Lump Sum Payments (Bonuses, Commissions, Etc.)
Effective September 1, 2007, a Texas employer who has received an administrative writ of withholding for child support arrearages from CSD may not make a lump-sum payment to an employee in a gross amount of $500 or more without first notifying CSD to determine how much should be applied to the arrearages. [TFC§158.215]
To obtain additional information on lump sums, select one of the following topics:
- What is the definition of a “lump sum payment”?
- How can an employer determine a payment is a “lump sum payment”?
- What does an employer do once the payment is determined to be a “lump sum payment”?
- How does an employer report a lump sum?
- Electronic method
- Manual method
What is the definition of a lump sum payment?
A “lump-sum payment” is defined as income in the form of a bonus or an amount paid in lieu of vacation or other leave time. The term does not include an employee’s usual earnings or an amount paid as severance pay.
How can an employer determine a payment is a lump sum payment?
To determine a lump sum payment, an employer should consider the following:
- Would the lump sum payment be a gross amount of $500 or more?
- Is the Administrative Writ from the OAG?
If the answer is “yes” to all the questions, an employer must notify our office before making the lump sum payment to an employee.
What does an employer do once the payment is determined to be a lump sum payment?
Employers must provide the following information when notifying the OAG of a potential lump sum distribution:
- company name
- company address
- contact person’s name
- phone number
- fax number
- employee’s name
- social security number
- OAG case number
- amount of bonus, if known
Since the statute contains a 10 day requirement for CSD to respond to the notification, an employer may not make the lump sum payment
- the earlier of 10 days after the employer notified CSD of the pending lump sum payment
- the date the employer received authorization from the CSD to make the payment according to the authorization’s terms.
The OAG researches each record and sends a spreadsheet back to the employer with the amount of the arrears for each case and indicates whether or not withholding from the lump sum payment should occur. The spreadsheet is sent to the fax number provided in the application no later than 10 days from the date the record was submitted.
How does an employer report a lump sum?
Employers have several methods of reporting their employee lump sum distributions to the OAG – both electronically and manually.
The OAG has developed two electronic methods that allow employers to submit lump sum notifications in a secure environment by way of an online form or via our Data Transfer System. Both method offer a simple, safe method of data sharing that will save employers time and effort.
- The Lump Sum Payments Notification Form allows any employer who has a Texas Income Withholding Order to submit a notification of intent to distribute Lump Sum payments electronically. The online form allows employers to enter their company’s information and up to 250 employee records at a time. The form does not require a user to be registered or logged into the Employer One Stop in order to submit the Lump Sum Payment Notification. Click here to access the form
- The second method is an electronic spreadsheet that employers may submit through our data transfer system. The spreadsheet is entitled “Notice of Intent to Distribute Lump Sum Payments Form” (Excel format) and is available on this Web site. Employers who are registered to use the employer Web site have access to the data transfer system and can use the DTS Option to send records quickly and easily.
To use the Data Transfer System to upload the Excel format of the list of your employees eligible for a lump sum distribution, please follow these steps.
|1||Log into the Texas Employer Website at Employer One Stop Login|
|2||Click Data Transfer in the top navigation bar.|
|3||Click Upload File in the navigation bar.|
|4||Select File Type LUMPSUM from the drop-down menu and click Go.|
|5||Click the Browse button to select an already created file from your hard drive or other location on you company’s network.|
|6||Enter a file description that will be meaningful to you at a later date.|
|7||Click the Upload File button.|
|8||Note the File ID number for future reference.|
The OAG has developed two manual methods that allow employers to submit lump sum notifications:
- Notice of Intent to Distribute Lump Sum Payments – form
- Lump Sum Notice File Layout – Excel spreadsheet
Please Select a Topic
- Third-Party Agents
- Electronic Process
- Multiple Orders
- Determining the Amount to Be Withheld
- Definitions Established by the Texas Family Code
- Medical Support Deductions
- Multiple Orders
- Calculating Withholding Amount for Varying Pay Cycles
- Remitting Withheld Amount
- Additional Withholding Categories
- Helpful Tips
Top of page