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DCS  > Child Support > FAQs > Frequently Asked Questions Frequently Asked Questions

As required by federal law enacted in 1984, Indiana enacted an income withholding law that applies to all employers/income payors, regardless of size. Pursuant to Indiana law, an "income payor" means an employer or other person who owes "income" to an obligor and "income" means anything of value. It permits enforcement offices operating in the Indiana Child Support Program to require any employer/income payor to withhold delinquent and current child support obligations from an employee/obligor's earnings. The amounts withheld must be submitted to the Indiana State Central Collection Unit (INSCCU). The law also applies to payments owed to independent contractors. Following are the answers to several questions employers may have with respect to the law. 

Q. How is the obligation to withhold triggered?

A. The employer/income payor is not obligated to withhold support obligations for an employee/obligor unless and until it receives a written notice from a court or a child support agency. In addition to other pertinent information, the notice must state:

  • The name of the affected employee/obligor and the fact that the employee/obligor is delinquent in the payment of child support, if appropriate.
  • The total amount to be withheld each pay period from the employee/obligor's income. (This amount may have to be computed by using the conversion table which should be included with the notice.)
  • The clerk of the court or agency to which the amount withheld must be sent.
  • The fact that the withholding must continue until:
    1. further notice is received from the court or a child support agency, or
    2. the employee/obligor is terminated from employment.

Q. What happens if an employer/income payor hires or rehires a person who already has an established child support income withholding order?

A. In either event, the employer/income payor is required by law to initiate the withholding.  The employer/income payor should contact the court or agency that issued the order, for guidance.  You can also contact the Employer Maintenance Unit for assistance at 1-800-292-0403 or email EMU@dcs.in.gov

Q. When must the withholding begin?

A. The employer/income payor must start withholding from the affected employee/obligor's pay no later than the first pay period that occurs after 14 days following the date the notice was mailed. From then on, each time the employee/obligor is paid; the proper amount must be withheld and forwarded. If the employer/income payor is required to withhold child support income from more than one employee/obligor that is payable to the same clerk, the employer/income payor may submit to such clerk or to the state central collection unit named in the notice, one total amount each pay period for all affected employee/obligors so long as the portion of the payment attributable to each employee/obligor is specified.

Employers can contact the Employer Maintenance Unit (EMU) for their issues concerning child support payments at (317) 232-0327 or 1-800-292-0403 or EMU@dcs.in.gov.

Please note: Employers with fifty (50) or more employees and more than one child support obligor, are required by I.C. 31-16-15-16 to process those payments by Electronic Funds Transfer (EFT) to the State Central Collection Unit. For employers who do not meet this requirement, payments should be mailed by check to the State Central Collection Unit, P. O. Box 6219, Indianapolis IN 46206-6219, and must include the employee's name, Social Security Number, the court cause number and the ISETS case number.

Q. What is the maximum amount that may be withheld each pay period from the employee/obligor's pay?

A. The permissible limit on withholding under the law depends upon the affected employee/obligor's present dependents and prior support obligations. Sixty percent of the employee/obligor's weekly disposable earnings may be withheld, unless the employee/obligor is presently supporting a spouse or a dependent child other than the one for whom the support is being ordered. In the latter case, only 50% of the employee/obligor's disposable earnings may be withheld. In either case, the maximum percentage is increased by 5% if the employee/obligor is more than 12 weeks behind in the payment of support. In most instances, the maximum percentage of disposable earnings subject to withholding for the affected employee/obligor will be specified in the notice. In the event that the agency or court does not know the employee/obligor's present support obligations, the employer/income payor may be required to elicit this information from the employee/obligor.

Q. What are "disposable earnings"?

A. This term is defined to include only those earnings which are left after all deductions required by law are taken from the employee/obligor's check. Hence, amounts required to be withheld for social security and income taxes would not be included in disposable earnings. On the other hand, amounts withheld from earnings at the employee/obligor's request or through an agreement with a labor union (union dues) or similar organizations are included in disposable earnings, because they are not considered deductions required by law for purposes of income garnishment. In determining the maximum amount subject to child support withholdings, garnishments presently being deducted are also included in disposable earnings.

Example: An employee/obligor's gross wages for the week are $250. From this amount, the employer/income payor withholds $40 in federal, state and local income taxes; $20 in social security taxes; $10 in union dues; $50 for insurance and $5 for the United Way. The employee/obligor has no spouse or dependent child other than the one for whom support has been ordered and is not more than 12 weeks behind in the payment of support.

