This covers the different processes that relate to tax collection; namely, the different processes included in handling delinquent debt and collection cases. Each time an employer submits a wage report, they are also to remit payment for that report in a timely fashion. When an employer fails to submit payment (or the wage report and payment), a series of events occur to resolve the issue.
To begin, when an employer does not submit a wage report and/or payment, they receive notification of their failure to submit timely. Zero percent reimbursable employers receive a charge bill once the quarterly charges are posted to their individual accounts. Employers that are two percent reimbursable will receive a Statement of Account during the quarterly filing and may receive an additional bill following the reconciliation. In the event they continue to not submit both items, the first process that happens is systematic, wherein SUITS identifies which piece has not been submitted (report and/or payment) and continues the collection process from that identification. The employer receives separate notices for the late report and/or payment
In the event a wage report is not submitted, after thirty days of no submission, SUITS will generate an estimated wage report based on historical reports or otherwise will calculate an estimate based on system placed parameters or “rules.” When SUITS creates this report, it may need to be reviewed by an internal staff member at the UI Agency. This will happen via a workflow that is triggered “Review Estimated Wage Report.” Once the estimated report is posted, SUITS will create the payment amount to be submitted by the employer and the employer is notified. Note: The process of creating estimated wages can also be done manually by an internal UI Agency staff member.
In the event the employer has submitted a wage report or an amended report, but not the payment associated with it, SUITS identifies these accounts and sends a notification to the employer. This process is treated differently depending on if they are a zero percent reimbursable, two percent reimbursable or state government agency.
Zero percent reimbursable employers are sent a quarterly charge bill (SOA) based on the total charges against their account for the quarter. The employer has 30 Days to submit payment. NOA (Notice of Assessment) should be generated on day 31 if payment is not received.
Two percent reimbursable are sent a bill (SOA) once their account is reconciled if their benefit charges are more than their quarterly contributions submit for the year.
They also receive an SOA – Delinquent Payment (Statement of Account) which details the dollar amounts due. Once ten days have passed since the original due date, the delinquent account will move into the collection process if no payment is received. If the account has a total delinquent debt over $150.00, SUITS will create and assign a collections case.
Billing Statements for State Government Employers are sent to the SC Treasury. In the event that a State Government account is delinquent, staff can manually generate a Treasurer Withholding Funds Due correspondence to request funds be withheld from the delinquent agency. Once the delinquency is cleared, staff can manually issue a Treasurer Reimburse Delinquent Clear correspondence to notify the Treasury that the associated delinquency has been cleared.
Collection cases are initially created by SUITS based on a set of parameters and rules coded into the programming. This is one of the times in which a UI Agency Staff member cannot create this manually. When SUITS creates a collections case, it will initially assign the case to the collections worker who is assigned to either the South Carolina County, or the US State where the employer’s primary physical address is located.
The collection case screen in SUITS is essentially a hub of information. Outside of entering in collection case notes, creating alerts, and generating correspondence, there is little functionality to happen there. However, that collection case is the ‘one stop shop’ for all information regarding that employer’s delinquent debt and both active and historical collections instruments which are associated with the employer account.
As a response to the notifications sent, or any time there is a debt of more than $300.00, an employer may request a standard or customized payment plan via the employer portal. Once they submit this payment plan, SUITS will automatically approve a standard payment plan if there are no exceptions on the account. If there are exceptions such as a previously defaulted plan, or a custom payment plan request was submitted, SUITS generates a Review Payment Plan workflow for an internal UI Agency staff member to review. The review may approve, deny or modify the payment plan. Once the payment plan is approved, SUITS monitors for receipt of the down payment amount calculated when the plan was created. The employer must submit the down payment within eleven days of approval for the payment plan to be confirmed and become active. At that point, SUITS monitors for payments (and the timeliness of them). SUITS will consider the debt paid in full if all payments are made on time, or all debts and the accrued interest for the payment plan have been paid off. When an active (current, pending, or in review) payment plan exists on the account, SUITS will not allow new collections instruments to be created on the account. If the plan is closed or defaulted due to lack of payment, SUITS will resume normal collection activity. This payment plan will be one of the many potential records linked to the collection case record, making the collection case a launching pad into the payment plan record if needed.
If there is continued delinquency on an account after ten days with an amount of $150.00 or greater, an SOA is sent out, and SUITS will create a lien ID in the Assessment stage for these accounts. An assessment is generated by a batch process, which also generates a Notice of Assessment (NOA) correspondence sent to the employer. The NOA contains the legal warning which alerts the employer that the UI Agency can file a lien and other collections instruments against them if payment is not received. After fifteen days of no payment received, the status of the Assessment is updated via batch from ‘pending’ to ‘eligible’ and an alert is sent to the case manager notifying them that the employer has debt which can be added to a new lien.
Once a total of fifteen days have passed since the NOA (Notice of Assessment) has been sent to the employer and the total debt is $150.00 or greater, an internal UI Agency staff member can update the ‘eligible’ assessment to a lien. Upon updating the record to verify in what counties the lien will be filed and what quarters/year should be included in the lien, SUITS will update the lien to an active status and send correspondence to SCEIS as well as the electronically signed correspondence sent to the county court. A copy of this lien notice will also be mailed to the employer. At this point, SUITS monitors for the receiving of recording information documents back from the court. When received, SUITS will generate a Review Lien Process workflow which allows staff to update the lien with the recording information (Judgement Roll Number) from the court. If more than one ‘active’ lien exists on the account and a payment is received, SUITS will generate a Review Multiple Collections workflow to allow staff to apply the payment to specific quarters covered by a lien, or by the standard payment hierarchy.
