South Carolina Department of Revenue Law Change: Authorized to File Tax Liens with an Online Database System

The South Carolina Legislature has passed a new law that has far-reaching implications for those searching land records in the state of South Carolina. Traditionally, the South Carolina Department of Revenue has filed tax liens against individual taxpayers for non-payment of state taxes by filing a lien with the county recorder in the county where the taxpayer resides. The tax lien would then become a lien against any real property owned by the taxpayer in that particular county for a period of ten years. However, the recorded lien would not affect property owned by the taxpayer located in counties other than the one where the lien is filed. This traditional system of recording may change drastically with the passage of Senate Bill 160, which was signed into law by the Governor on March 28, 2019 and will go into effect on July 1, 2019.

The new law supplements Section 12-54-122(G) of the South Carolina Code by allowing the South Carolina Department of Revenue to “implement a statewide system of filing and indexing liens which must to be accessible by the public over the Internet”.  The new lien would have a permanent date and time stamp, the name of the taxpayer, and the amount of tax and penalties. The most important aspect of the new law is that a lien filed with any new system implemented by the SCDOR would be effective statewide from the date and time it is recorded and available to the public over the internet. This means that a lien filed by the SCDOR will automatically become a lien against any property owned by the defaulting taxpayer in South Carolina.  The lien becomes effective statewide upon one filing without transcribing the lien to all of the different counties in the state.  It is important to note that the new law does not extend the current ten-year life span of a recorded tax lien. 

Once a new online system is implemented by the SCDOR, Clerks of Court and Registers of Deeds, the current county officials charged with recording tax liens in individual counties in South Carolina, are relieved of any statutory obligations for filing and maintaining newly filed tax liens. This does not absolve the county offices from maintaining tax liens already recorded in their offices.  Assuming that the SCDOR will only list new tax liens on their system of record, title abstractors and attorneys must continue to check tax liens in the county where a parcel of real property is located until the ten-year statute of limitations period expires for those liens.  Once the system has been in effect for ten years, title examiners may then stop searching the individual county tax records and use only the statewide database for a title search for tax liens. 

While the new law does not require the SCDOR to implement a new system, the law was created in anticipation of the SCDOR implementing such a system and we expect that they will do so. Once the system goes into effect, persons searching titles in South Carolina must check both the new system for tax liens and continue to check the individual county tax lien index for older tax liens recorded prior to the start date for a new SCDOR system. Since numerous mortgage servicers utilize nationwide title companies to perform title searches for their loans in default, these servicers and title companies must be aware of the implementation of a new tax lien filing system by the SCDOR so that they make certain they are able to adequately search titles in South Carolina.        

Published by John S. Kay on June 3, 2019.