The employee/obligor's disposable earnings for the week are $190 ($250 less $60). The maximum amount that may be withheld from his or her check to comply with the child support withholding law is $114 (60% of $190).

Exception: If a medical support order is currently enforceable, the child support obligation, the employer's fee and the portion of insurance for the child(ren) included in the Medcial Support Order are not to exceed the maximum percentage allowed by law.

Q. How are lump sum payments treated?

A. Lump sum payments (severance pay, sick pay, vacation pay, commissions, bonus payments, or any other lump sum payment) must be withheld if the obligor has an existing arrearage. If the lump sum payment is an amount that can be represented (equated) to a specific number of weeks, the employer/income payor should withhold the lesser of either the total amount in arrears or the product of the amount of support the employee/obligor is required to pay each week multiplied by the number of weeks represented by the lump sum payment. In either case, the amount withheld still cannot exceed the percentage allowed by the Consumer Credit Protection Act.

However, if the lump sum payment is an amount that cannot be represented by specific payment amounts over a specific number of weeks, the entire net lump sum amount must be withheld (with no federal Consumer Credit Protection Act percentage limitations) up to the amount of the employee/obligor's existing arrearage. See Fisher Body v Lincoln National Bank & Trust Company of Fort Wayne, 563 N.E. 2nd149 (Ind.App.1990)

Example (with application of percentage limitations): If the notice to withhold is for $100 each week, the lump sum payment is $1,000 (which is equivalent to 4 weeks regular pay) and the outstanding arrearage is $2,000, then the lesser of $2,000 or $400 (4 weeks times $100), which would be $400, should be taken out for child support.

Example (application of percentage limitation not applicable): company Christmas bonus of $1,000, the bonus based upon past year's success of the company. Because bonus is not representable by a certain amount per week calculation, the lump sum amount is not, under Indiana law, considered "disposable income" and not subject to federal Consumer Credit Protection Act percentage limitations. Therefore, the entire $1,000 is subject to withholding up to the employee/obligor's arrearage.

Q. Is the employer/income payor entitled to a fee for the administrative costs of withholding?

A. Yes. At the employer/income payor's option, it may deduct a fee of $2 from the employee/obligor's pay each time income is withheld and forwarded to the Clerk of the Court or support agency. The assessment of this fee will not decrease the amount of income that must be submitted to the court unless the total amount withheld would otherwise exceed the permissible limit.

Example: If the wage withholding order is for $115 per week, and the maximum amount subject to withholding for the particular employee/obligor is $115 per week, the employer/income payor may still deduct a fee of $2 from the employee/obligor's check. However, the employer/income payor must then submit only $113 to the clerk that week.

Q. What if the employee/obligor already has other assignments of garnishments on his or her income?

A. While the total amount withheld may never exceed the permissible percentage limit, the child support withholding obligation takes priority over any other claim, secured or unsecured, on income except claims for current federal, state and local taxes. Thus, child support withholding takes precedence over creditor garnishments to the extent that total withholding would otherwise exceed the permissible limit. If, in complying with all child support withholding requirements, an employer/income payor has exceeded the twenty-five (25%) of disposable income limitation applicable to business garnishments under Indiana law, the business garnishment cannot be honored. If the income withholding for child support has not exceeded the 25% limitation, the difference between what has already been withheld to comply with child support withholding requirements and 25% of the employee/obligor's disposable income (for the pay period) could be applied to a business garnishment.

If there is more than one child support withholding order against the same employee/obligor, and there is not enough money to fully satisfy all the support orders, the orders must be complied with on a pro rata basis with the appropriate pro rata share for each current obligation being first paid.

Example of a child support and business garnishment: An employee/obligor is subject to a child support order in the amount of $100 per week and a business garnishment. If the disposable income is $500, the child support obligation comes to 20%. Then only 5% of the disposable income may be sent on the business garnishment. However, if the disposable income is $400, the child support obligation would come to 25% and the business garnishment cannot be deducted from this pay.

Example of more than one child support order: An employee/obligor is already subject to a child support income withholding order in the amount of $100 per week. The maximum that may be withheld from this particular employee/obligor's weekly earnings is $120 per week. A second child support income withholding notice for the same employee/obligor is received by the employer/income payor for $50 per week. The employer/income payor would withhold and submit $80 per week on the first order and would begin withholding and submitting only $40 per week on the second. (see additional examples of pro rata allocation on provided FAQ sheet)

Q. What happens when the affected employee/obligor's employment is terminated?

A. The employer/income payor must notify either the court or the child support agency (this will be specified in the original notice) of the termination of employment within ten days of its occurrence. At the same time, the employer/income payor must also supply the terminated employee/obligor's last known address and the name and address of his or her new employer/income payor, if known. This will end the employer/income payor's obligations under this law.

