Easy-To- Read Understanding of South Carolina State Tax Liens
Quick Summary
- A state tax lien is when the government places a claim on your property, stopping you from selling or refinancing until the debt is settled.
- Each year, the South Carolina Department of Revenue sends notices to people who owe state taxes.
- Once you pay off the debt in full, the lien is removed, and you can sell, refinance, or keep your property without worrying about losing it.
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WHAT IS A STATE TAX LIEN IN SOUTH CAROLINA?
In the state of South Carolina, a state tax lien is a claim against your property – either real or personal. This type of lien occurs when a taxpayer owes the South Carolina Department of Revenue and fails to repay their tax debt.
Before you are able to sell your property, you must repay the debt to satisfy the active lien. If you have an active lien, you cannot sell or refinance your property until you’ve paid the debt. An active lien on your property may result in a lower credit rating and can impact your chances of getting a loan or financing.
Once you’ve paid the debt in full, your state tax liens will be satisfied, and you’ll receive a clear title. Within 30 days of payment, the State Tax Lien Registry will be updated by the South Carolina Department of Revenue to show the debt has been resolved.
WHY DID I RECEIVE A SC STATE TAX LIEN?
The South Carolina Department of Revenue sends out many notices to taxpayers every year – around hundreds of thousands of notices. These notices contain specific information about what you need to know and what you need to know about your state tax lien. In most cases, these issues can be resolved in a timely manner if you follow the instructions given to you in the notice.
The SCDOR may send you a notice for a number of reasons, including:
- You have a balance due
- You are due a larger or smaller refund
- There’s a question about your return or they need additional information or documents
- They need to verify your identity. This may include asking you to send additional documents or complete either the Identity Verification Quiz or Individual Code Verification on MyDORWAY.
- Your return changed
- A collection agency partnered with the SCDOR to collect a debt you owe
HOW CAN I RESOLVE MY SC NOTICE?
What you need to do to resolve your notice will depend on the instructions given. These steps should be clearly outlined in the notice you receive. The state may ask you to:
Pay the Amount Due
You can pay online through South Carolina’s free tax portal, MyDORWAY. Or you can mail in your payment along with the voucher you received in your notice to the address listed.
Request a Payment Plan Agreement
If you are not able to pay in full, you can request a Payment Plan Agreement. The SCDOR will review your request and either accept or deny. Learn more here.
Send Copies of Any Missing Documents to the SCDOR
You’ll be asked to mail copies of the requested documents to the address listed on your notice.
Verify your identity
Your notice may direct you to sc.gov/VerifyID or dor.sc.gov/VerifyCode to provide additional information to verify your identity.
HOW DO STATE LIENS ACTUALLY WORK?
The South Carolina Department of Revenue will file a tax lien when you fail to pay your state tax liability. To put it simply, here’s how tax liens work in the state of South Carolina:
Silent Liens
Automatically arise when you fail to pay your taxes and do not go on public record. This arises out of the operation of the law, and the SCDOR has 10 years to collect.
Public Filing
Public filings prevent property owners from transferring the property without settling their tax debt. These liens are filed with the local register of deeds and also continue for 10 years after the date of the tax assessment.
Enforceability
The SCDOR may still hold the tax lien even if its authority to seize property expires after a decade.
CONSEQUENCES OF A STATE TAX LIEN
If you fail to repay your state tax lien, there can be consequences. Here are a few reasons why you should address your tax lien quickly and avoid any trouble further down the road:
Credit score impact:
Having a tax lien can negatively impact credit scores, potentially for years in the future.
Property sale complications:
May make selling or refinancing a property more challenging.
Asset Seizure:
The SCDOR has the authority to seize your assets to satisfy the tax debt.
Financial Repercussions:
Failing to properly take care of your lien can lead to greater financial problems like interest or increased penalties.
3 HELPFUL WAYS TO AVOID ENDURING A STATE TAX LIEN
Here are a few smart habits to adopt to avoid receiving a notice of a state tax lien:
Timely tax payments:
Avoid filing late or making late payments.
Installment plans:
Arrange a payment plan early if you suspect you won’t be able to pay in full when it’s due.
Professional Advice:
Work with a tax professional to ensure you stay compliant.
WHO CAN I SPEAK WITH ABOUT A SC STATE TAX NOTICE?
If you receive a notice, read through it, and have questions, contact the South Carolina Department of Revenue. Your notice should have contact information located on the left side near the bottom of the page. Use the contact information provided to reach out to the SCDOR, and if you do not have specific contact information listed on your notice, you can call 1-844-898-8542 for further assistance.