Once a lien has become active, a Bank Levy may be issued against the delinquent employer if the debt is $300.00 or greater. For a Bank Levy, SUITS will create the active levy and send correspondence (Notice to Execute Levy) to the bank. Staff can update the levy status reason-code to reflect the bank response and enter an amount to be sent by the bank if that information is known. No further court or staff approval needs to occur for a bank levy to execute. The active lien(s) which exist on the account support the levy, and the levy becomes ‘active’ as soon as it is submitted.
When the bank receives the Notice to Execute Levy, the bank will verify if the delinquent employer has an actionable account with their bank, and send a response back to the agency. This response from the bank is normally received via email to the collections department, or sometimes by US mail.
There is a five-day delay between Notice of Levy sent to bank and Notice of Levy sent to the employer. The notice gives the bank time to verify and freeze the account if valid. Should the employer receive the Notice of Levy on the same day, they could clear out their account before the bank takes action. Unlike garnishments, levies are always a single payment. If a valid account exists, the bank will seize an amount, and mail a check to the agency. The check could be the full amount of the levy, or it could be a partial amount of the total amount included in the levy. The standard payment hierarchy will apply the payment sent by the bank in response to a levy.
In the event there is not a valid account, or otherwise the amount paid does not cover the full amount of the debt, the UI Agency can create a new levy record once the original levy has been dismissed. Staff can choose to dismiss an active levy at any time, but SUITS will always dismiss a bank levy 30 days from its creation date, regardless of status. SUITS will not allow more than one active bank levy to exist on an account at one time.
For a Wage Garnishment, staff must manually generate a Notice of Wage Garnishment correspondence to the delinquent owner/partner ten days before they can create a new garnishment. Note that this is only for the scenario of a sole proprietorship or a partnership. The notice is a warning letter which has to be sent by law. Ten days after that warning (assuming no payment), staff create the wage garnishment and Notice to Execute Wage Garnishment correspondence to the delinquent owner/officer’s employer (The Employer-Paying-Wages or EPW). This correspondence does not have to be sent to the delinquent owner/officer since they were warned, and their current employer will inform them that their wages are being garnished.
The Employer-Paying-Wages will contact the agency to establish the terms of the garnishment. By law, no more than 36% of wages can be garnished per paycheck, and there is a hierarchy to wage garnishments if that owner/officer has other debtors (child support, IRS, etc.). The EPW will work with the agency to establish the percentage they will garnish, the payment installment (weekly, bi-weekly, etc.) and how long the garnishment will last based on the amount of debt.
A payment from the EPW has to be applied to the specific quarters covered by the wage garnishment. SUITS creates a Review Multiple Collection Activity work item if there is an active garnishment so that staff can research and verify if the received payment was for the garnishment, or just a normal payment. Then staff can apply to the account accordingly, meaning they will look at the payment information to see if it came from the EPW. Normally garnishments are always paid as a check, so staff would look at the check image to see who issued it. Otherwise, they may need to contact the EPW to determine if they made the payment, or the delinquent employer made a payment on their account. The workflow allows staff to select which quarters to apply the payment. Otherwise, it used the default ‘oldest to newest’ hierarchy.
The above-listed processes cover the wide range of collection activities. However, there are two other scenarios that may come up as a response to communications on delinquent debt.
This first of these two scenarios is if a delinquent notice has been sent to an employer, and the employer responds that they are currently inactive, and that is why they have not submitted wages/payment. In this case what would happen is the employer would send a request to inactivate via the employer portal. The request triggers a workflow for an internal UI Agency staff member to review the request. Once it is approved and the account has been updated to an inactive status as of the date indicated by the employer, it will update the account to remove the delinquency. In the event estimated wages have been created, they will be removed from the account.
The second scenario that may happen is an employer may file for bankruptcy. In this event, several things will happen. The employer will send in information about the bankruptcy, and a bankruptcy record is manually created in SUITS. Once the record is created, the UI Agency staff will enter in the information provided such as the bankruptcy case number, type (i.e.: Chapter 12), filing date and the name of the debtor name (i.e. State of SC). Another step in this is SUITS identifying what debt remains (if any) based on the filing date of the bankruptcy. For example, if the delinquent debt is from Quarter 1 of 2017, and the employer filed for bankruptcy in October of 2016, then the debt will be considered ‘post-petition’ debt and not considered in collection. Adversely, any debt that accrued prior to October of 2016 is still eligible for collection (pre-petition debt).
When the state agency is informed of a bankruptcy, it is necessary to submit a Proof of Claim to the Bankruptcy Court. Submission of the Proof of Claims adds the UI Agency to the list of creditors seeking payment from the bankrupt employer. This Proof of Claim Cover Letter accompanies the Proof of Claim when submitted to the court. This correspondence will be printed and returned to the Bankruptcy Unit for completion and mailing.
Outside of the above-described processes, some otherwise detailed within this handbook are:
•What happens when debt needs to submitted for state or federal intercept (system process)
•Post Benefit Charges to Employer Account (system process)
•Generates quarterly benefit charge bills for 0% reimbursable employers
•Generates SOA debit or credit based on 2% reconciliation
Throughout, there are details on the correspondences sent out, the workflows initiated due to different triggers, and what SUITS is doing behind the scenes.