Glossary

Confused about a specific term or acronym? Solve the mysteries of terminology with this informative resource. Updated regularly with industry-specific vocabulary and concepts, the Glossary provides easy-to-understand definitions of tax-related terms.

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Electronic Funds Transfer (EFT)
Some states and federal agencies require employers to pay unemployment taxes by electronic funds transfer. There are several regulations for electronic funds transfer.
Garnishment
Garnishment another term for lien. ADP also uses the term garnishment to describe one of the four lien types handled by WGPS. ADP processes regular garnishments (federal and state student loans) and creditor garnishments(for money owed to a hospital, department store, and other creditors)
Obligation
Amount of money to be paid as support by the responsible parent and themanner in which it is to be paid.
Obligee
The person or agency to whom payments are owed (e.g., the custodialparent in the case of a child support order)
Obligor
A person who is bound by a legal obligation or required to pay a lien orgarnishment. The employee who is subject to withholding is the obligor
Payee
A person or agency to whom payments for a wage garnishment are sent.In the case of child support, the payee can be the custodial parent or thechild support agency enforcing the child support order
Private Support
Withholding that is the result of a private agreement between parties or requested by the employee and often paid to a third party, for example, a trustee, bank, attorney, or estate. A phrase in a support order such as "agreement between the court and listed parties" identifies a private support order. This lien type has a low priority; it takes precedence over employee wage assignments and other voluntary deductions only.
Spousal Support
Support Payment made by one spouse to the other during or after legal separation or divorce (also known as alimony). See also Support Order
Support Order
The attachment of a portion of an employee’s wages for child, spousal, ormedical support. This wage attachment can be the result of a court order(mandatory) or an agreement between involved parties (private).
Tax Levy
The attachment of a portion of an employee’s wages (after credit forfederal or state exemptions) to the Internal Revenue Service (IRS) or state government for payment of delinquent taxes.
Wage Assignment
An employee's voluntary transfer of wages for payment of an installment loan or purchase. For example, you might use a wage assignment to make payments for health and life insurance, savings plan, car loan, or mortgage.

ADP’s WGPS feature does not handle wage assignments; if an employee requests a wage assignment, enter it as a voluntary deduction and disburse it manually.
Wage Attachment
An employee's involuntary transfer of wages for payment of a support order, federal or state tax levy, creditor garnishment, student loan, or bankruptcy.
Wage Base
The amount of an employee’s pay that is subject to wage garnishment (also called the lien basis). The lien wage base varies by lien type and jurisdiction. Often it is disposable income—that is, gross pay minus taxesand other earnings or deductions required by law
Sarbanes-Oxley Act
The Sarbanes-Oxley Act was signed into law in an effort to prevent or reduce the incidence of corporate and securities fraud. Significantly, the Act (technically named "The Corporate and Criminal Fraud Accountability Act of 2002") provides protection to, and even encourages, employees who would report such fraud.

Sarbanes-Oxley provides the most forceful protections to date for corporate whistleblowers. It prohibits retaliation against whistleblowers, reinforces the act of whistleblowing, and requires public companies to adopt a code of business ethics and protocols for receiving and reviewing reports of ethical wrongdoing. More importantly, the Act enforces compliance by making both corporations and individuals accountable for their actions via administrative, civil, and criminal enforcement mechanisms.
Statement of Payment
Wage Garnishment report that provides the client details of when Employee disbursements release and the payment method.
Debit Filter
Automatically returns all ACH items for a designated Client account, except those that are pre-authorized. Authorized ACH Originators (ADP) are identified by providing the bank with a specific Company Identifier (debit filter number).
Overpayment
An amount of benefits paid to an individual to which the individual is not legally entitled, regardless of whether or not the amount is subsequently recovered.
Employer
An employing unit, as defined, subject under State or Federal unemployment compensation laws.
Deductions
An amount that is or may be subtracted from an employee's paycheck. They can be taken pre-tax or after tax depending on the type of deduction. The employee must agree to have deductions withheld from their paycheck
Dependent
A person who is claimed as a dependent must:
- be a child of the employee who is either under 19 or a full-time student under 24, or
- be a child of the employee who is a full-time student over 24 who is reasonably expected to receive less than $3,000 of income during the taxable year, or
- be reasonably expected to receive less than $3,000 of income during the taxable year, or
- be permanently and totally disabled and receive income for services performed at a sheltered workshop operated by a charity or government
- receive more than half his support from the employee;
- be a citizen, national, or resident of the United States, or a resident of Canada or Mexico, or an alien child adopted by and living with a United States citizen abroad;
- and be either:
  (1) a child, grandchild, stepchild, parent, grandparent, stepparent, brother, sister, stepbrother, stepsister, in law, aunt, uncle, nephew, or niece of the employee, or
  
