South Carolina State Income Tax Protest

SOUTH CAROLINA STATE INCOME TAX PROTEST — NOTICE OF PROPOSED ASSESSMENT

TABLE OF CONTENTS

1. Submission Header
2. Identification of Proposed Assessment
3. Statement of Timeliness
4. Statement of Facts
5. Issues Presented
6. Legal Argument
7. Burden of Proof
8. Penalty and Interest Abatement
9. Conference and Hearing Request; Reservation of Rights
10. Relief Requested
11. Verification and Signature
12. Certificate of Service
13. Schedule of Exhibits
14. South Carolina Practice Notes
15. Sources and References

1. SUBMISSION HEADER

TO: South Carolina Department of Revenue
Office of General Counsel — Litigation Section
[OR appropriate Division Office identified on the Notice]
300A Outlet Pointe Boulevard
Columbia, South Carolina 29210

FROM: [TAXPAYER LEGAL NAME]
[STREET ADDRESS]
[CITY, STATE ZIP]
SSN/FEIN: [XXX-XX-XXXX or XX-XXXXXXX]
SCDOR File / Account No.: [________________________________]
Telephone: [(___) ___-____]

RE: Written Protest of Notice of Proposed Assessment No. [________________________________]
Tax Type: South Carolina [Individual / Corporate / Pass-Through] Income Tax
Tax Period(s): [YYYY]
Date of Notice of Proposed Assessment: [__/__/____]
Statutory Protest Deadline (90 days): [__/__/____]
Amount in Dispute: $[________________________________] (tax, penalty, and interest)

FORM REFERENCE: SCDOR Form C-245 (Protest Pursuant to Revenue Procedures Act) is filed concurrently as a cover document; this Written Protest constitutes the substantive submission required by S.C. Code § 12-60-450(B).

2. IDENTIFICATION OF PROPOSED ASSESSMENT

2.1. Taxpayer [TAXPAYER LEGAL NAME] ("Taxpayer") timely filed South Carolina Form [SC1040 / SC1120 / SC1120S / SC1065 / OTHER] for the tax year(s) [YYYY] on [__/__/____].

2.2. On [__/__/____], the South Carolina Department of Revenue ("Department" or "SCDOR") issued Notice of Proposed Assessment No. [NUMBER] (the "Proposed Assessment") asserting additional South Carolina income tax of $[____], penalty of $[____], and interest of $[____] computed through [__/__/____].

2.3. The Proposed Assessment is based on the Department's adjustments described as: [summarize Department's adjustments — e.g., disallowance of itemized or business deductions, residency redetermination, IRC conformity issue under S.C. Code § 12-6-40, addback of depreciation, federal RAR conformity adjustment, transfer pricing, apportionment recalculation under § 12-6-2210, etc.].

2.4. Taxpayer disputes the Proposed Assessment in its entirety / in part as set forth below and timely files this written Protest pursuant to S.C. Code § 12-60-450.

3. STATEMENT OF TIMELINESS

3.1. The Proposed Assessment is dated [__/__/____]. Pursuant to S.C. Code § 12-60-450(A), the deadline to file a written protest is ninety (90) days from that date, which is [__/__/____].

3.2. This Protest is filed on [__/__/____], within the statutory ninety-day window, and is therefore timely.

3.3. [If applicable: This Protest was deposited in the United States Mail, postage prepaid and certified, on the date set forth above and is deemed filed on the postmark date. / This Protest was filed electronically through MyDORWAY on the date set forth above.]

3.4. By timely filing this Protest, Taxpayer invokes the automatic stay of collection on the contested portion of the Proposed Assessment under S.C. Code § 12-60-450(I), excepting any jeopardy assessment under § 12-54-120.

4. STATEMENT OF FACTS

4.1. [Background of Taxpayer — entity formation, domicile, tax year, filing history, residency, business operations in and outside South Carolina.]

4.2. [Facts giving rise to the disputed adjustment — transactions, contracts, expenses, federal treatment, residency facts, apportionment factors.]

4.3. [SCDOR audit history — date and content of any Information Document Requests ("IDRs"), conferences, audit narratives, and position changes.]

4.4. [Material correspondence and dates: notice of audit, IDR responses, audit findings letter, draft NOPA, and final Notice of Proposed Assessment.]

5. ISSUES PRESENTED

5.1. Whether the Department erred in [concise issue statement #1 — e.g., disallowing the deduction for X under S.C. Code § 12-6-XXXX].

