Attachment and Garnishment: Who, What and When

Attachment and Garnishment is an effective and often-used method of enforced tax collection.  But, the statutes that govern it and the process of enforcing it are anything but easy. 

Below are a few basic pointers to keep in mind when it comes to determining when to pursue this enforced collections remedy and against what type of personal property to attach.

When 

General Statute 105-368 gives NC local government taxing authorities the right to pursue Attachment and Garnishment against a delinquent taxpayer’s intangible personal property on the first day that the tax is considered delinquent (January 6^th).

What Can be Attached and Garnished

Intangible personal property is defined as any personal property that can’t be seen or felt and which legally belongs to the taxpayer.  Examples of intangible personal property that are available to the Attachment and Garnishment remedy are:

• Wages or other compensation

• Rental fees on property owned by the taxpayer

• Bank deposits

• Owned by the taxpayer

• Owned jointly by the taxpayer and a spouse

• Proceeds subject to levy (such as proceeds from a real estate sell)

• Property held in an Escheat Fund (unclaimed property)

What Can Not be Attached or Garnished

There are a few forms of intangible personal property that are exempt from the Attachment and Garnishment remedy due to federal and state laws which prohibit their attachment.  These are:

• Most retirement benefits

• Military benefits

• Unemployment compensation

• Social Security benefits

• NC public assistance payments (Medicaid, payment for adoption assistance, food and nutrition service benefits)

• Corporate assets for which the delinquent taxpayer is a shareholder

Who is Subject to Attachment and Garnishment

Any person or entity who owes intangible personal property subject to G.S. 105-368 to a delinquent taxpayer can be subject to Attachment and Garnishment.  This includes:

• Employers

• Up to 10% of gross wages (before deductions for taxes, retirement plans, or other voluntary withholdings) due to the delinquent taxpayer

• This includes the Federal  Government , though the required time allowed for a response is lengthened.

• Tenants

• Rents would be paid in their entirety to the taxing authority

• Other County or City Governments in the possession of funds belonging to the delinquent taxpayer

• Banks

  • Eligible deposits or balances would be paid to the taxing authority until the tax debt is satisfied

For more on the Attachment and Garnishment remedy, you may refer to G.S. 105-368.