  (2) a member of the employee's household for the taxable year and have the employee's home as his principal place of abode; and not file a joint return.
- Involuntary Deductions
  Deductions over which the employers and employees have no control.
- Social Security Number (SSN)
  An individual's taxpayer identification number; it consists of nine digits in the format 000-00-0000.
- Wage Withholding
  An automatic deduction of all or part of an employee’s wages to pay some debt or financial obligation such as child support. Wage withholding can be voluntary or involuntary
- Alimony
  Payments made by one spouse to the other, often during or after a legal separation or divorce (also known as spousal support). See also Support Order
- Allowable Lien Limits
  Federal and state limitations on the amount of an employee’s wages that can be attached for a lien
- Bankruptcy
  The attachment of all or a portion of an employee’s wages to satisfy outstanding debts. Usually, this lien type has the highest priority.When you receive a bankruptcy order, you must inactivate all other liens(except, in most cases, support orders). Currently, all bankruptcies are issued by a federal court
- Case/Docket Number
  A court-assigned number that identifies a judgment against an obligor and the resulting lien
- Child Support
  Payments made to the custodial parent for the care of dependents.See also Support Order
- Collection Agency
  A third party responsible for collecting overdue debts
- Court-Ordered Support
  A mandatory support order, often paid to the court or a child support enforcement agency, that is identified by phrasing such as “order served”or “notice of order”
- Custodial Parent
  Person with legal custody and with whom the child lives; may be a parent,relative, or other individual
- Disposable Income
  Earnings minus deductions required by law to be withheld. These required deductions include the following
  - Federal, state, and local taxes
  - Mandatory union dues or retirement/pension plan contributions (such as for government workers), if allowed for a particular lien type and jurisdiction
  - Any additional earnings or deductions specified on the lien notification
  Note: Other lien deductions, such as support payments, are not considered “deductions required by law” unless specified on the lien notification
- Employer-Allowed Fee
  An administrative fee collected by an employer from an employee for processing a lien. The legality, amount, and collection frequency vary by state
- Excludable Deductions
  Scheduled deductions that are subtracted from an employee’s gross pay before a lien deduction is calculated. Deductions that should be excluded vary by tax jurisdiction and lien type and must be indicated on the lien notification
- Excludable Earnings
  Earnings that are subtracted from an employee’s gross pay before a lien deduction is calculated.
- FIPS Code
  The Federal Information Processing Standard code used to identify the child support enforcement agency that issued an order. Not all support orders specify a FIPS code
- Funds Disbursement
  A WGPS feature that has ADP make lien payments to the appropriate payee
- Goal Limit
  The total amount due to satisfy a lien. When this limit is reached, the deduction stops. Federal bankruptcy, garnishments, and tax levies often have a fixed amount to be paid; support orders usually do not unless theyare a separate order for arrears
- Immediate Wage Withholding
  Mandatory deductions from income that start as soon as an agreement for support is established.
- Levy
  See also Tax Levy
- Lien Basis
  The amount of an employee’s pay that is subject to wage garnishment.The lien basis varies by lien type and jurisdiction. Often it is disposable income that is, gross pay minus taxes and other earnings or deductions required by law.
- Lien Notification
  A court order or other document that specifies the terms of an employee lien (e.g., payee name, amount due, start date). This notification is yoursource document when setting up a lien and entering payee information and excludables.
- Lien Type
  A category of lien that affects the lien priority and calculation basis.ADP currently supports Bankruptcy, Support Order, Garnishment, andTax Levy lien types
- Mandatory Support
  Withholding that is court-ordered and usually paid to a court or childsupport enforcement agency. Phrases in a support order such as“order served” or “notice of order” identify a mandatory support order.This lien type has a high priority.
- Noncustodial Parent
  A parent who does not have primary custody of a child but who is responsible for financial support.
- Nonresidential Parent
  A parent who does not live with or have custody of a child but who is responsible for financial support.