What triggers a Minnesota Wage Garnishment?
The MN DOR won’t garnish your wages unless you have an outstanding Minnesota tax balance and you haven’t made arrangements with the DOR to pay it. In other words, wage garnishments often occur if you’ve failed to respond to the multiple tax collection notices sent to you.
The tax debt collection process begins when the MN DOR sends you a tax bill or “demand to pay” letter that contains the following information:
- How much you owe in taxes, penalties, and/or interest;
- Why you owe this tax debt;
- How long you have to pay this tax debt?
- What rights you have during the tax collection process?
- What enforcement actions you could be subject to if you don’t make arrangements to pay your tax debt, and
- How you can avoid tax enforcement actions?
This letter must be sent to your last known address. Keep in mind that even if the U.S. Postal Service returns this letter to the MN DOR, it can still take enforced collection action.
The MN DOR must wait at least 30 days (or for any applicable appeal periods to expire, whichever is longer) from the date it sends you the tax bill before it contacts your employer to begin the wage garnishment process.
Minnesota Wage Levy Procedures
Assuming you don’t respond to the tax bill or demand for payment and the 30-day waiting or appeal period has passed, the MN DOR can send your employer a wage levy notice. After receiving this notice, your employer must complete an online wage levy disclosure form that determines how much money will be taken out of each paycheck.
The amount your employer must garnish is equal to 25% of your disposable earnings. Your disposable earnings amount is typically what’s left in your paycheck after taking out money for other deductions, such as payroll and income taxes.
Once this garnishment begins, your employer isn’t allowed to stop garnishing your wages until the MN DOR sends your employer a wage levy release.
How to Stop or Release a Minnesota Department of Revenue Wage Levy
Wage garnishment in Minnesota is especially challenging to deal with once it begins. The MN DOR will release the wage levy and stop taking money out of your paycheck if:
- You pay off your tax debt in full.
- You file bankruptcy.
- There are other wage claims that prevent the MN DOR from garnishing your wages.
- You prove that you’re exempt from the levy; or
- You establish sufficient financial hardship.
You may be exempt from wage garnishment if you’re currently incarcerated or have been incarcerated within the last six months or have received financial need-based government aid within the last six months.
Financial hardship means the wage levy prevents you from paying for basic living costs, such as rent, essential medications, and food. Even if you show financial hardship, it might not stop the levy, but instead reduce how much the MN DOR takes from each paycheck.
Given the difficulty in stopping an MN wage levy, it’s better to prevent one from occurring.
How to Prevent a Wage Levy
The best thing to do to prevent a wage levy is to pay your Minnesota taxes as soon as you receive a bill from the Department of Revenue. If that’s not possible, you should still respond promptly to the MN DOR when they send you a tax bill.
If you disagree with the bill, you may be able to file an appeal to challenge the basis for the tax or dispute the amount.
If you agree with the tax that’s been assessed against you, but lack the ability to pay it off in full immediately, you have several options to consider. While these aren’t ideal solutions (or won’t apply in all situations), they can prevent your Minnesota tax debt from getting to the point where your paycheck is garnished.
- Set up a payment agreement.
- Claim financial hardship.
- Ask for penalty abatement.
- Request a collection suspension.
- See if you’re eligible for a compromise.
- Apply for innocent spouse relief.
- Consider filing for bankruptcy.
Stopping Minnesota Wage Garnishment FAQs
How much can the Minnesota DOR garnish from my paycheck?
Unless an exception applies, your employer must withhold and remit to the DOR 25% of what’s left from your paycheck after taking out any required withholding amounts, such as child support, IRS wage levies, and payroll taxes.
How can I stop an MN wage levy?
There are several ways to stop an existing wage garnishment: paying off your tax debt in full, showing that you’re exempt from a MN wage levy, demonstrating financial hardship, or filing bankruptcy.
Can I keep my employer from knowing about my tax debt when there’s a wage levy?
No, as the MN DOR must send a wage levy notice to your employer so your employer can withhold money and send it to the MN DOR.
Can my employer fire me for having my wages garnished by the MN Department of Revenue?
No. Under Minnesota law, an employer is prohibited from firing you or taking any other disciplinary action against you in response to the MN DOR garnishing your wages.
Do I need to hire a tax pro to resolve my tax problem?
You don’t have to, but it can be helpful if you have a tax debt you can’t afford to pay, or you believe the Minnesota Department of Revenue is asking you to pay a tax debt you don’t owe.
