

B. PR 04-275 State of Utah Notice of Lien-Levy for Past Due Child Support NH-Juan Robert D~ ~ (Your reference number S2D8B52:JMA)

DATE: June 22, 2004

1. SYLLABUS

The issue is whether SSA must comply with a notice of lien-levy issued by the State of Utah Office of Recovery Services (ORS) for past due support owed to a child.

SSA is authorized under Section 459 of the Act to garnish title II benefits subject to legal process brought by an individual in a State court for the enforcement of a legal obligation to provide child support. A legal process is any writ, order, summons or other similar process in the nature of garnishment. It may include, but is not limited to, an attachment, writ of execution, income execution order or wage assignment that is issued by a court of competent jurisdiction, including Indian tribal courts within any State, territory, or possession of the U.S. or the District of Columbia and is directed to a government agency.

Utah state law defines writs of garnishment and notices of lien-levy as two distinct procedures. Utah law permits garnishment of a debtor's earnings, including title II payments in child support cases. The amount of recovery is limited to 50 percent of a debtor's disposable income. Notices of lien-levy, however, permit ORS to satisfy past-due child support by intercepting or seizing periodic or lump-sum payments from only a state or local government agency.

In this case, SSA does not have to comply with the notice of lien-levy because Utah law does not permit interception of a lump-sum or periodic payment from a Federal agency. In addition, SSA cannot conclude that the notice of lien-levy was issued in the nature of a garnishment since Utah specifically defines garnishment as the means of enforcing child support from title II benefits and notices of lien-levy as a means of seizing assets such as lump-sum or periodic payments from state or local agencies to satisfy past-due child support.

2. OPINION

QUESTION PRESENTED

You have requested an opinion on whether SSA must comply with a notice of lien-levy issued by the Utah Office of Recovery Services (ORS) for past due support owed to a child.

Short Answer

We do not believe that the notice of lien-levy against back benefits of this claimant1 should be honored because the notice is not expressly authorized by the modification of the anti-assignment provision at 42 U.S.C. § 659 and accompanying regulations at 5 C.F.R. § 581 et seq.2 The notice, therefore, is beyond the income withholding permitted by those provisions, is unlawful under the relevant portions of the Consumer Credit Protection Act §§ 1671-1677, and is arguably impermissible under State law.

FACTS

The available facts in this case indicate that on March 30, 2004, ORS served a "Notice of Lien-Levy" on the Social Security Office in Salt Lake City, Utah. The notice demanded payment of $13,410.00 and $ 20,048.00 from Mr. D~ DIB for past due child support (Notice of Lien-Levy from ORS, March 26, 2004).

Mr. D~ receives $772 in monthly DIB benefits. A garnishment for child support in the amount of $90.00 is being withheld from his monthly benefits. This garnishment is approximately 12% of his monthly benefits.

Federal Law

The Social Security Act prohibits alienation or assignment of benefits, such as execution, levy, attachment or garnishment. See 42 U.S.C. § 407(a). However, there are two narrow exceptions to the anti-assignment provision. First, Title II benefits are subject to withholding in accordance with State laws enacted pursuant to subsections (a)(1) and (b) of 42 U.S.C. § 666 (2000), and to any other "legal process," for the enforcement of alimony or child support obligations. See id. § 659(a) (2000). Subsections (a)(1) and (b) of 42 U.S.C. § 666 do not mention any procedure for collecting alimony or child support other than income withholding subject to the percentage limitations of the Consumer Credit Protection Act (CCPA), codified at 15 U.S.C. § 1673.3 "Legal process" is defined as "any writ, order, summons or similar process in the nature of garnishment" issued by a court or administrative agency. See 42 U.S.C. § 659(i)(5)(A)(i) (emphasis added). The regulations at 5 C.F.R. § 581 et seq., and POMS also do not authorize any form of Title II benefits assignment other than income withholding in the nature of garnishment for the limited purposes stated.

Second, 26 U.S.C. §§ 6331 and 6334(c), permit the Internal Revenue Service to levy upon Social Security benefits only for collection of Federal income taxes.

Utah State Law

Utah law permits garnishment of a debtor's earnings by ORS to enforce child support obligations. See Utah Code Ann. § 62A-11-312.5(3)(a) (2004). A writ of garnishment in Utah cannot seek more than 50% of a debtor's disposable income. See id. § 62A-11-316(4). Utah R. Civ. P. 64D(d)(vii) (2004) exempts Social Security benefits from "earnings" subject to garnishment, except when sought to satisfy child support obligations. However, notices of lien-levy, are treated separately from garnishments. Utah Code Ann. § 62A-11-304.1(h)(i) (2004) permits ORS to secure assets to satisfy past-due support by (i) intercepting or seizing periodic or lump sum payments from (A) a state or local government agency, (B) judgments, settlements, and lotteries.

DISCUSSION

We do not believe that the Agency is obligated to pay the Utah ORS in accordance with this notice of lien-levy. This notice is not expressly authorized by 42 U.S.C. §§ 659 and 666 or the accompanying regulations at 5 C.F.R. § 581 et seq. and is beyond income withholding permitted by those provisions. In addition, the notice of lien-levy is unlawful under the relevant portions of the Consumer Credit Protection Act. Finally, this notice is also arguably impermissible under State law.

