Q&A: Here’s a question that a Wisconsin credit union recently asked The League’s Legal Affairs team, along with our answer. Do you have a compliance question? Contact The League’s Compliance Hotline at (608) 640-4050 or email.
Q. I know that we can charge a fee for IRS levies, but can we also charge for the various state levies, i.e., Department of Revenue, Workforce Development, Department of Child Protective Services, etc.?
A. If you look through our ii Release No. 0136 – Notice of Levy – you’ll see that we cover all sorts of different levies that a credit union might receive (such as unemployment benefits, child support, IRS, DOR and so forth). For several types of levies, the statutes and regulations spell out exactly what you can charge as a levy processing fee.
- On Wisconsin Department of Revenue tax levies, the Wisconsin Statutes (§71.91) do not address fees, either to allow them or to prohibit them. We advise credit unions to contact the DOR directly for approval to charge their levy processing fees. According to some credit unions, the DOR told them that most financial institutions do charge such fees and that they have no objections (but who knows if the person they talked to was knowledgeable and accurate). Without a solid answer from the statutes, our best advice is to contact the DOR, ask permission, and keep a record of the date, time, and name of the DOR rep you speak to. You can reach the DOR’s compliance department at (608) 266-7879 or by email at DORCompliance@wisconsin.gov.
- The Wisconsin Department of Workforce Development issues levies to recover delinquent unemployment compensation (UC) contributions owed by employers. DWD may also issue levies to recover UC benefit overpayments from workers. The Wisconsin Statutes (§108.225(20)) say that the credit union “is entitled to collect from the debtor a levy fee of $5 “for each levy in which a debt is satisfied by means of a single payment and $15 for each levy in which a debt is satisfied by means of more than one payment. The fee is payable from the property levied against and is in addition to the amount of the levy.” The credit union can charge the fee to the account holder at the time it transfers the proceeds of the levy to the state.
- On Wisconsin Department of Children and Families child support levies, the Wisconsin Statutes (§49.854(11)(a)) say, “Any 3rd party is entitled to a levy fee of $5 for each levy in any case where property is secured through the levy. The 3rd party shall deduct the fee from the proceeds of the levy.”
One word of caution: The credit union’s consumer Truth in Savings disclosures and comparable business account disclosures should state the amount of your levy fee with a clear indication of when the fee is incurred. And it’s best if your account documentation has language signed by each accountholder whereby they agree to the terms of such disclosures that were provided by the credit union. (For example, The League’s “Your Account Agreement” form (WCUL #82004) says: “From time to time your Account may be subject to fees. The amount and conditions under which fees may be charged to your Account are set forth in the Credit Union’s Truth-in-Savings Disclosures.”) That is enough to make the accountholders liable for the levy fee when you process a levy.