Sources: South Carolina Department of Revenue: MyDORWAY
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as governmental services advice, financial advice and/or legal advice. We are not government professionals, financial advisors nor legal professionals , and the content provided does not constitute governmental, financial or legal advice from a licensed professional. The content of this article does not replace personalized advice from a licensed professional who is aware of your individual circumstances.
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FREQUENTLY ASKED QUESTIONS
Are South Carolina liens legal?
Yes, they are.
The state of South Carolina can issue a state tax lien if the person fails to pay state taxes. State tax liens are active for 10 years and can negatively impact the taxpayer’s credit score.
Are state tax liens available for the public to view?
Yes. South Carolina state tax liens are listed as public record by the SCDOR. You can view them at dor.sc.gov/LienRegistry.
How do I estimate my total balance due and make payments?
You can estimate your total balance using the Estimate Lien Payoff tool available to you on the State Tax Lien Registry.
When you’re ready to make a payment, find your lien in the online registry, click the number in the “balance due” column, select ID Type from the drop-down menu, enter your ID Number, then click next to enter your contact information and payment information.
Can I access documentation about a lien ?
You can access the documentation for your lien using the State Tax Lien Registry at dor.sc.gov/LienRegistry.
Once you’ve found your correct lien, you can download your State Tax Lien Satisfaction notice. Depending on your device, it will download as a PDF or in a new tab, so you can save or print the documentation.
What if I disagree with my notice?
If you don’t agree with your notice, there are a few things you can do depending on the circumstances.
– If you believe you’ve already paid the amount noted in your notice, mail in supporting documents, such as a bank statement and copies of canceled checks, to the address listed on the notice. Contact the SCDOR at the number listed on your notice for further information.
– If you’ve already completed the above and still disagree with the findings, you have the right to appeal your notice.
– If your notice states the South Carolina Department of Revenue is collecting a debt on behalf of a different agency, you will need to contact the agency seeking collection with questions instead of the SCDOR.
Can I appeal a state tax lien with the SCDOR?
No.
You can appeal your debt notice, but a state tax lien is issued after the opportunity to appeal or pay your debt has passed. If you believe your tax lien was wrongly filed, contact the SCDOR immediately ComplyToday@dor.sc.gov and attach the supporting documentation.
What if I ignore my notice?
If you receive a notice from the SCDOR, do not ignore it. Ignoring your notice and not resolving the debt can lead to consequences, including penalties such as:
- The SCDOR levying or garnishing your wages
- The SCDOR revoking your business license
- The SCDOR placing a tax lien on your property
- The SCDOR charging interest on top of any existing debt
- Not receiving your tax refund
How long does a tax lien stay on a credit report?
According to Experian, all three credit bureaus stopped including tax liens as a part of credit reports in April 2018.
Even though they are no longer included in credit reports, tax liens can still affect your ability to get approved for credit, so it is important to resolve tax debts when you receive a notice from the SCDOR.
Can a tax lien be removed from a credit report?
Yes, you have the right to have tax liens removed from your credit score per the Fair Credit Reporting Act.
Can a tax lien be negotiated or settled?
Yes, it is possible to negotiate or settle a tax lien with the IRS or state revenue agency through an Offer in Compromise or an Installment Agreement.
However, these options may not be available to all taxpayers and are subject to certain eligibility requirements.
Can a tax lien be removed?
Yes, state tax liens are satisfied once the debt is fully repaid. You can satisfy the lien by paying it, subordination, or proving it was filed in error.
Can a tax lien affect business financing?
Yes, a tax lien can affect your ability to obtain financing, such as a getting approved for a new loan.
What is a tax lien?
A tax lien is a legal claim by a government agency used to collect an outstanding debt.
Federal tax liens are typically issued by the IRS and state tax liens are issued by your state’s revenue agency. Tax liens protect the government’s interest in your property.
What is the difference between a state tax lien and federal tax lien?
Federal tax liens are issued by the IRS when you fail to pay federal taxes and state tax liens are issued by your state’s department of revenue for unpaid state taxes.
Federal and state tax liens function similarly, but their legal frameworks by which they are governed are different. State and local laws may add complications for state tax liens.
What is the difference between a tax lien and a tax levy?
A lien refers to the legal claim on assets, and a levy is when the agency you owe actually seizes those assets.
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