South Carolina General Assembly
107th Session, 1987-1988

Bill 1182


                    Current Status

Bill Number:               1182
Ratification Number:       527
Act Number                 474
Introducing Body:          Senate
Subject:                   Uniform method of collection and
                           enforcement of taxes levied and assessed by
                           the South Carolina Tax Commission
View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A474, R527, S1182)

AN ACT TO DESIGNATE SECTIONS 12-54-10 THROUGH 12-54-230, CODE OF LAWS OF SOUTH CAROLINA, 1976, AS ARTICLE 1, CHAPTER 54 OF TITLE 12, ENTITLED "UNIFORM METHOD OF COLLECTION AND ENFORCEMENT OF TAXES LEVIED AND ASSESSED BY THE SOUTH CAROLINA TAX COMMISSION", AND TO AMEND THE 1976 CODE BY ADDING ARTICLE 3 IN CHAPTER 54 OF TITLE 12, SO AS TO ENACT THE SETOFF DEBT COLLECTION ACT, AND TO REPEAL SECTIONS 12-7-2240 AND 12-53-55 OF THE 1976 CODE, RELATING TO EXISTING REFUND SETOFF AND INFORMATION EXCHANGE PROVISION MADE OBSOLETE BY THE PROVISIONS OF THIS ACT.

Be it enacted by the General Assembly of the State of South Carolina:

Article designated

SECTION 1. Sections 12-54-10 through 12-54-230 of the 1976 Code are designated Article 1, Chapter 54, Title 12 of the 1976 Code and entitled "Uniform Method of Collection and Enforcement of Taxes Levied and Assessed by the South Carolina Tax Commission".

Article added

SECTION 2. Chapter 54, Title 12 of the 1976 Code is amended by adding:

"Article 3

Setoff Debt Collection Act

Section 12-54-410. This article may be cited as the 'Setoff Debt Collection Act'.

Section 12-54-420. As used in this article:

(1) 'Claimant agency' means any state agency, board, committee, commission, public or private institution of higher learning, and the Internal Revenue Service. 'Claimant agency' does not mean the Office of Child Support Enforcement of the Department of Social Services.

(2) 'Commission' means the South Carolina Tax Commission.

(3) 'Debtor' means any individual having a delinquent debt or account with any claimant agency which has not been adjusted, satisfied, or set aside by court order, or discharged in bankruptcy.

(4) 'Delinquent debt' means any liquidated sum due and owing any claimant agency, including court costs, fines, penalties, and interest which have accrued through contract, subrogation, tort, operation of law, or any other legal theory regardless of whether there is an outstanding judgment for that sum which is legally collectible and for which a collection effort has been or is being made.

(5) 'Refund' means any individual or corporate South Carolina income tax refund payable. This term also includes any refund belonging to a debtor resulting from the filing of a joint income tax return.

Section 12-54-430. (A) The collection remedy under this article is in addition to any other remedy available by law.

(B) Claimant agencies may submit for collection under the procedure established by this article all delinquent debts which they are owed.

(C) All claimant agencies, whenever possible, shall obtain the full name, social security number, address, and any other identifying information, required by regulations promulgated by the commission for implementation of this article, from any person for whom the agencies provide any service or transact any business and who the claimant agencies can foresee may become a debtor under the terms of this article.

Section 12-54-440. If the claimant agency determines that the administrative cost of utilizing this article is prohibitive, it may choose not to participate in the setoff program, or it may chose to participate only in cases of delinquent debts above an amount it determines appropriate.

Section 12-54-450. Subject to the limitations contained in this article, the commission, upon request, shall render assistance in the collection of any delinquent account or debt owing to any claimant agency by setting off any refunds due the debtor from the commission by the sum certified by the claimant agency as delinquent debt.

Section 12-54-460. (A) A claimant agency seeking to attempt collection of a delinquent debt through setoff shall notify the commission in writing and supply information the commission determines necessary to identify the debtor whose refund is sought to be setoff. Notification to the commission and the furnishing of identifying information must occur on or before a date specified by the commission in the year preceding the calendar year during which the refund would be paid. Additionally, subject to the notification deadline specified above, the notification is effective only to initiate setoff for claims against refunds that would be made in the calendar year subsequent to the year in which notification is made to the commission.

(B) Upon receiving the certification of the claimant agency of the amount of the delinquent debt, the commission shall determine if the debtor is due a refund. If the debtor is due a refund of more than twenty-five dollars, the commission shall setoff the delinquent debt against the amount of the refund in excess of twenty-five dollars and transfer the amount setoff to the claimant agency. The commission shall retain twenty-five dollars of each refund setoff to defray its administrative expenses.

When the claimant agency is the Internal Revenue Service, the commission shall not charge the administrative fee and the total amount of the refund is available for setoff. No apportionment is required in cases of refunds resulting from filing joint returns. The commission shall consider any certified delinquent debt and debtor list provided by a claimant agency as correct. Reviews of refund setoffs are with the claimant agency. If after appropriate review the claimant agency determines that the setoff amount is excessive, it shall refund the appropriate amount to the taxpayer. If, after appropriate review, the claimant agency determines that it is entitled to no part of the amount setoff, it shall refund the entire amount plus the administrative fee retained by the commission. That portion of the refund reflecting the administrative fee must be paid from claimant agency funds. If a refund has been retained in error the claimant agency shall pay interest to the taxpayer calculated as provided in Section 12-54-20 from the date provided by law after which interest is paid on refunds until the appeal is final.

Section 12-54-470. Priority in multiple claims to refunds allowed to be setoff under the provisions of this article must be in the order in time which a claimant agency has filed a written notice with the commission of its intention to effect collection through setoff under this article. However, claims filed by any agency of state government have priority over claims filed by the Internal Revenue Service or an institution of higher learning. Notwithstanding this priority according to time of filing, the commission has priority over all other claimant agencies for collection by setoff whenever it is a competing agency for a refund.

Section 12-54-480. (A) Simultaneously with the transmittal of proceeds collected to a claimant agency, the commission shall provide the agency with an accounting, which, whenever

possible, must include the full names of the debtors and the debtors' social security numbers. No federal tax return information may be divulged by the commission under any circumstances.

(B) Upon receipt by a claimant agency of proceeds collected on its behalf by the commission and an accounting thereof as specified under this section, the agency shall credit the debtor's obligation and shall notify the debtor in writing of the amount of the setoff.

Section 12-54-490. (A) All information exchanged among the commission, claimant agency, and the debtor necessary to accomplish and effectuate the intent of this article is lawful.

(B) The information obtained by a claimant agency from the commission in accordance with the exemption allowed by subsection (A) may only be used by the agency in the pursuit of its debt collection duties and practices and any person employed by or formerly employed by the agency who discloses the information for any other purpose is subject to the penalties provided in Section 12-7-1680.

Section 12-54-500. The commission shall promulgate regulations and prescribe forms and procedures necessary to implement this article."

Repeal

SECTION 3. Sections 12-7-2240 and 12-53-55 of the 1976 Code are repealed.

Time effective

SECTION 4. This act takes effect October 15, 1988.