South Carolina Payroll Tax Enforcement & Liens
Checklist
Purpose and Scope
South Carolina uses income tax withholding rules to require employers to withhold state income tax from certain payments and remit those amounts to the South Carolina Department of
Revenue. This guide focuses on South Carolina income tax withholding procedures and terminology, since South Carolina administers that obligation through SCDOR withholding forms and processes.
Federal income tax withholding and Social Security and Medicare taxes arise under federal law and follow federal rules, so you should address those issues with the IRS rather than through
SCDOR. South Carolina unemployment insurance tax is administered separately by the South
Carolina Department of Employment and Workforce, so you should separate those notices and records from SCDOR withholding correspondence.
What a South Carolina Withholding Problem Means
A South Carolina withholding problem arises when your business fails to file required South
Carolina withholding returns, fails to remit withholding payments, or has an account that shows missing periods. SCDOR tracks filing and payment activity by tax period, and a break in that chain can trigger a notice, an assessment, and collection activity if you do not resolve the account.
You improve outcomes when you treat every notice as a deadline-driven compliance event, and you confirm each period using the filing schedule and your payroll records. You reduce confusion by matching each payment to the correct quarter using paycheck dates rather than pay periods or accrual dates.
What SCDOR Administers and How It Organizes
Withholding
SCDOR administers South Carolina withholding returns and payments through specific withholding forms and portal functions rather than through a single “payroll tax return.” You should organize your response around withholding forms, withholding periods, and the notice type you received, since these factors determine how you respond.
You should use the withholding forms that apply to the period at issue, and you should avoid unrelated state forms that cover other tax programs. You should rely on the WH-series withholding forms for South Carolina withholding compliance and keep a single folder that ties each quarter’s return to proof of payment.
Filing and Payment Timing You Should Confirm
SCDOR sets quarterly return due dates at the end of the month following the end of each quarter. You should treat the due date schedule as the baseline and verify whether weekends or holidays move a specific deadline to the next business day.
You should use the correct return form for each quarter and match each filing to the account’s open status. You should file a return for each quarter while the withholding account remains open, even when you withheld no South Carolina income tax during that period.
Return schedule and forms for most withholding accounts
- WH-1605 applies to the first three quarters of the year
- WH-1606 applies to the fourth quarter and annual reconciliation period
- Quarter 1 return due date is April 30.
- Quarter 2 return due date is July 31
- Quarter 3 return due date is October 31
- Quarter 4 and annual return due date is January 31
Payment timing depends on whether you qualify as a resident or nonresident withholding agent under South Carolina rules. You should treat the paycheck date as the controlling date for when the wages were paid and when withholding attaches to a quarter.
Key payment timing rules that affect the issuance of notices include
- Resident withholding agents pay with the same frequency as federal payments.
- Nonresident withholding agents pay quarterly when the total withholding stays below
$500 per quarter.
- Nonresident withholding agents pay monthly once withholding reaches $500 during a
quarter, and the remittance becomes due by the 15th of the following month.
What Can Happen If You Ignore a Notice
SCDOR can move from notices and assessments into collection tools, and those tools can affect your business and personal finances. SCDOR can issue levies against wages and
intangible assets and can treat a tax lien as a claim against your real or personal property in
South Carolina.
SCDOR may issue a levy against 25% of an individual’s gross wages when an unpaid assessment or tax lien exists. SCDOR may also levy bank accounts and certain investment accounts, and it may levy contract payments and future payments up to the total amount due.
What a Notice Does Not Prove by Itself
A notice does not prove the final amount owed, and a single letter may reflect missing filings, misapplied payments, or estimated assessments. You should confirm the notice type and the periods listed, because different notices describe different options and different consequences if you miss the response window.
A notice does not guarantee that SCDOR has already filed a lien or issued a levy. You should verify your account status through official SCDOR systems and confirm that your mailing address remains current to reduce the risk of missed correspondence.
Checklist: What to Do After Receiving a Withholding
Notice
- WH-1605 returns for quarters 1 through 3
- WH-1606 returns for quarter 4 and annual reconciliation
- Payment confirmations and bank records that show clearing dates and amounts
- Copies of notices, envelopes, and any account identifiers shown on the notices
Step 1: Gather and Organize Withholding Records
Collect payroll registers and payroll system reports for the affected periods, and you should gather your filed withholding returns and payment confirmations. You should organize records by quarter, since SCDOR measures return filing and many notices by quarterly periods.
Reference items you should pull first:
Step 2: Review the Notice for Tax Type and Periods
Read the entire notice and identify whether it involves South Carolina income tax withholding administered by SCDOR. You should separate any unemployment insurance issue and address it with DEW rather than treating it as an SCDOR withholding matter.
Record the notice date, the tax periods listed, the amount shown, and any stated deadline for response. You should keep the account number or reference number visible on every document you send or upload to ensure the account matches cleanly.
Step 3: Verify Filing and Payment Posting by Quarter
Compare your filed WH-1605 and WH-1606 returns against SCDOR's posting records through your SCDOR account tools. You should compare your payment confirmations against SCDOR payment postings by period, since misapplied payments can create delinquency signals when the money has actually cleared.
