About Setoff Debt & GEAR
About Setoff Debt Collection
The Setoff Debt Collection Act, Chapter 56 of Title 12 of the South Carolina Code (1976), authorizes public entities to participate in the state's Setoff Debt Collection Program. Using a 1992 amendment to the Setoff Debt Collections Act, SCAC has been assisting county governments and other county entities to participate in the Setoff Debt Collection Program. County entities submit delinquent debts to SCAC for possible matches against state income tax refunds due their debtors. SCAC acts as a clearinghouse between county governments and the S.C. Department of Revenue (SCDOR) for the processing of these debts and returns the money to the counties. Monies, which otherwise would have gone uncollected, are returned to the counties this way.
- SCAC Services are FREE to participating entities. Fees are $25 each for SCAC and the SCDOR and are added to the debt paid by the debtors.
- SCAC provides free software and technical assistance to participating entities to manage their debt data. (View all SCAC services for debt collection.)
- Entities must have valid Social Security Numbers for individuals to submit an account.
- Debts must be at least $50, or multiple accounts must sum to $50, to be submitted to the Setoff Debt program.
- Entities must follow due process procedures for debtors, as defined in the statute (see Setoff Debt Collection Act). Entities must provide notice and an opportunity to be heard to debtors.
- Entities must meet the deadlines for sending letters and submitting their data file.
- SCAC sends the data files to the SCDOR each December.
- After January 1, the SCDOR matches the data in the debt files with the state income tax returns. SCDOR processes setoff match information once a week.
About GEAR
Governmental Enterprise Accounts Receivable Collections (GEAR): is a collection program, authorized by S.C. Code § 12-4-580 (enacted in 1996), that allows the Department of Revenue (SCDOR) to use setoff debt and additional collection tools, such as payment plans, wage garnishments and bank levies to collect bad debts for public entities. SCAC has been assisting counties with GEAR collections since 2001.
- GEAR allows continued collections when a debtor does not have an income tax return. With GEAR, governmental entity debt is treated like any State tax debt, subject to the same collection tools available to SCDOR such as levy and garnishment. This allows a higher collection rate for larger debts.
- Using GEAR, entities can lighten administrative burden to staff. SCAC assists entities with the daily program and data operations. SCDOR, sends collection notices, handles phone inquiries, sets up payment schedules, and makes collections.
- SCAC Services are FREE to participating entities. (View all SCAC services.) SCDOR charges a 22% fee, paid by the entities, for debts that are collected through payment plans and wage garnishments.
- Entities must follow due process procedures for debtors, as defined in the statute (see Setoff Debt Collection Act).
- SCAC will send GEAR files to SCDOR in December. Other accounts can be added to GEAR throughout the year. Accounts will then stay in the SCDOR system and rollover from year to year.
- After January 1, entities receive monthly GEAR payments and reports.