Setoff Debt & GEAR
The SCDOR is committed to the fair administration of debt collection and to protecting compliant citizens. Unpaid liabilities can make it difficult for governmental and quasi-governmental entities to budget and fund essential public services. South Carolina law requires the SCDOR to assist qualifying entities in collecting debts through two collection programs: Setoff Debt and GEAR.
Setoff Debt allows the SCDOR to assist in collecting debts owed to claimant agencies by garnishing South Carolina Individual Income Tax refunds. GEAR (Governmental Enterprise Accounts Receivable) is more flexible and comprehensive than Setoff Debt. In addition to garnishing South Carolina Individual Income Tax refunds, GEAR collection efforts include wage garnishments, tax liens, bank account levies, and license revocations. GEAR also allows debtors to set up payment plans to satisfy debts.
Taxpayer notification and protests
At least 30 days before submitting a debt to the SCDOR, the claimant agency must send a notification letter to the debtor. The letter will be mailed to the address the debtor provided at the time the debt was incurred or to the debtor’s last known address.
You have the right to protest or appeal this debt to the claimant agency as outlined in the Setoff Debt Collection Act (SC Code 12-56).
Mail a written protest to the claimant agency at the address provided in the claimant agency's notification letter. The protest must be filed within 30 days of the date of the notification letter and must:
- contain your name, address, and tax identification number,
- identify the type of debt in dispute, and
- give a detailed statement of all the reasons that support the protest.
Do not send a protest to the SCDOR; you can only file a protest with the claimant agency directly. The claimant agency is required to notify the SCDOR when a protest has been filed, if the debt has been sent to the SCDOR.
ⓘ See section 63 of the
Setoff Debt Collection Act (SC Code 12-56-63) for additional details on protests and appeals, including next steps if your protest is denied by the claimant agency.
The SCDOR is responsible for notifying a debtor once collection actions begin. If a debtor’s tax refund is garnished, the SCDOR will mail the taxpayer a Notice of Refund Adjustment. If a debt is being collected through GEAR, the SCDOR sends a notice to the debtor prior to any collection action.
Additional information for claimant agencies