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COMMITTEE REPORT
April 11, 2002
H. 5010
S. Printed 4/11/02--H.
Read the first time April 3, 2002.
To whom was referred a Bill (H. 5010) to amend Title 12, Code of Laws of South Carolina, 1976, by adding Chapter 55 enacting the Overdue Tax Debt Collection Act authorizing the South Carolina Department of Revenue, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
ROBERT W. HARRELL, JR. for Committee.
REVENUE IMPACT 1/
This bill is expected to increase state general fund revenue an estimated $3,600,000 in FY2002-03. This bill is also expected to increase other funds within the Department of Revenue by an estimated $400,000 in FY2002-03.
Explanation
This bill would create the Overdue Tax Debt Collection Act to allow the Department of Revenue to impose a collection assistance fee of twenty percent on certain overdue tax debts. An overdue tax debt is any unpaid tax debt that remains unpaid one hundred twenty days after the first notice of an unpaid tax debt is received by a taxpayer from the Department of Revenue. According to officials with the Department of Revenue, the department is actively pursuing an estimated $60,000,000 of outstanding collectible debt from taxpayers. Revenue officials currently collect an estimated $20,000,000 of overdue tax debts annually. Multiplying an estimated $20,000,000 of overdue tax debts by a twenty percent collection assistance fee yields an estimated $4,000,000 in overdue tax debt collection fees in FY2002-03. The Department of Revenue may retain up to ten percent of the proceeds from collection assistance fees in a special account within the department to be used for defraying the cost of collecting the debts and other administrative costs as approved by the agency director. Multiplying $4,000,000 in overdue tax debt collection assistance fees by ten percent yields an estimated $400,000 that the Department of Revenue may credit and retain in a special account within the department. The remaining $3,600,000 would be remitted to the state general fund in FY2002-03.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO AMEND TITLE 12, CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 55 ENACTING THE OVERDUE TAX DEBT COLLECTION ACT AUTHORIZING THE SOUTH CAROLINA DEPARTMENT OF REVENUE TO IMPOSE A COLLECTION ASSISTANCE FEE ON CERTAIN OVERDUE TAX DEBTS EQUAL TO TWENTY PERCENT OF THE OVERDUE AMOUNT AND TO ALLOW THE DEPARTMENT TO RETAIN A PORTION OF THE COLLECTION ASSISTANCE FEE FOR ITS OPERATION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 12 of the 1976 Code is amended by adding:
Section 12-55-10. This chapter may be cited as the Overdue Tax Debt Collection Act.
Section 12-55-20. The General Assembly finds that the Department of Revenue has documented that the State's cost of collecting overdue tax debts exceeds twenty percent of the cost of collecting overdue debts. The General Assembly further finds that the cost of collecting overdue tax debts is currently borne by taxpayers who pay their taxes on time. It is the intent of the General Assembly by enacting the Overdue Tax Debt Collection Act to ship this cost to the delinquent taxpayers who owe overdue tax debts.
Section 12-55-30. (A) As used in this chapter:
(1) 'Overdue tax debt' means any part of a tax debt that remains unpaid one hundred twenty days or more after the first notice. The term does not include a tax debt; however, if the taxpayer entered into an installment agreement for the tax debt within one hundred twenty days after the first notice and has made all timely payments required under the installment agreement.
(2) 'Notice' means a notice of proposed assessment or notice of assessment issued by the department to the taxpayer.
(3) 'Tax debt' means the total amount of tax, fees, penalties, interest, and costs for which notice has been issued by the department to the taxpayer.
(B) Except when the context clearly indicates a different meaning, the definitions in Section 12-60-30 also apply to this chapter.
Section 12-55-40. A collection assistance fee may be imposed on an overdue tax debt. To impose a collection assistance fee on a tax debt, the department shall notify the taxpayer that the collection assistance fee may be imposed if the tax debt becomes overdue tax debt.
Section 12-55-50. The collection assistance fee is collectible as part of the debt. The department may waive the fee to the same extent as if it were a penalty.
Section 12-55-60. The amount of the collection assistance fee is twenty percent of the amount of the overdue tax.
Section 12-55-70. Administrative costs not to exceed ten percent of the proceeds of the collection assistance fee must be credited to a special account within the department. This amount is a receipt of the department and must be applied to the cost of collecting tax debts, to educating taxpayers, to reduce enforced collection costs, and to other administrative costs approved by the director.
Section 12-55-80. The department may bring suits in the courts of other states to collect taxes legally due this State. The officials of other states are empowered to sue for the collection of taxes in the courts of this State. Whenever the department considers it expedient to employ local counsel to assist in bringing suit in an out-of-state court, the department may employ local counsel.
Section 12-55-90. Collection agencies with which the department contracts under Sections 12-4-340 and 12-54-227 are also authorized to collect on behalf of the department overdue tax debts and the collection fee imposed by this chapter."
SECTION 2. This act takes effect December 1, 2002, and the Overdue Tax Debt Collection Act as added by this act applies for all tax debts incurred before which remain outstanding on December 1, 2002, and to all tax debts incurred on or after December 1, 2002.
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