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Illinois Income Withholding Information and Compliance

In the state of Illinois, income withholding most frequently relates to the court- or administration-ordered deduction of wages from an individual’s income to fulfill payment of child support. Although income withholding can sometimes apply to deductions for spousal support or medical support, in this article we’ll primarily focus on all that is required of employers to remain compliant, timely, and accurate with employee withholding for child support payments.

income withholding order illinois building

Phases of the Withholding Process

When employers first receive an Order/Notice – Income Withholding for Support related to child support or medical support, the Illinois Department of Healthcare and Family Services or issuing agency will also send the following documents:

  • An Employer IWN Cover Letter
  • Health Insurance Reports (if union-sponsored or employer healthcare is part of the withholding order)
  • A National Medical Support Notice
  • A HIPPA Privacy Letter

Expectations of the Employer

Once an employer has received an Order/Notice – Income Withholding for Support form and all other documents needed to fulfill income withholding and medical insurance obligations, they should complete the following steps:

  • Verify the authenticity of the order and ensure that all required information is provided. Once authenticated, date stamp the documents.
  • Note where to remit payments, the amount of child support required, medical support terms, and any conditions/terms for past-due support.
  • Provide a copy of the Order/Notice to the employee
  • Closely abide by the terms of the order

In the state of Illinois, employers are entitled to deduct $5 per month as an administrative fee for completing withholding of employee income. This amount is deducted from the employee’s remaining income and should not impact the support payment amount.

In the event that an employee’s wages do not allow for full payment of the requested support amount, employers are legally entitled to withhold up to 50% of the obligor’s disposable income. If other employee garnishments are already in place (or activate later), the employer must always withhold income for child support first above other garnishments. Illinois Child Support Services offers more detailed information and guidance on how to subsequently withhold for secondary garnishments (typically at a rate that cannot exceed 25% of the employee’s remaining disposable income).

Payment Submission

In alignment with federal regulations, Illinois employers are required to submit withheld child support within seven business days of the scheduled pay date (or the day payment is credited to the employee).

In the original Order/Notice – Income Withholding for Support, there may be specific payment instructions, but in most cases, employers should submit income withholding payments (child support, spousal support, and medical support) to the following address:

Illinois State Disbursement Unit (SDU)

P.O. Box 5400

Carol Stream, IL 60197-5400

Checks should be made payable to the Illinois State Disbursement Unit and be accompanied by a document cataloging the employee’s name, SSN, payment amount, case/docket number, and the court or agency where the order was entered.

If an employer withholds for multiple employees within the organization, it is permissible to send a single combined payment accounting for all funds due. However, the information listed above must be included to account for each employee and case.

Employers are obligated to continue withholding based on the terms outlined in the original Order/Notice. In the state of Illinois, if an employee separates from the employer or employment is terminated, the employer must complete the “Notice of Employment Termination or Income Status” section found in the original Order/Notice. This must then be sent to the Illinois Department of Health Care and Family Services.

Consequences for Noncompliance

Employers are forbidden from disciplining, discharging, refusing to hire, or penalizing an employee on the basis of mandated income withholding to fulfill child support obligations. If an employer takes such action, they could be fined $200, forced to provide restitution, and reinstate the employee.

Employers may not willfully refrain from withholding or paying income required through an Order/Notice and could ultimately be held liable for the full amount owed. Similarly, if an employer fails to pay withheld amounts within seven business days of an employee’s payday, they could be fined $100 for each day the infraction continues (beyond seven business days). Nevertheless, recent Illinois legislation stipulates that the Illinois Department of Healthcare and Family Services may not impose a fine that exceeds $1,000 within a single pay period.

Simplify Income Withholding, Garnishments and Pay Deductions with CAVU

Whether your business is navigating income withholding, garnishment orders, or voluntary pay deductions, CAVU HCM’s Garnishment Administration Service provides the guidance and support you need to remain legally compliant. Our experts manage the calculations, setups, and deductions necessary to fulfill all federal and Illinois state requirements and complete deductions in a timely and accurate way.

Ready to enjoy hassle-free withholding and payroll? Contact us today to start our collaboration.

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.