How South Carolina Collects Taxes & The Tax Help Offered to Taxpayers
The South Carolina Department of Revenue does much of the same work as the IRS, but on the State level. One of the Department’s most important responsibilities is to ensure that everyone pays their taxes on time. Residents of South Carolina who owe back taxes should immediately reach out to the Department of Revenue to find out what their repayment options are. If you ignore your tax obligations the Department will aggressively go after you to collect the money. T and there are a number of ways this could play out, as follows:
If you do not comply with South Carolina’s tax laws you may be assessed penalties. The most common reasons that delinquent taxpayers get penalties added to their tax bill are for failing to file tax return on time or failing to pay the total amount due. If you fall into one or both of these categories, you may be penalized in other ways as well.
Penalties for these infractions are as follows:
Failing to File Tax Return on Time: if you failed to file within one month or less the penalty would be 5% of the total tax due. An additional 5% will be added for each month or portion of a month that goes by as long as you don’t pay. This will not exceed 25%. If you do not file your tax return on time, whether you owe money or not, the Department will estimate how much you owe and send a proposed tax assessment in that amount.
Failing to Pay Taxes on Time: if the failure were less than a month the penalty would be ½% of the total amount due. For each month or portion of a month that goes by without you paying the Department will add another ½%, without exceeding 25%.
The South Carolina Department of Revenue is responsible for collecting taxes for the State. If they contact you regarding your taxes, interest and penalties you may owe, they must give you a complete explanation. The Department sends notices to the taxpayer’s last known address and if you receive a notice you are required to send full payment for those taxes. If you disagree with the amount(s) on your tax notice you can file an appeal within 90 days of receiving the notice. You may want the expertise of a reputable tax professional to advise you on your appeal or otherwise provide tax help in the areas that would be most beneficial.
If you do not respond to the notice within the time required, the Department of Revenue may start the collections process. This could involve levies, liens, wages garnished, suspension or revocation of any licenses issued by the State, and seizure and sale of your property. Also, you may legally be held responsible for any costs associated with the State’s attempts to collect your taxes and these costs could then be added to the total amount you owe.
If you do not pay the amount of money assessed and don’t bother to arrange for an installment payment agreement, you may find that a tax lien has been placed on your property by the DOR. The upshot is that you will not be able to take a loan out on your property or sell it until you’ve fully satisfied the debt. Furthermore, a lien can ruin your credit because it’s public information.
If you have received a levy or been warned that one is on the horizon, you should get immediate tax help from a reputable professional so that you can take steps to avoid this. Otherwise, you could have your bank account(s) levied, your wages and any property you own. In fact, the DOR may seize and sell your property if that’s what it takes to collect your outstanding taxes.
License Suspension or Revocation
If you are not in compliance with State tax laws, you risk being denied an application for a license or if you are already licensed, your license may be suspended, revoked or cancelled. The Department of Revenue would notify you of this in writing along with providing the reason why this was done. Before you risk losing your license and livelihood, hire a reputable tax professional or CPA to give you the tax help you are so urgently in need of. You are within your rights to appeal this decision as long as you file your appeal within 90 days of being notified, so get professional advice and help for this.
If you are anticipating receiving a tax refund but owe back taxes, the State may intercept your refund and apply it to your existing tax liability.
Programs Available Offering Tax Help & Tax Relief to Eligible Taxpayers
You are within your rights if you want to file an appeal of a proposed tax assessment. You must do this in writing within 90 days of getting the assessment notice. You also are within your rights to be represented by an attorney, certified public account or another enrolled agent whom you trust that can provide the tax help you need by joining with you in meeting with the Department of Revenue and working on your behalf during the appeals process.
Installment Payment Agreements
The Department of Revenue wants taxpayers to file their returns on time and pay the full amount they owe. If you are unable to pay the full amount you are encouraged to send as much as you can since the interest and penalties on the outstanding balance can quickly add up.
If you miss the deadline on filing and paying your taxes, you will get a Notice of Assessment from the Department of Revenue. This will spell out what you owe in taxes and penalties. If there is no way you can pay the full amount, you may qualify to arrange for an installment payment agreement. This would allow you to pay your taxes over a period of time. If you gain approval for this program, you must make an initial minimum payment of 10% on the total amount you owe. However, you would not be eligible for an installment payment agreement if you were currently involved in bankruptcy.
To submit an application for an installment payment agreement, do the following:
- Fill out Form FS-102, which is the Installment Agreement Request
- Send a check for 10% of the taxes you owe. Make your check out to South Carolina Department of Revenue. Write your full name and social security number on the check in the memo section. Staple the check to the form. (Applications that come in without a check are automatically denied.)
- You need to also send a $45 processing fee, which is non-refundable.
- If you want your monthly installment payments automatically taken out of your checking account, include a voided check.
- Send your packet to the address at the bottom of page 1 of the form.
If you have questions you can go to the nearest Taxpayer Service Center or phone them at (803) 898-5000. You can find contact information for all the service centers at the bottom of page 2.
If your request is accepted, the State will then record a tax lien for the amount you owe under the payment agreement. Interest and penalties will keep accruing until the entire liability is paid. To remain in compliance with your agreement, you will need to file all tax returns in the future on time and include the full payment. When you accept this level of tax help from the State, you are expected to abide by your agreement. If you fail to do this or fail to make your monthly installment payments could result in the initiation of enforced collection activities.
Offer in Compromise
An Offer in Compromise provides incredible tax relief because the taxpayer is able to settle their outstanding taxes for less than what they owe. Generally speaking, South Carolina taxpayers would be eligible for an Offer in Compromise if they were undergoing severe financial hardship, if the tax debt would be extremely hard to collect due to insolvency or if it is highly questionable whether the full amount of tax is actually owed.
To apply for an Offer in Compromise, you must complete SC Form 656. When submitting the form to the Department of Revenue you’ll need to include a check for 10% of the amount you are proposing to settle your taxes for. If your proposed offer were accepted, the remaining balance would need to be paid within 30 days. Furthermore, you would have to agree to file your tax returns when due and pay the full amount of any taxes you owe for five years straight from the date the Department accepted your offer.
When you have an unpaid tax liability, the Department of Revenue will add interest and penalties to whatever amount you owe. The interest will keep accruing until you’ve paid your entire debt, but there are ways to have a portion if not all your penalties waived. To be eligible for a partial or complete abatement you will need to explain to the Department of Revenue why it is you were unable to get your taxes paid on time.
If you were granted a waiver on your penalties you would receive significant tax relief because these penalties can really add up. However, a penalty waiver is generally only approved when circumstances out of your control kept you from filing your taxes on time or you had no idea that you were obligated to pay and taxes and that they were due.
Power of Attorney
You are within your rights to authorize someone else to represent you in dealing with the South Carolina Department of Revenue. This professional who prepares your taxes is allowed to explain your return. You can have a lawyer, CPA and an enrolled agent who practices before the IRS represent your interests before the DOR. To proceed in getting the tax help you need, file Form SC2848, which is a Power of Attorney & Declaration of Representative.
Contact Information for the South Carolina Department of Revenue
If you want to reach out to the Department of Revenue, you can go in person to the nearest taxpayer service centers. They have seven spread across the state. To speak to them over the phone, you can call (803) 898-5709, which is the Taxpayer Assistance Hotline. To make an electronic inquiry, use SCeNote.Contact Us