Taxes In South Carolina | Taxes South Carolina | Income Tax South Carolina

Options for Resolving Tax Debt and the Impact of Overdue Taxes in South Carolina
 

The South Carolina Department of Revenue (SCDOR) is responsible for the collection of various personal and company taxes, as well as estate tax. The SCDOR may take various collection procedures, such as rescinding company licenses, garnishing earnings, or placing liens on your property, if you owe money on taxes.

Under Governor Richard Irvine Manning, III's direction, the South Carolina Department of Revenue (SCDOR), formerly known as the South Carolina Tax Commission, was established in 1915 with the main duty of valuing property for taxes. In compliance with state law, SCDOR currently manages and collects a variety of taxes and registration fees. The goal of providing equitable tax administration for the citizens of South Carolina has not altered, despite changes in the range of services offered.

The Department of Revenue was established in 1993 by the combination of the South Carolina Tax Commission, the Division of Motor Vehicles, and the Alcoholic Beverage Control Commission. Three years later, SCDOR's original goal of administering taxes was reinstated when the Division of Motor Vehicles was transferred to the Department of Public Safety, consolidating all vehicle-related operations under a single organization.

The administrative tax obligations of SCDOR have increased due to the introduction of new taxes, such as the income and sales/use taxes, which are the main sources of revenue for South Carolina. Currently, SCDOR is responsible for overseeing and collecting funds from over thirty-two distinct taxes and registration fees, which together account for about ninety-three percent of South Carolina's general fund.

Nonetheless, the agency is open to working out a plan with taxpayers who owe money on state taxes. This guide examines your options for South Carolina tax settlement and describes what the SCDOR can do if your tax debt is unpaid.
 

Options for Resolving Back Taxes in South Carolina
You might be able to negotiate a number of arrangements if you owe money on back taxes in South Carolina. For delinquent taxpayers, the SCDOR provides payment plans, offers in compromise, and other tax relief programs.

 
The primary choices for South Carolina residents with outstanding tax debt are listed below.
 

Plans for Paying South Carolina Taxes
Both individuals and corporations are able to settle their tax obligations through the SCDOR. You cannot have an ongoing SCDOR garnishment or levy in order to be eligible, and you must have received a notice to request a Payment Plan Agreement.

Depending on how much you owe, different payment plan terms apply. Businesses must get in touch with the SCDOR directly, while individuals can extend their payment terms by up to 48 months. A payment plan can be requested online or by sending Brian an email at [email protected].

Offer in Compromise from South Carolina
Because of uncertainty about collectability and financial difficulty, the SCDOR allows proposals in compromise, which let you to pay down your tax liability for less than you owe.
When a department has issues about its ability to collect the tax liability, it is said to be in doubt as to collectability. When there are extraordinary circumstances that prevent the taxpayer from making a payment, it is considered economic hardship. It also holds true if the taxpayer would suffer undue hardship in order to pay the charge.

Form SC656 (Application for Offer in Compromise) is used to apply for an offer in compromise. The application, instructions, and list of supporting documents are all contained in this PDF. The Collection Information Statement for Individuals (Form SC433A) and the Collection Information Statement for Businesses (Form SC433B) are also included.
 

Relief for Innocent Spouses
For taxpayers who require relief from tax burdens solely attributable to their spouse or previous spouse, the SCDOR provides innocent spouse relief. If you were the recipient of a proposed assessment or had a tax refund applied to a tax burden that your spouse was responsible for, you may be eligible to file for innocent spouse relief. To submit an application, use Form SC8857 (Request for Innocent Spouse Relief).

Status of Hardship
If you meet the requirements for presently not collectible (CNC) status or hardship, the Internal Revenue Service (IRS) will cease collection operations on your account. Regretfully, the SCDOR does not promote a comparable initiative; nonetheless, the state might consider concessions from taxpayers facing financial difficulties.

People in economic distress are those who, because of extraordinary circumstances, are unable to fulfil their tax obligations. If fulfilling the tax obligation in full would put undue financial strain on you, you can also be eligible.

Reduced Penalties for South Carolina Taxes
Form C530 is used in South Carolina to ask for penalty abatement. Basic contact information and information about the taxes you owe are required on this brief form. You are next prompted to justify the SCDOR's decision to waive your penalty.
The application asks you to provide pertinent sections of the tax code to support your request. If you want to increase your chances of success, you might want to see a tax professional.

Process for South Carolina Tax Appeals
You can register a protest with the SCDOR if you don't agree with a tax assessment. Your protest will be reviewed by the SCDOR Litigation Section and the SCDOR Appeals Section. If you continue to disagree after receiving a Department Determination from the Litigation Section, you may ask for a disputed case hearing.
 