As we discussed at length in the April 30, 2004 opinion, the modification of the anti-assignment provision at 42 U.S.C. § 659 allows income withholding "in accordance with State law enacted pursuant to subsections (a)(1) and (b) of section 666 of this title . . . and to any other legal process brought, by a State agency administering a program under a State plan approved under this part." See 42 U.S.C. § 659(a) (emphasis added). See Memorandum from RCC, Denver to AD VIII, Denver, State of Utah Notices of Lien-Levy for Past Due Support, at 7-8 (April 30, 2004). Likewise, the regulations state that legal process must be accomplished pursuant to State procedures in effect pursuant to subsections (a)(1) and (b) of section 666 of Title 42. See 5 C.F.R. § 581.202(b). As mentioned previously, subsections (a)(1) and (b) of section 666 only mention income withholding subject to the limitations of the CCPA, and neither the statute nor the regulations mention any other mechanism by which States or private parties can seize Social Security benefits to satisfy child support obligations. See 42 U.S.C. § 666(a)(1), (b); 15 U.S.C. § 1673(b); see also 5 C.F.R. § 581 et seq. Income withholding permissible under section 659 must not exceed the limits of section 1673(b) of the CCPA. See 42 U.S.C. § 666(b)(1). In this notice, the amounts demanded exceed any limitations for income withholding.

Moreover, "any other legal process" is defined as any "writ, order, summons or similar process in the nature of garnishment." See 42 U.S.C. § 659(i)(5)(A)(i) (emphasis added). For the following reasons, we do not believe that the notices of lien-levy in each of these three cases are "in the nature of garnishment." While garnishments and notices of lien-levy are both procedures by which property of an obligor in possession of a third party is sought to satisfy child support obligations, the similarities end there. See Utah Code Ann. §§ 62A-11-312.5, 62A-11-304.1(h)(i). A garnishment is the only method the Utah statutes permit to seize "earnings," the definition of which expressly includes Social Security benefits when sought for satisfaction of child support obligations. Furthermore, as discussed above, a notice of lien-levy is a one time attempt to seize specific property in its entirety, while garnishment is limited to 50% of the obligor's disposable earnings, and when used to enforce child support can be "continuing" over a period of time until the obligation is satisfied. See Utah Code Ann. §§ 62A-11-304.1(h)(i), 62A-11-316(4); see also Utah R. Civ. P. 64D(a)(iii), (d)(vii), (v), 69(b). Therefore, we do not believe that this notice of lien-levy is "in the nature of garnishment," insofar as it seeks a one-time seizure of the claimant's property.

Because the modification of the anti-assignment provision or waiver of sovereign immunity does not authorize any other procedure other than those in the "nature of garnishment" for income withholding of Social Security benefits subject to CCPA limitations in order to satisfy child support obligations, and because the notices of lien-levy are "not in the nature of garnishment," we believe that the Agency is not required to honor them. No legal proceeding, including garnishment, may be brought against the United States absent a waiver of sovereign immunity. See Millard v. United States, 916 F.2d 1, 2 (Fed. Cir. 1990) (citing United States v. Mitchell, 445 U.S. 535, 538 (1980)).

This notice also may be an impermissible means of seizing Social Security benefits under State law. As discussed above, under Utah law, ORS is authorized to "secure assets to satisfy past-due support" by "intercepting or seizing periodic or lump-sum payments" from "a state or local government agency, including unemployment compensation, worker's compensation, and other benefits" and "judgments, settlements, and lotteries." See Utah Code Ann. § 62A-11-304.1(h)(i). Social Security Title II benefits are not from "a state or local government agency," nor are they a judgment, settlement or lottery. In the case of this claimant, he receives a monthly benefit of $772 per month, which cannot be classified as a "judgment, settlement or lottery." Therefore, this notice of lien-levy against a monthly benefit is arguably also improper under Utah law.

Finally, even if the notice was valid, when the Agency fails to comply with legal process for enforcement of child support, we have advised that the Agency is not liable for money damages. See Memorandum from RCC, Seattle, to AD II, Seattle, Validity of Oregon Income Withholding Order Against Past-Due Benefits, at 4 (July 3, 2003).

CONCLUSION

Accordingly, we advise that the Agency is not required to honor this notice because it (a) is not expressly authorized by 42 U.S.C. §§ 659 and 666 or the accompanying regulations at 5 C.F.R. § 581 et seq.; (b) violates the provisions of the Consumer Credit Protection Act, 15 U.S.C. §§ 1671-1677; and (c) is arguably impermissible under State law.

Deana R. E~-L~
Acting Regional Chief Counsel

By:__________________________
Laura R~-B~
Assistant Regional Counsel

1We previously advised in an opinion dated April 30, 2004, that we believe that a levy can be considered "in the nature of garnishment" in some instances. Therefore, the agency should not categorically reject "levies" for child support or alimony. Such determinations must be made on a case by case basis. See Memorandum from RCC, Denver to AD VIII, Denver, State of Utah Notices of Lien-Levy for Past Due Support, at 7-8 (April 30, 2004).

2All references to the United States Code (U.S.C.) and the Code of Federal Regulations (C.F.R.) are to the 2000 and 2003 editions, respectively.

3Section 1673(b) states that the maximum part of the aggregate disposable earnings (compensation paid for personal services including periodic payments pursuant to a pension or retirement plan), subject to garnishment shall not exceed the following limits: (1) 50%, where the individual is supporting a spouse or dependent child, other than the spouse or child that is the subject of the garnishment order; (2) 55% where the individual is not supporting such a spouse or dependent child and is 12 weeks or more in arrears; (3) 60% where the person is not supporting a spouse or dependent child; and (4) 65% where the person is not supporting a spouse or dependent child and is 12 weeks or more in arrears. See 15 U.S.C. § 1673(b).


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PR 04505.049 - Utah - 03/24/2008
Batch run: 01/27/2009
Rev:03/24/2008