SC tax agency collects $178 million in unpaid fees, fines

The S.C. Department of Revenue collected $178 million last year for unpaid debts that Palmetto State residents they owed to another state agency or a local government.

That amount, collected through two programs, is $17.1 million more than the agency collected in the previous fiscal year.

The two programs allow the Revenue Department to collect unpaid fines or fees owed to local governments or other state agencies, including colleges.

“Unpaid liabilities hurt any organization and leave the burden on those who do pay their fair share,” said Revenue Department chief Rick Reames.

The Setoff Debt program allows the Revenue Department to offset an S.C. residents’ tax refund by the amount that person owes a local government or state agency.

That program collected $163.4 million in the fiscal year that ended June 30. That is up $13.6 million from the year before.

The second program, called Governmental Enterprise Accounts Receivable (GEAR), allows the Revenue Department to act as a collection agency to collect a debt —putting a levy on a debtor’s bank account or a lien on their house. GEAR often is used if a debtor is not owed a tax refund.

GEAR collected $14.5 million in the state’s fiscal year that ended June 30, up $3.5 million from the fiscal year before.

Most of the participants in the Revenue Department’s debt collection programs are local governments, including school districts, county offices, county hospitals, fire departments and municipalities.

Revenue chief Reames said the record year of debt collections was due, in part, to more local governments and state agencies signing up for the program. The Revenue Department has streamlined the paperwork required from local governments and state agencies to take part in the programs, Reames said.

The Revenue Department charges a $25 fee to the debtor for the Setoff Debt program.

For the GEAR program, the agency charges a $25 fee to the debtor. It also charges the local government or state agency owed money 22 percent of the debt that it collects.

This story was originally published August 28, 2016 at 6:38 PM with the headline "SC tax agency collects $178 million in unpaid fees, fines."