(a)        Notice. – N.C. Gen. Stat. § 105-242 specifies when intangible property is subject to attachment and garnishment. Before the Department attaches and garnishes intangible property in payment of a tax, the Department must send the garnishee a notice of garnishment. The notice must be sent in accordance with the methods authorized in N.C. Gen. Stat. § 105-241.20 or, with the agreement of the garnishee, by electronic means. The notice must contain all of the following information, unless the notice is an electronic notice subject to subsection (a1) of this section:

(1)        The taxpayer’s name.

(2)        The taxpayer’s social security number or federal identification number.

(3)        The amount of tax, interest, and penalties the taxpayer owes.

(4)        An explanation of the liability of a garnishee for tax owed by a taxpayer.

(5)        An explanation of the garnishee’s responsibility concerning the notice.

(a1)      Electronic Notice. – Before the Department sends an electronic notice of garnishment to a garnishee, the Department and the garnishee must have an agreement that establishes the protocol for transmitting the notice and provides the information required under subdivisions (4) and (5) of subsection (a) of this section. An electronic notice must contain the information required under subdivisions (1), (2), and (3) of subsection (a) of this section.

(b)        Action. – A garnishee must comply with a notice of garnishment or file a written response to the notice within the time set in this subsection. A garnishee that is a financial institution must comply or file a response within 20 days after receiving a notice of garnishment. All other garnishees must comply or file a response within 30 days after receiving a notice of garnishment. A written response must explain why the garnishee is not subject to garnishment and attachment.

Upon receipt of a written response, the Department must contact the garnishee and schedule a conference to discuss the response or inform the garnishee of the Department’s position concerning the response. If the Department does not agree with the garnishee on the garnishee’s liability, the Department may proceed to enforce the garnishee’s liability for the tax by sending the garnishee a notice of proposed assessment in accordance with N.C. Gen. Stat. § 105-241.9

(c)        Release. – A notice of garnishment sent to a financial institution is released when the financial institution complies with the notice. A notice of garnishment sent to all other garnishees is released when the Department sends the garnishee a notice of release. A notice of release must state the name and social security number or federal identification number of the taxpayer to whom the release applies.

(d)       Financial Institution. – As used in this section, the term “financial institution” has the same meaning as in N.C. Gen. Stat. § 53B-2 ?(2007-491, s. 30; 2010-31, s. 31.8(i).)

Terms Used In North Carolina General Statutes 105-242.1

  • Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
  • following: when used by way of reference to any section of a statute, shall be construed to mean the section next preceding or next following that in which such reference is made; unless when some other section is expressly designated in such reference. See North Carolina General Statutes 12-3
  • Garnishment: Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
  • Intangible property: Property that has no intrinsic value, but is merely the evidence of value such as stock certificates, bonds, and promissory notes.
  • property: shall include all property, both real and personal. See North Carolina General Statutes 12-3
  • state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories, so called; and the words "United States" shall be construed to include the said district and territories and all dependencies. See North Carolina General Statutes 12-3
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