5.2. Whether the Department erred in [concise issue statement #2 — e.g., asserting South Carolina residency for tax year YYYY notwithstanding domicile in another jurisdiction].

5.3. Whether the assessed substantial-understatement penalty under S.C. Code § 12-54-155 should be abated for substantial authority, adequate disclosure, and/or reasonable cause.

5.4. Whether the periods of limitation in S.C. Code § 12-54-85 bar all or part of the Proposed Assessment.

6. LEGAL ARGUMENT

6.1. The Department's Adjustment Is Contrary to South Carolina Income Tax Law

6.1.1. South Carolina conforms to the Internal Revenue Code as of the date set forth in S.C. Code § 12-6-40(A), with statutorily enumerated decoupling and modification provisions in S.C. Code §§ 12-6-1110 through 12-6-1170 (additions and subtractions).

6.1.2. [Substantive argument — apply South Carolina statutes, regulations (S.C. Code Regs. Chapter 117), SCDOR Revenue Rulings and Revenue Procedures, and South Carolina case law to the facts.]

6.1.3. [Cite controlling authority — e.g., SCDOR Revenue Ruling [##-##]; S.C. Code Regs. § 117-XXX; South Carolina Court of Appeals or Supreme Court decisions; Tax Division ALC orders.]

6.2. The Statute of Limitations Bars [Year/Item]

6.2.1. Under S.C. Code § 12-54-85(A) the Department must assess additional income tax within three (3) years from the later of the return's due date (with extensions) or the filing date.

6.2.2. The return for tax year [YYYY] was filed on [__/__/____]; the limitations period expired on [__/__/____].

6.2.3. [If applicable: No exception applies. Taxpayer did not omit more than 20% of gross income (six-year rule under § 12-54-85(C)), did not fail to file, and did not commit fraud. The Department did not obtain a written extension of the limitations period under § 12-54-85(G).]

6.3. Federal Conformity and RAR Reporting

6.3.1. [If federal RAR-driven: address S.C. Code § 12-6-4910(F) and § 12-6-5020 reporting requirements. A taxpayer must report federal adjustments to SCDOR within 180 days; failure to report extends the limitations period under § 12-54-85(F).]

6.4. The Department's Methodology Is Arbitrary

6.4.1. [Where applicable — challenge sampling methodology, statistical projections, allocation/apportionment under §§ 12-6-2210 to 12-6-2310, alternative-method requests under § 12-6-2320, or transfer-pricing positions.]

7. BURDEN OF PROOF

7.1. Taxpayer acknowledges that under S.C. Code § 12-60-2530 and ALC Rule 29(B) a Department assessment is presumed correct, and that the taxpayer bears the burden of proof by a preponderance of the evidence.

7.2. The exhibits and statements herein, together with [specify supporting evidence — books and records, federal returns, contracts, sworn statements], are sufficient to rebut the presumption and to establish that the Proposed Assessment is incorrect.

7.3. With respect to civil fraud penalties under S.C. Code § 12-54-155 and any allegation of intentional misconduct, the burden of proof remains on the Department under controlling South Carolina authority.

8. PENALTY AND INTEREST ABATEMENT

8.1. Reasonable Cause. Pursuant to S.C. Code § 12-54-160 (waiver of penalties) and SCDOR policy, penalties are subject to waiver upon a showing of reasonable cause and absence of willful neglect. Taxpayer relied on [describe reliance — written advice of qualified tax professional, prior SCDOR Revenue Ruling, ambiguous statute, federal/state conformity gap, or unanticipated change in law] and exercised ordinary business care and prudence.

8.2. Substantial Authority / Adequate Disclosure. As to any substantial-understatement penalty under § 12-54-155, Taxpayer's position is supported by substantial authority and was adequately disclosed on the return; the penalty is therefore inappropriate.

8.3. First-Time Abatement. Taxpayer has a clean compliance history with no penalties asserted in the prior [3] tax years and qualifies for first-time penalty relief consistent with SCDOR practice.

8.4. Interest. Statutory interest under S.C. Code § 12-54-25 generally cannot be waived, but Taxpayer reserves all rights to interest abatement to the extent any portion was caused by Department error or unreasonable delay.

9. CONFERENCE AND HEARING REQUEST; RESERVATION OF RIGHTS

9.1. Conference Requested. Pursuant to S.C. Code § 12-60-450(D) and the South Carolina Taxpayers' Bill of Rights (S.C. Code § 12-58-10 et seq.), Taxpayer requests an informal protest conference with the Department's Office of General Counsel — Litigation Section.

