April 20, 2016 – Wisconsin law was recently amended to prohibit the use of income withholding to enforce percentage expressed child support orders. 2015 Wis. Act 172 amended Wis. Stat. sections 767.75(1f) and (3m) to provide that all income assignments must be for a fixed sum regardless of whether the court-ordered obligation on which the assignment is based is expressed in the court order as a percentage of the payer's income.
Percentage expressed orders are only permissible in very limited circumstances. Support amounts must generally be expressed as a fixed sum unless the parties have stipulated to expressing the amount as a percentage of the payer’s income and the requirements under Wis. Stat. section 767.34(2) (am) 1. to 3. are met. The provisions of that section have not changed. The changes made in Act 172 relate to the enforcement of those orders.
Section 767.75(1f) provides that all orders for child support, family support, maintenance, birth costs, or receipt and disbursement fees constitute as assignment of income. The assignment applies to all commissions, earnings, salaries, wages, pension benefits, income continuation insurance benefits under section 40.62, duty disability benefits under section 40.65, lottery prizes that are payable in installments, worker’s compensation benefits under Chapter 102, unemployment compensation benefits under Chapter 108 and any other money due or to be due to the in the future. As a result of the changes in Act 172, assignments must now be issued as a flat dollar amount.
Federal law requires that all collections through income withholding must be receipted and disbursed through the state’s Disbursement Unit, the Wisconsin Support Collections Trust Fund. This requirement applies regardless whether the case is receiving the services of the Child Support program. Federal law also requires all states to use the standard Income Withholding order form, which is a federal Office of Management and Budget form. The form instructs employers to reject and return to sender any form in which the amount they are instructed to withhold is not a dollar amount. Prior to the change in Act 172, there was nothing in Wisconsin law limiting the use of income withholding orders to dollar amounts.
gov connie.chesnik wisconsin Connie M. Chesnik (U.W. 1986) is legal counsel for the Wisconsin Department of Children & Families, working with the state’s child support and W-2 programs since 1985. Reach her by gov connie.chesnik wisconsin email.
The practical effect of this change in the law is that if a stipulation is approved for a percentage expressed support amount, thereby creating an assignment of income under 767.75(1f), the order must be converted to a flat dollar amount for purposes of withholding.
If a child support agency receives a percentage expressed order with a request to process income withholding, that order will be returned so that the percentage can be converted to a flat dollar amount for purposes of withholding. The underlying order may still be expressed as a percentage and the amount due under the order may be reconciled at a later date under section 767.71 against the payments actually made to determine if there is an arrearage.
Here is an example of how this might work:
Child support payer makes $1,000/month and stipulates to a child support order expressed as 25 percent of their income for two children. That order creates an assignment of the payer's income under section 767.75(1f). The judge converts the order to a flat amount of $250/month for the purpose of income withholding, which represents the appropriate percentage of the payer’s current income.
At some point in the future, payer’s income increases to $1,100/month, and it is a year after that pay increase before a reconciliation of his payments against his income is done. When a reconciliation is done, the court makes a determination under section 767.71 that the total amount due under the order since the pay increase is $3,300 (25 percent of $1,100 = $275 x 12 = $3,300). The amount of $3,000 has been collected through income withholding, and an arrearage of $300 would be established (25 percent of the additional $100/month = $25 x 12 months = $300). The judge could increase the withholding order to reflect the increase in the payer’s income and could add an additional amount as a repayment on the $300 arrearage.
The new provisions in Act 172 took effect March 2, 2016. Payments will continue to be receipted and disbursed on income withholding orders issued prior to that date as long as employers continue to comply with those orders. However, if an employer rejects an income withholding that is expressed as a percentage of income, the order will need to be converted to a flat dollar amount by the court before it can be processed by a child support agency.