Businesses grapple with new SC tax-filing system

Jill Hendrix, the owner of Fiction Addiction in Greenville, has a bone to pick with the state’s tax agency.

Two weeks ago, the agency unveiled its $29.1 million new computer system for businesses filing online sales tax returns and Hendrix says using the new system is “miserable.”

“They’ve made an already confusing system even more confusing,” she said.

Rick Reames, director of the state Department of Revenue, acknowledges that the new system has generated complaints and requires a learning curve. But he said by the time the system is fully implemented in three years, it will offer a far more comprehensive and secure tax-processing system that eventually could save taxpayers about $40 million during the next decade.

The system South Carolina purchased is used in almost 20 other states, he said.

“The entire point of this is to simplify tax administration,” Reames said. “It’s going to do that. There are clearly learning curves in its implementation.”

The old system worked off “legacy” computers that did not talk to one another and did not provide optimum security, he said.

Reames said the agency for many years before he became director had been developing its own system that never quite worked right.

“That process failed miserably,” he said. “It was always over budget. It was always behind schedule. And every time they got to a stopping point, it was behind the private market, from a technology perspective.”

He said one of the things that irked him as a tax attorney was when clients would pay their taxes and then get a notice from the agency saying they had not paid their taxes.

So the agency, he said, decided to pull the plug on the project last year and chose a system already in use in other states. According to the agency, the actual cost thus far of implementing the system is under budget, so it may not cost $29 million.

“This new product is an off-the-shelf system that is fully integrated,” he said. “So there’s no concern about a lack of communication between technologies. It has security baked into it and was developed with security from the ground up rather than trying to layer security on an aging technology.”

That’s important because of the massive data breach the agency suffered in 2012, affecting millions of individual and business taxpayers with exposed personal identification and bank account information.

While the state made many changes in response to that hacking, Reames said the new system makes the agency’s tax processing even more secure.

But one of the results of that new security is that business owners, CPAs and others filing online are having to create new passwords and re-authenticate their accounts, a process requiring time and various pieces of information.

“Clearly there are some adjustments to using the new system that taxpayers will have to get used to,” Reames said. “That’s why we have extended our phone coverage to morning and evening support and why we have people this weekend and next weekend manning the phones and the email banks to address that.”

The new system offers taxpayers a portal, MyDORWAY, which shows a record of their account, something which did not exist before. Administrative changes like changing an address, adjustments, requesting a penalty abatement can all now be done through the portal, rather than separately, Reames said.

Taxpayers with questions about MyDORWAY may call 803-898-5000 (select option 1) from 7 a.m. until 7 p.m. every day, including weekends, through Sept. 23.

This story was originally published September 15, 2015 at 9:00 PM.