9.2. Representation. Taxpayer is represented by [ATTORNEY/CPA NAME], [SC BAR/LICENSE NO.], with a duly executed SCDOR Form SC2848 (Power of Attorney and Declaration of Representative) on file or attached as Exhibit [__].

9.3. Right to Have Representative Present. Taxpayer is informed of and exercises the right under S.C. Code § 12-58-90 to have an attorney, accountant, or other designated representative present at any meeting or hearing with the Department.

9.4. Reservation. Taxpayer reserves the right to (a) supplement this Protest with additional facts, exhibits, and authority; (b) raise additional legal issues identified through further review; (c) request a contested case hearing before the South Carolina Administrative Law Court ("ALC") under S.C. Code § 12-60-460 within thirty (30) days of any adverse Department Determination; (d) seek further appeal to the South Carolina Court of Appeals under S.C. Code § 1-23-610 and Rule 203(d)(6), SCACR; and (e) seek de novo review at the ALC stage of all factual and legal issues.

9.5. No Waiver. Nothing in this Protest constitutes a concession of liability, an admission, or a waiver of any defense, including limitations, constitutional, apportionment, or due-process defenses.

10. RELIEF REQUESTED

WHEREFORE, Taxpayer respectfully requests that the Department:

• A. Withdraw the Proposed Assessment in its entirety; or in the alternative
• B. Reduce the Proposed Assessment to $[____] consistent with the corrected computation set forth in Exhibit [____];
• C. Abate all penalties for reasonable cause, substantial authority, adequate disclosure, and/or first-time penalty relief;
• D. Recompute interest consistent with the reduced principal amount and abate any interest attributable to Department delay;
• E. Schedule an informal protest conference at a mutually agreeable date and time;
• F. Issue a Department Determination consistent with the foregoing within the one-year period required by S.C. Code § 12-60-450(E); and
• G. Grant such further relief as the Department deems just and proper.

11. VERIFICATION AND SIGNATURE

I, [SIGNATORY NAME], [TITLE — e.g., Taxpayer / President / Member-Manager], declare under penalty of perjury under the laws of the State of South Carolina that I have reviewed the foregoing Protest and the attached exhibits, and that the factual statements contained herein are true and correct to the best of my knowledge, information, and belief.

Date: [__/__/____]

[________________________________]

[SIGNATORY NAME]

[TITLE]

[TAXPAYER LEGAL NAME]

Submitted by counsel:

[LAW FIRM / CPA FIRM]

By: [________________________________]

[ATTORNEY/CPA NAME], S.C. Bar No. [####] / S.C. CPA Lic. No. [####]

[STREET ADDRESS]

[CITY, STATE ZIP]

Telephone: [NUMBER]

Email: [EMAIL]

12. CERTIFICATE OF SERVICE

I hereby certify that on the [____] day of [_______________], 20[____], I filed the foregoing WRITTEN PROTEST OF NOTICE OF PROPOSED ASSESSMENT with the South Carolina Department of Revenue by [MyDORWAY electronic filing / United States Mail, postage prepaid and certified, return receipt requested / hand delivery] addressed to:

South Carolina Department of Revenue
Office of General Counsel — Litigation Section
[OR appropriate Division Office identified on the Notice]
300A Outlet Pointe Boulevard
Columbia, South Carolina 29210

[________________________________]

[ATTORNEY/CPA NAME]