Q. What are the penalties for failing to comply with or attempting to evade the requirements of this law?

A. The employer/income payor is liable for any amount it fails to withhold and submit pursuant to any child support withholding notice. Further, an affected applicant or employee/obligor may recover at least $100 from the employer/income payor in a civil action if the employer/income payor refuses to employ, discharges, or otherwise disciplines him or her because of the withholding requirement. This specific statutory remedy does not affect the applicant's or employee/obligor's right to seek any other form of legal redress that may be available to him or her because of the refusal to employ, discharge from employment, or disciplinary action.

Q. What if I have further questions regarding the child support income withholding law?

A. You may seek information at the numbers listed on the Income Withholding order under line number 12. Employers can contact the Employer Maintenance Unit (EMU) for their issues concerning child support payments at (317) 232-0327 or 1-800-292-0403 or EMU@dcs.in.gov.

How do I pro rate child support payments?

This document gives in depth detail and examples on how to pro rate child support payments.

What if the IWO received by the income payor is for an individual who is an "independent contractor for whom taxes are not deducted when the income payor compensates the obligor for obligor's services”?

A. Normally, per federal and state requirements governing income withholding for child support, the amount employers withhold is calculated by:
  1. For the pay period in question, from gross pay deduct all taxes (state, federal and local) which = "disposable income for child support".
  2. Multiply the "disposable income" by the percentage limiter (may be 50%, 55%, 60%, or 65%) indicated in the first paragraph of "Remittance Information" on the standard income withholding order.
  3. Compare the dollar amount result in #2 to the obligor's ordered amount for the time period and whichever amount is the smallest is the amount to be withheld.

However, in the case of pay to an independent contractor where NO taxes are withheld, CSB has always suggested to income payors, as a policy, that in order to be able to do steps 1-3 above and in order to express fairness to the obligor, the income payor assume taxes of 20% for step #1 and then proceed to steps #'s 2 and 3.

For example:

  1. Business (income payor) receives an IWO for an independent contractor (NCP obligor) to whom they are issuing a check for $400. The obligor's support order is $100/wk + $20wk for arrears with an indicated percentage limiter of 55%. Assumption of 20% taxes on gross pay = $80.
  2. $400 - $80= disposable income of $320 ; $320 x 55% = $176
  3. The lesser amount as between the weekly order of $120 and the 55% amount of $176 is $120; therefore, the full IWO amount can be withheld.

If, on the other hand the gross payment of $400 had been for a two week period, then the calculation would be as follows:
  1. Assumption of 20% taxes = $80
  2. $400 - $80= disposable income of $320 ; $320 x 55% = $176
  3. The lesser amount as between the bi-weekly order of $240 and the 55% amount of $176 is, in this instance, $176; THEREFORE, the full IWO order amount cannot be withheld - the lesser amount to be withheld is the percentage limiter amount of $176.

Q. What is the National Medical Support Notice (NMSN)?

A.The NMSN is a notice sent to employers from the child support enforcement agency. The NMSN is ordering you as an employer to enroll your employee’s child in your employer-provided health insurance coverage pursuant to a Qualified Medical Support Order (QMSO).

Its purpose is to ensure that children receive health care coverage when it is available and required as part of a child support order. It is designed to simplify the work of employers and plan administrators by providing uniform documents requesting health care coverage.

The NMSN/QMSO is divided into Part A and Part B. Part A is a Notice to Withhold for Health Care Coverage, the Employer's Response, and Instructions. Part B is a Medical Support Notice to the Plan Administrator, the Plan Administrator Response, and Instructions.

Payments deducted from an employee's pay pursuant to enrollment in health insurance pursuant to a NMSN/QMSO, are subject to Consumer Credit Protection Act (CCPA) limits.

It is at this point that the employer may determine that the premium and ongoing child support exceed the Consumer Credit Protection Act (CCPA) limits under the state priority for withholding. If so, the employer will notify the child support enforcement agency, using the "Employer Response".

The employer completes Part A if the employee is not eligible for health insurance, if the employee has been terminated, or if there is not enough disposable income to cover the health care premiums. If the employee is not eligible or is no longer employed, the employer returns the completed Part A to the child support agency and discards Part B.