Program for Amnesty
As of this writing, tax amnesty is not being offered in South Carolina. In 2015, the SCDOR granted amnesty.
The state does, nevertheless, offer a program for voluntary disclosure. You are eligible to use this program to come forward if you haven't been submitting or paying your South Carolina taxes, but only if you make the first move to get in touch. Once the SCDOR gets in touch with you regarding the tax, your eligibility for voluntary disclosure ends.

When you utilize this program, the department waives any penalties, but the SCDOR still adds interest on your sum. Furthermore, the SCDOR will often only go back three years or fewer. To put it another way, you usually shouldn't have to worry about any taxes that are older than three years if you willingly come forward.
 

Reverse Tax Enforcement Measures
In South Carolina, taxpayers who fail to submit returns or pay their taxes may face a variety of collection measures from the SCDOR. Through its Governmental Enterprise Accounts Receivable (GEAR) program, the SCDOR also collects delinquent accounts for state agencies, higher education institutions, housing authorities, political subdivisions, and other U.S. state governmental bodies.

The SCDOR may take any of the following collection steps against you, regardless of whether you owe state taxes or liabilities through GEAR.
 

Tax Liens
If you owe money on your taxes, the SCDOR may impose a tax lien on your personal or real estate. A tax lien is the state's enforceable claim to your property that is valid for ten years after it is placed. You are unable to obtain a clear title or sell your home at this time.

You have to pay your tax debt in full in order to get a South Carolina tax lien removed. On the SCDOR website, the state additionally posts a list of all state tax liens. If you think the SCDOR filed a lien in error, you should email the SCDOR at [email protected]. Normally, the SCDOR only issues liens after the deadline for appealing the tax bill has passed.
 

Tax Levy
When the state takes your assets to pay off an unpaid tax debt, it's known as a tax levy. Your paychecks, bank accounts, investment accounts, and contract payments could all be subject to state levy in South Carolina.

For instance, if you are an independent contractor and a customer owes you money, the SCDOR might get in touch with them and ask them to send the department's payment immediately. In a similar vein, should you be a vendor and a company owes you money for goods or services, the

SCDOR has the authority to get in touch with that company and demand payment.
A quarter of your gross pay may be garnished by the SCDOR. Wages before taxes, health insurance payments, retirement contributions, and other deductions are all included in the 25%.
 

The SCDOR may be able to seize assets for unpaid bills from various organizations, including state agencies, public and private universities, and housing authorities, in addition to imposing levies for state taxes.

Tax Penalties
If taxpayers neglect to file returns or pay their tax obligations, the SCDOR imposes a variety of penalties. There is a failure-to-file penalty of 5% of the outstanding amount every month, up to a maximum of 25%, for late filing. The SCDOR will charge you a failure-to-pay penalty equal to 0.5% of the outstanding balance each month until you settle the debt or the penalty amount reaches 25% of the outstanding balance.
 

Penalties on your account in South Carolina might sum up to 50% of the entire amount owed. Based on your filing deadline, anticipated payment date, and anticipated filing date, the SCDOR's online calculator will calculate your penalties. Making an account on MyDORWAY is the simplest way to obtain this data.

Additionally, interest on outstanding tax liabilities is assessed by the SCDOR. The agency employs interest rates set by the IRS. The federal short-term rate plus 3% is used by the IRS when it modifies interest rates on a quarterly basis.
 

Additional Tax Collection Enforcement
Every quarter, the SCDOR releases a list of the top 250 delinquent firms and individuals. Taxpayers who have arranged payment arrangements or filed for bankruptcy are not included.
Additionally, companies that fail to pay their taxes or make plans to settle their outstanding debts risk having their business licences revoked by the government. Companies that go on after a licence has been revoked risk a $500 daily fine.

Common Notifications Issued by SCDOR
A range of letters are sent by the SCDOR to taxpayers who owe money on their taxes. Notices are used by the state to inform taxpayers of the following matters:
• The outstanding tax amount.
• A rise or fall in the taxpayer's reimbursement.
• A request for more tax return-related information.
• Modifications done to the tax return.
• Verification of identity.
 

Each and every notice from the SCDOR should include information about your outstanding balance, available choices for settlement, and the state's upcoming collection activities. Notifications also provide contact details for the SCDOR.

The SC Tax Collection Statute of Limitations
The clock starts on the later of these dates, and the SCDOR has three years from the date the return was due or submitted to assess taxes. If the taxpayer underreported the amount of tax owed by 20% or more, or if there was fraudulent intent, this statute of limitations does not apply. In these circumstances, the SCDOR has up to 72 months (six years) to assess the tax.

The SCDOR normally has ten years from the date of assessment to attach a lien to a taxpayer's assets, and the lien may remain on the taxpayer's assets for an additional ten years. For instance, the SCDOR has until 2030 to file a lien if someone submits a tax return in 2020 but fails to pay for it. The lien may be in effect until 2040 if the SCDOR files it in 2030.