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Indicates Matter Stricken
Indicates New Matter
April 9, 2003
S. Printed 4/9/03--H.
Read the first time January 14, 2003.
To whom was referred a Bill (H. 3065) 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 with amendment:
Amend the bill, as and if amended, in Section 12-55-30(A), as contained in SECTION 1, page 2, by striking item (1) and inserting:
/ (1) 'Overdue tax debt' means any part of a tax debt that remains unpaid one hundred twenty days or more after the first notice. /
Amend the bill further, as and if amended, page 2, by striking Section 12-55-70 and inserting:
/ Section 12-55-70. The proceeds of the collection assistance fee must be credited to a special account within the department and must be used to fund the South Carolina Business One Stop (SCBOS) program within the department. Any excess proceeds of the collection assistance fee above the amount required to fund the SCBOS program must be credited to the department to be retained and expended for use in budgeted operations. /
Amend the bill further, as and if amended, page 3, by striking SECTION 2 and inserting:
/ SECTION 2. This act takes effect upon approval by the Governor 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. /
Renumber sections to conform.
Amend title to conform.
ROBERT W. HARRELL, JR. for Committee.
The Board of Economic Advisors has reviewed the bill and has determined that there is no impact on state general or other fund revenue in FY2003-04.
This bill would make the collection assistance fee and revenue allocation provisions of Proviso 64.14 of the FY2002-03 Appropriation Act part of permanent law. Specifically, this bill would codify the provisions of Proviso 64.14 of the FY2002-03 Appropriation Act that permit DOR to charge certain delinquent taxpayers a 20 percent "collection assistance fee" against overdue tax debt. Overdue tax debt is defined as "any part of a tax debt that remains unpaid one hundred twenty days or more" after taxpayers are first notified of overdue tax liability. Proviso 64.14 of the FY2002-03 Appropriation Act provides that 10 percent of revenue generated by collection assistance fees is retained by DOR with the remaining 90 percent transferable to the general fund. This bill would allocate collection assistance fee revenue in the same manner and using the same percentage as Proviso 64.14 of the FY2002-03 Appropriation Act. According to DOR officials, collectable overdue tax debt one hundred twenty days old or older to which the 20 percent collection assistance fee applies will total an estimated $2,520,000 in FY2003-04. Multiplying an estimated $2,520,000 in collectable overdue tax debt one hundred twenty days old or older by a 20 percent collection assistance fee would generate an estimated $504,000 of collection assistance fee revenue in FY2003-04. Of this amount, an estimated $50,400, or 10 percent, would be retained by DOR and an estimated $453,600, or 90 percent, would be transferred to the general fund in FY2003-04. According to DOR officials, revenue generated by this fee may increase in future years if and/or when overdue tax debt levels return to historic trends experienced prior to the tax amnesty program implemented during the second quarter of FY2002-03. Because Proviso 64.14 of the FY2002-03 Appropriation Act already permits DOR to charge certain delinquent taxpayers a 20 percent collection assistance fee and because the allocation of collection assistance fee revenue was not altered, this bill is not expected to impact state general or other fund revenue in FY2003-04.
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.
EXPLANATION OF IMPACT:
The Department of Revenue indicates there will be no fiscal impact on the General Fund of the State. Any additional expenses in other funds would be offset by the collection fee authorized by the proposed legislation to be retained and used by the department.
The Board of Economic Advisors is the appropriate agency to address any revenue impact of this legislation.
Office of State Budget
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, 2003, 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, 2003, and to all tax debts incurred on or after December 1, 2003.
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