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Bill Number: 202 Ratification Number: 86 Act Number 50 Introducing Body: Senate Subject: Relating to the assessment and collection of taxes
(A50, R86, S202)
AN ACT TO AMEND CHAPTER 54, TITLE 12, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE ASSESSMENT AND COLLECTION OF TAXES, BY ADDING ARTICLE 5, THE SOUTH CAROLINA TAXPAYERS' BILL OF RIGHTS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. (A) The General Assembly finds that taxes are the most sensitive point of contact between citizens and their government, and that there is a delicate balance between revenue collection and taxpayer rights. It is the intent of the General Assembly to enact guarantees in South Carolina to ensure that the rights, privacy, and property of South Carolina taxpayers are protected adequately during the process of the assessment and collection of taxes.
(B) The General Assembly further finds that the South Carolina tax system is based largely on voluntary compliance, and the development of understandable tax laws and taxpayers informed of these laws will both improve voluntary compliance and the relationship between taxpayers and government. It is the further intent of the General Assembly to promote improved voluntary taxpayer compliance by improving the clarity of tax laws and efforts to inform the public of the proper application of those laws.
SECTION 2. Chapter 54 of the 1976 Code is amended by adding:
The South Carolina Taxpayers' Bill of Rights
Section 12-54-710. This article may be cited as the 'South Carolina Taxpayers' Bill of Rights'.
Section 12-54-720. The South Carolina Tax Commission shall administer this article.
Section 12-54-730. The commission shall establish the position of the Taxpayers' Rights Advocate. The advocate or his designee is responsible for facilitating resolution of taxpayer complaints and problems, including any taxpayer complaints regarding unsatisfactory treatment of taxpayers by commission employees, and staying actions where taxpayers have suffered or will suffer irreparable loss as the result of those actions. Applicable statutes of limitation are suspended during the pendency of a stay.
Section 12-54-740. The commission shall develop and implement a taxpayer education and information program directed at, but not limited to, all of the following groups:
(1) taxpayers newly registered with the commission;
(2) taxpayer or industry groups identified by the commission;
(3) commission employees.
Section 12-54-750. (A) The taxpayer education and information program specified in Section 12-54-740 includes, but is not limited to:
(1) mailings to, or appropriate contact with, the taxpayer groups specified in Section 12-54-740(2) which explain in simplified terms the most common areas of noncompliance the taxpayers or industry groups are likely to encounter;
(2) a program of written communication with newly registered taxpayers explaining in simplified terms their duties and responsibilities and the most common areas of noncompliance encountered by participants in their business or industry;
(3) participation in small business seminars and similar programs organized by state and local agencies;
(4) revision of taxpayer education materials currently produced by the commission which explain the most common areas of taxpayers' nonconformance in simplified terms;
(5) implementation of a continuing education program for audit personnel to include the application of new legislation to taxpayer activities and areas of recurrent taxpayer noncompliance or inconsistency of administration.
(B) The commission shall annually publish a report of recommendations for improving taxpayer compliance and uniform administration, including, but not limited to:
(1) changes in statute or commission regulations;
(2) improvement of training of commission personnel;
(3) improvement of taxpayer communication and education.
Section 12-54-760. The commission shall publish brief but comprehensive statements in simple and nontechnical language which explain procedures, remedies, and the rights and obligations of the commission and taxpayers. As appropriate, statements must be provided to taxpayers with the initial notice of audit, the notice of proposed additional taxes, any subsequent notice of tax due, or other substantive notices. Additionally, the commission shall include the statement in the tax booklets which are mailed annually to individuals and corporations.
Section 12-54-770. All deficiency notices and all tax due notices are required to contain a description of the basis for and identification of amounts of tax due, interest, and penalty.
Section 12-54-780. (A) The amount of revenue collected may not be used to evaluate any commission employee's performance.
(B) The commission shall develop and implement a program to evaluate employee's performance with respect to his contact with taxpayers. The development and implementation of the program must be coordinated with the Taxpayers' Rights Advocate.
Section 12-54-790. (A) Hearings may be recorded only if prior notice is given to the taxpayer and the taxpayer is entitled to receive a copy of the recording.
(B) The taxpayer must be informed before any hearing that he has a right to have present at the hearing his attorney, accountant, or other designated agent.
Section 12-54-800. (A) If the commission finds that a person's failure to make a timely return or payment is due to the person's reasonable reliance on written advice from the commission, the person is relieved of any penalty or interest, notwithstanding the provisions of Section 12-54-160.
(B) For the purposes of this section, a person's failure to make a timely return or payment is considered to be due to reasonable reliance on written advice from the commission only if the commission finds that all of the following conditions are satisfied:
(1) The person requested in writing that the commission advise him whether a particular activity or transaction is subject to tax under the tax laws administered by the commission, and the specific facts and circumstances of the activity or transaction were fully described in the request.
(2) The commission responded in writing to the person regarding the written request for advice, stating whether or not the described activity or transaction is subject to tax, or stating the conditions under which the activity or transaction is subject to tax.
(3) In reasonable reliance on the commission's written advice, the person did not remit the tax due.