Improve accuracy by matching payments to quarters based on paycheck dates, since withholding attaches when wages are paid. You support corrections when you save electronic confirmations, screenshots, and bank proof that identify the payment date and the remittance reference.
Step 4: Contact SCDOR and Request Account Detail
Call SCDOR using the contact information on your notice and ask for an itemized breakdown by period that separates tax, penalty, and interest. You should ask how SCDOR applied each payment to quarters and dates, since credit corrections often depend on application details.
Document the representative’s name and the call date, and record the action the representative requests. You should request written confirmation when you receive instructions that affect deadlines, filing actions, or payment plan decisions.
Step 5: Respond Based on What the Facts Support
You should request a correction when you can prove that SCDOR misapplied a payment or failed to credit a filing. You should submit copies of returns, payment receipts, and bank records that show funds were sent and cleared.
You should avoid filing unrelated state forms or using non-withholding forms as substitutes for
WH-1605 and WH-1606. You should file missing withholding returns using current withholding forms for the periods at issue, and you should file returns for each quarter while the withholding account remains open.
Step 6: Evaluate Payment Plan Options When a Balance Remains
Decide whether you can pay the balance in full while keeping ongoing filing and payment requirements. You should ask SCDOR about a Payment Plan Agreement when you need time to pay, since SCDOR describes eligibility requirements and an agreement fee.
SCDOR charges a non-refundable $45 fee for Payment Plan Agreements. SCDOR does not allow a Payment Plan Agreement when an active levy or garnishment exists, and SCDOR requires bank draft arrangements unless you meet the alternative down payment terms described by SCDOR.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 7: Monitor Liens and Know How They Work
You should monitor for lien activity when SCDOR issues an assessment, and the balance remains unresolved. SCDOR describes a sequence that begins with proposed assessment notices and can move to an assessment notice, followed by lien issuance when the balance remains unresolved.
SCDOR states it will mail a Notice of State Tax Lien to Taxpayer (W-131-F) when it issues a lien.
SCDOR posts state tax liens in the State Tax Lien Registry, and SCDOR updates the registry to show a lien satisfied within 30 days of receiving full payment.
Step Eight: Keep Records for Statutory Timeframes
Keep records long enough to cover assessment periods and exceptions, since a fixed retention rule can understate real risk. South Carolina uses a general 36-month assessment period with explicit exceptions that can extend the assessment window or remove the limitation when you fail to file.
Retain withholding returns, payment proof, and notice correspondence for at least the 36-month baseline and longer when exceptions apply. You improve future defense by keeping quarterly packets that show the return, the payment, and the posting confirmation in one place.
Frequently Asked Questions
How long does the state have to assess South Carolina withholding tax?
South Carolina generally assesses taxes within 36 months from the later of the date the return or document was filed or due to be filed. South Carolina may assess after that period when fraudulent intent exists or when you failed to file a required return or document.
South Carolina may assess within 72 months when a 20% understatement of total taxes required to be shown on the return or document exists. You should treat those timeframes as statutory rules and keep records that can support the amounts and filing history for each period.
Can a South Carolina withholding notice involve a lien or levy immediately?
A notice can begin a process leading to assessments and collection actions, and the notice itself does not prove that SCDOR has already filed a lien. You should verify your status through official SCDOR systems and watch for specific lien and levy notices described by SCDOR.
SCDOR may levy wages and intangible assets when an unpaid assessment or tax lien exists.
SCDOR may levy 25% of an individual’s gross wages, and it may also levy bank accounts and certain investment accounts up to the total amount due.
Can I request penalty relief and interest relief from SCDOR?
SCDOR provides a process for requesting a penalty waiver through MyDORWAY and by form submission. SCDOR issues a written approval notice or a written denial notice after it reviews a penalty waiver request.
South Carolina law states that interest accrues on unpaid tax from the due date until paid, and it allows SCDOR to waive up to 30 days’ interest for administrative convenience. You should ask
SCDOR specific questions about penalty and interest treatment for your account and keep written confirmations.
Closing Summary
Protect your position when responding to SCDOR notices by maintaining organized records and a quarter-by-quarter reconciliation of filings and payments. You should verify which withholding forms apply: WH-1605 covers the first three quarters, and WH-1606 covers the fourth quarter and the annual reconciliation. You should file a return for each quarter while the account remains open.
Track the notice type, the periods listed, and the deadline stated on the notice, and you should contact SCDOR for an itemized account breakdown when your records do not match posted periods. You reduce escalation risk by resolving assessments promptly, since SCDOR describes a pathway from proposed assessments to assessments and then to liens when a balance remains unresolved.
Evaluate payment options early when a balance remains, because SCDOR offers Payment Plan
Agreements with stated requirements and a non-refundable $45 fee. You should monitor for collection activity, since SCDOR may levy wages and intangible assets and may levy 25% of an individual’s gross wages when an unpaid assessment or tax lien exists.
Support future resolution when you keep withholding returns, payment proof, and notice correspondence long enough to cover assessment timeframes and exceptions. South Carolina generally assesses within 36 months, and it provides exceptions that extend the assessment window or allow assessment after the normal period when a required return was not filed or fraud exists.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and aren’t sure how to respond, our team can help you understand your options and next steps.
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