13. SCHEDULE OF EXHIBITS

14. SOUTH CAROLINA PRACTICE NOTES

• Single statutory pathway. The South Carolina Revenue Procedures Act (Title 12, Chapter 60) provides the exclusive administrative path: (1) Notice of Proposed Assessment under § 12-60-420; (2) written protest within 90 days under § 12-60-450; (3) Department Determination within one year under § 12-60-450(E)–(F); (4) request for contested case hearing at the ALC within 30 days under § 12-60-460; (5) ALC final order; (6) appeal to the South Carolina Court of Appeals under S.C. Code § 1-23-610 and Rule 203(d)(6), SCACR.
• Hard 90-day deadline. The 90-day protest deadline under § 12-60-450(A) is jurisdictional. Failure to file a timely protest converts the proposed assessment to a final assessment under § 12-60-430, foreclosing administrative and judicial review and authorizing collection. Calendar conservatively from the date stamped on the face of the Notice.
• Stay of collection. A timely protest stays collection on the contested portion under § 12-60-450(I), and that stay continues through any timely-filed ALC contested case. Limited exceptions include jeopardy assessments under § 12-54-120 and certain trust-fund situations.
• Burden of proof. Under S.C. Code § 12-60-2530 and ALC Rule 29(B), the assessment is presumed correct and the taxpayer bears the burden by a preponderance of the evidence at the contested case hearing. Fraud allegations and certain penalty additions remain on the Department.
• Pay-to-play not required at ALC stage. Unlike federal refund litigation, a taxpayer need not prepay or post bond to access the ALC. Bond/payment requirements arise only at the appellate stage in the South Carolina Court of Appeals, where § 12-60-3360 requires payment or bond for taxes determined due by the ALC before an appeal is perfected.
• Deference and de novo review. ALC review is de novo on both fact and law under S.C. Code § 1-23-600(B); the ALC is not bound by SCDOR's interpretive positions and may receive new evidence, although the record at the protest stage informs the issues preserved.
• Limitations periods. § 12-54-85(A): three (3) years from the later of due date or filing; six (6) years for omissions exceeding 20% of gross income (§ 12-54-85(C)); no limit for failure to file or fraud. RAR-driven adjustments require reporting within 180 days under § 12-6-4910(F)/§ 12-6-5020; failure to report extends the limitations period under § 12-54-85(F).
• Taxpayers' Bill of Rights. S.C. Code § 12-58-10 et seq. establishes the SC Taxpayers' Rights Advocate (Chapter 58), guarantees the right to representation at any conference or hearing (§ 12-58-90), and prohibits delay or denial of refunds based on unrelated audits (§ 12-58-160).
• Power of attorney. Use SCDOR Form SC2848 to authorize representation at the protest stage. Counsel of record at the ALC stage must be a member in good standing of the South Carolina Bar; non-attorney representatives have limited appearance rights under ALC Rule 13.
• Confidentiality. Tax return information is confidential under S.C. Code § 12-54-240. Exhibits containing taxpayer identifiers should be appropriately redacted in any public filing or motion.
• Filing channels. Protests may be filed through MyDORWAY, by certified mail, or by hand delivery to the SCDOR address printed on the Notice. Always retain proof of filing date and a complete copy of the submission.

15. SOURCES AND REFERENCES

• S.C. Code Title 12, Chapter 60 (Revenue Procedures Act) — https://www.scstatehouse.gov/code/t12c060.php
• S.C. Code § 12-60-450 (Appeal of proposed assessment; written protest) — https://www.scstatehouse.gov/code/t12c060.php
• S.C. Code § 12-60-460 (Contested case hearing at the ALC) — https://www.scstatehouse.gov/code/t12c060.php
• S.C. Code § 12-60-470 (Refund claims) — https://law.justia.com/codes/south-carolina/title-12/chapter-60/section-12-60-470/
• S.C. Code § 12-54-85 (Periods of limitation) — https://www.scstatehouse.gov/code/t12c054.php
• S.C. Code § 12-54-160 (Waiver of penalties)
• S.C. Code Title 12, Chapter 58 (Taxpayers' Bill of Rights) — https://www.scstatehouse.gov/code/t12c058.php
• S.C. Code § 1-23-600 (Administrative Law Court contested cases)
• SCDOR Form C-245 (Protest Pursuant to Revenue Procedures Act) — https://dor.sc.gov/sites/dor/files/forms/C245.pdf
• SCDOR Form SC2848 (Power of Attorney) — https://dor.sc.gov/forms
• SCDOR Appeals Process — https://dor.sc.gov/notices-compliance/appeals-process
• SCDOR, Administrative Process and Procedures — https://dor.sc.gov/administrative-process-procedures-department-revenue-internal-appeals-process-and-procedure-0
• SCDOR Taxpayers' Bill of Rights — https://dor.sc.gov/transparency/taxpayers-bill-rights
• South Carolina Administrative Law Court — https://scalc.net/
• ALC Rules of Procedure (eff. April 18, 2022) — https://www.scalc.net/Rules%20documents/Official%20ALC%20Rules%202022.pdf
• MyDORWAY portal — https://mydorway.dor.sc.gov

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. A South Carolina-licensed attorney (or a CPA admitted to practice before SCDOR with proper authorization) must review and customize this document before submission. Statutes, regulations, and Department procedures change frequently; verify all citations and deadlines before filing.