(4) The liability for taxes applied to a particular activity or transaction which occurred before either of the following:
(a) the commission rescinded or modified the advice so given by sending written notice to the person of the rescinded or modified advice;
(b) a change in statutory or constitutional law, a change in the commission's regulations, or a final decision of a court, which rendered the commission's earlier written advice no longer valid;
(c) any person seeking relief under this section shall file with the commission all of the following:
( i) a copy of the person's written request to the commission and a copy of the commission's written advice;
( ii) a statement signed under penalty of perjury, setting forth the facts on which the claim is based;
(iii) any other information which the commission may require.
(d) only the person making the written request may rely on the commission's written advice to that person.
Section 12-54-810. (A) An officer or employee of the commission acting in connection with any law administered by the commission may not knowingly authorize, require, or conduct any investigation of, or surveillance over, any person for nontax administration related purposes.
(B) Any person violating subsection (A) is subject to disciplinary action in accordance with the commission's procedure, including dismissal from office or discharge from employment.
(C) This section does not apply with respect to any otherwise lawful investigation concerning organized crime activities.
(D) The provisions of this section are not intended to prohibit, restrict, or prevent the exchange of information where the person is being investigated for multiple violations.
(E) For the purposes of this section:
(1) 'Investigation' means any oral or written inquiry directed to any person, organization, or governmental agency.
(2) 'Surveillance' means the monitoring of persons, places, or events by means of electronic interception, overt or covert observations, or photography, and the use of informants.
Section 12-54-820. The commission shall release any levy issued or on any property in the event of any of the following:
(1) the liability for which the levy was made is satisfied;
(2) the commission determines that release facilitates the collection of the liability;
(3) an installment payment agreement has been executed with respect to the liability;
(4) the commission has determined that the levy creates an economic hardship due to the taxpayer's financial condition;
(5) if the commission determines the fair market value of the property exceeds the liability and partial release does not hinder collection of the tax and related costs owed to the commission.
Section 12-54-830. (A) A taxpayer may file a claim with the commission for reimbursement of bank charges incurred by the taxpayer as the direct result of an erroneous levy by the commission. Bank charges include a financial institution's customary charge for complying with the levy instructions and reasonable charges for overdrafts that are a direct consequence of the erroneous levy. The charges are those paid by the taxpayer and not waived or reimbursed by the financial institution. Each claimant applying for reimbursement shall file a claim with the commission in a form prescribed by the commission. For the commission to grant a claim, the commission shall determine that both of the following two conditions have been satisfied:
(1) the erroneous levy was caused by commission error;
(2) before the levy, the taxpayer responded to all contacts by the commission and provided the commission with any requested information or documentation sufficient to establish the taxpayer's position. The conditions stated in this item may be waived by the commission for reasonable cause.
(B) Claims pursuant to this section must be filed within ninety days from the date of the levy. Within thirty days from the date the claim is received, the commission shall respond to the claim. If the commission denies the claim, the taxpayer must be notified in writing of the reasons for the denial of the claim.
Section 12-54-840. The commission may enter into written installment payment agreements for a period not to exceed ninety days if it determines that the agreement facilitates collection of delinquent taxes, penalties, and interest owed, and liens have been recorded securing the debt and the taxpayer has clearly demonstrated inability to pay in full. The commission may modify or terminate an installment payment agreement if it determines that the financial condition of the taxpayer has sufficiently changed or the taxpayer has not complied with the terms of the installment agreement. The commission shall give written notice to the taxpayer at least thirty days before the action terminating or modifying the installment payment agreement. The provisions of this section do not apply in the cases where the commission has reason to believe that the collection of any tax, penalty, or interest is jeopardized by delay.
Section 12-54-850. The commission shall provide for an administrative appeal procedure for modifying or releasing liens. The commission may promulgate regulations to facilitate an appeals procedure for liens.
Section 12-54-860. (A) If the commission determines that filing a lien was in error, it shall mail a release to the taxpayer and the entity recording the lien as soon as possible after this determination and the receipt of lien-recording information and shall take necessary action to expunge the recording of the lien from the taxpayer's record. The release must contain a statement that the lien was filed in error. If the erroneous lien is obstructing a lawful transaction, the commission shall immediately issue a release of lien to the taxpayer and the entity recording the lien.
(B) When the commission releases a lien erroneously filed, notice of that fact must be mailed to the taxpayer and upon the request of the taxpayer, a copy of the release must be mailed to the major credit reporting companies in the county where the lien was filed.
Section 12-54-870. (A) If any employee of the commission wilfully, recklessly, and intentionally disregards commission published procedures, a taxpayer aggrieved by that action may bring an action for damages against the State of South Carolina in circuit court but not against any state employee.
(B) In any action brought under subsection (A), upon a finding of liability on the part of the State of South Carolina, the State is liable to the plaintiff in an amount equal to the sum of actual and direct monetary damages sustained by the plaintiff as a result of the actions or omissions.
(C) In the awarding of damages under subsection (B) the court shall take into consideration the negligence or omissions, if any, on the part of the plaintiff which contributed to the damages.
(D) Whenever it appears to the court that the taxpayer's position in the proceedings brought under subsection (A) is frivolous, the court may impose a penalty against the plaintiff in an amount not to exceed ten thousand dollars. A penalty so imposed must be paid upon notice and demand from the commission and must be collected as a tax imposed under this title.
Section 12-54-880. The provisions of this article are applicable to taxes administered by the commission."
SECTION 3. This act is effective for taxes assessed after December 31, 1989.