Ignoring Income Withholding Order Results In $53,400 In Penalties

Failure to follow an income withholding order brings a steep price for an Illinois employer following the divorce of one of its employees. A recent appeal came down from the Circuit Court of Sangamon County called In Re the Marriage of Sally Kay Hundley filed by the former wife and against her ex-husband John and his employer, Buckhart Sand & Gravel. The wife filed a third party claim against her husband’s employer for not paying monthly maintenance according to the income withholding notice.

Case Background

The court issued a written order finding that the initial failure to pay over withheld amounts pursuant to the withholding notice was an innocent mistake, but the violation became “knowing” when Buckhart failed to correct the mistake until May 2016. The company was assessed a statutory penalty in the amount of $112,000. In May 2018, the trial court modified its judgment and reduced the penalty to $53,400.

Illinois Law Provides Daily Penalty When an Income Withholding Order is Ignored

Buckhart argued at one point that it had a “computing error” and that caused them not to pay the money over to the SDU. They argued that they shouldn’t have to pay the penalty because it was an honest mistake. But once they realize the mistake, they still didn’t pay. Instead, after the first appeal, the case goes to trial.
In January 2018, the trial court conducted a bench trial. The parties stipulated that:

  1. Buckhart received an income withholding notice requiring it to withhold $370 per month from John’s pay beginning January 1, 2016,
  2. John was employed by Buckhart and paid weekly at all relevant times, and
  3. Buckhart withheld the amounts required from each paycheck but failed to pay the amounts to the SDU until May 2016.

As a result, Buckhart agreed Sally was entitled to the statutory presumption that the violation was knowing.

Company Admits to Not Taking Action on the Notice to Withhold Income

Employers Beware: Notice to Withhold Income Requires Strict Compliance

The employer in this case just doesn’t use sound judgment. A payor has no interest in the funds and should not be making a legal determination as to the validity of the conditions giving rise to the withholding. It is for this reason that the Act gives immunity to any payor who complies with a withholding notice. The Act specifically contemplates that withholding notices may contain mistakes about the current amount due or even arrearages, but it is not the employer’s job to second guess the notice or to do anything besides comply. If they believe an error was made, they could always petition the court, but what they cannot do is keep the money after they’ve withheld it.

THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/support/ignoring-income-withholding-order-pay-penalties/

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