If the employer determines that the employee is eligible, the employer forwards Part B to the Plan Administrator. The Plan Administrator completes Part B and returns it to the child support enforcement agency. The Plan Administrator may enroll the child in existing coverage or notify the child support agency of options for the custodial parent to choose from. Once the child is enrolled in a plan, the plan administrator will notify the employer of the proper premium deduction. The Plan Administrator may take whatever steps are necessary to enroll the child(ren) pursuant to the order to enroll.

Q. What is an Annual Support Fee?

A. The Annual Support Fee (ASFE) is a once-a-year administrative fee for processing child support payments. The Indiana Legislature increased the fee to $55 per child support case effective 1-1-08. Either the State or the County Clerk may collect the fee, depending on how the noncustodial parent (NCP) pays child support.

Pursuant to IC 13-33-37-5-6, the ASFE is now being collected at the State level on cases where the NCP pays child support through his employer via an income withholding order. Income withholding orders for the collection of this fee will be sent to employers if the NCP does not voluntarily pay it. This fee is considered part of the child support obligation; therefore, the Consumer Credit Protection Act (CCPA) applies. As with child support income withholding, employers who choose to do so may retain the $2.00 fee from the employees’ wages.

The fee CAN NOW also be sent electronically (ACH) but you must follow these instructions.  Set up the fee as a separate child support deduction and add ASFE to the beginning of the ISETS case number as shown on the reverse of this document.  ADP clients must use the P O Box 6219 as the payee address and add ASFE to the beginning of the ISETS case number, as only payments with this address will go electronically to Indiana.  Ceridian clients must assign the garnishment INSDU1 for the payments to go electronically.  Otherwise, payments must be by check and may NOT be combined with regular child support payments. The completed Fee Coupon indicating the employee(s) for whom the employer is paying must accompany the check so that the NCP is properly credited. Checks for the Annual Support Fee payments should be payable to the Indiana State Central Collection Unit (or INSCCU). Please mail ASFE payments to:

Indiana State Central Collection Unit ASFE
P. O. Box 6271
Indianapolis, IN 46206-6271
Note: This address is different from the address for regular child support payments!

Employers who have questions should contact the Child Support Bureau’s Employer Maintenance Unit (EMU) at (317) 232-0327 or (800) 292-0403.

Q. How does bankruptcy affect a child support obligation?

NEW BANKRUPTCY "EXCEPTIONS TO AUTOMATIC STAY" PROVISIONS BENEFIT TITLE IV-D ENFORCEMENT

The new bankruptcy legislation passed by Congress, P.L. 109-8, that went into effect on October 17, 2005 contains a variety of new and amended provisions that have the intent and purpose of enhancing the ability of enforcing and collecting child support obligations. Of particular interest to Title IV-D child support offices would be those certain and specific provisions found in SEC. 214 of the legislation and at 11USC 362(b)(2),(C),(D),(E),(F) and (G) which address "exceptions" to the normal automatic stay (of collection action) requirement when a bankruptcy action is filed. These revised provisions are as follows:
SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT OBLIGATION PROCEEDINGS.


Section 362(b) of title 11, United States Code, is amended by striking paragraph (2) and inserting the following:
`(2) under subsection (a)--
`(C) with respect to the withholding of income that is property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute;
`(D) of the withholding, suspension, or restriction of a driver's license, a professional or occupational license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act;
`(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act;
`(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or
`(G) of the enforcement of a medical obligation, as specified under title IV of the Social Security Act;'.

Under prior law, section §362(b)(2) of the Bankruptcy Code only excepted from the automatic stay the commencement or continuation of an action or proceeding: (1) for the establishment of paternity; or (2) the establishment or modification of an order for alimony, maintenance or support ; or (3) the collection of such of a support obligation from property that was not property of the bankruptcy estate.

The revisions to Bankruptcy Code section 362(b)(2) in the above referenced subsections enable the continuation of IV-D enforcement efforts by permitting:(1) the withholding of income that is property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or administrative order (an existing IWO for current plus arrears does not have to be changed to current support only); (2) the withholding, suspension, or restriction of a driver's license, or a professional, occupational or recreational license under state law, pursuant to section 42 USC 666(a)(16) may be pursued; (3) the reporting of overdue support owed by a parent to a consumer reporting agency pursuant to 42 USC §666(a)(7) may be continued; (4) the interception of tax refunds as authorized by sections 42 USC §664 and 666(a)(3) or analogous state law (federal and state); and (5) the enforcement of medical obligations, as specified under title IV of the Social Security Act (orders to provide health insurance coverage), notwithstanding the automatic stay.