South Carolina notice
SCDOR Notice of Refund Adjustment (I-351): Why It Changed
Your SC refund was reduced, either because SCDOR changed your return or applied the refund to a tax or agency debt.
Read it and keep it
If you dispute a change SCDOR made to your return, follow the dispute instructions and date on the notice; if the refund went to another agency's debt, the dispute is with that agency, not SCDOR.
A Notice of Refund Adjustment (I-351) means your South Carolina refund is not the amount you claimed. Either SCDOR changed your return, or it applied some or all of the refund to a debt: your own SC tax, or a debt that another agency or a public or private college submitted for collection. The notice says which, and that decides who you contact.
What this notice is telling you
- SCDOR either adjusted a figure on your return (for example withholding, a credit or a math error) or offset the refund against a debt.
- Under SC Code 12-60-490, a refund goes first to the same tax you owe, then to other SC taxes, then to debts collected through the Setoff Debt and GEAR programs.
- If anything remains after the adjustment, SCDOR says you should receive it within 8 weeks of filing.
- You can also see the notice in your MyDORWAY account.
What to do
Work out which kind of adjustment it is
Read the reason section. A change to your return lists the lines adjusted. An offset names the debt and, for an outside debt, the claimant agency.
For a change to your return, check it against your records
Compare your W-2s, 1099s and credit paperwork with the adjusted figures. Withholding that your employer reported differently is a common cause.
Send proof if SCDOR is wrong
If you have documents SCDOR did not consider, send copies to the address on the notice. If you still disagree after that, use the appeal rights the notice describes.
For an outside debt, contact the claimant agency
Hospital bills, child support, college balances and other agency debts are disputed with the agency named on the notice. SCDOR cannot resolve them.
Offsets for debts owed to other agencies
SC law requires SCDOR to help qualifying claimant agencies collect debts through two programs, Setoff Debt and GEAR. A claimant agency must send you a notification letter 30 days before it submits a debt to SCDOR. If you never received that letter or think the debt is wrong, raise it with that agency. SCDOR's appeals page says not to file an SCDOR appeal over a refund seized for another agency's debt.
| Reason on the notice | Who resolves it |
|---|---|
| SCDOR changed a line on your return | SCDOR, using the contact details and dispute instructions on the notice |
| Refund applied to an SC tax balance for another year or tax | SCDOR; check that balance's own notices |
| Refund applied to a Setoff Debt program debt | The claimant agency named on the notice |
| Refund applied to a GEAR program debt | The claimant agency for the debt itself; SCDOR for a GEAR payment plan |
Will this happen again next year?
If a balance remains, yes. SCDOR keeps applying refunds until the debt is paid. During a Payment Plan Agreement, refunds and SC Education Lottery winnings also go to the debt and do not count as a scheduled payment. Setoff Debt program debts cannot go on an SCDOR payment plan; GEAR debts can, with a down payment.
If the change came from IRS data
SCDOR often adjusts returns based on IRS information. If your federal return was changed, SC Code 12-54-85 allows SCDOR to assess for longer than the normal 36 months, and it also lets you claim a state refund within 180 days of a final IRS adjustment that reduces your income.
Where this notice sits
- Identity Verification letter
- Notice of Refund Adjustment (I-351)
The usual order. Not every account gets every notice, and some steps can be skipped.
Want a CPA to deal with it?
Bring the notice to a free consultation, in person on James Island or by video. We read it with you, tell you what it means for your account and, if you want us to, take over the response once SCDOR has our power of attorney on file.
IRS & SCDOR letters — Find your notice number below, see what it means and which date matters, then let a licensed CPA deal with the IRS or SCDOR on your behalf.
Sources
By Haigler CPA Group. Updated . Notices are revised from time to time, so go by the wording and dates on your own notice. The information on this site is general in nature and is not tax, legal, or accounting advice for your situation. Tax law changes and the right answer depends on facts we would need to review with you. Please speak with a qualified professional before acting on anything you read here.
Questions about Notice of Refund Adjustment (I-351)
Can SCDOR take my refund for a debt that is not a tax?
Yes. Debts owed to qualifying government agencies and public or private institutions of higher learning can be collected from your refund through the Setoff Debt and GEAR programs. The claimant agency must notify you 30 days before submitting the debt.
Can I appeal an offset for another agency's debt to SCDOR?
No. SCDOR's appeals page says not to begin an SCDOR appeal over a refund seized for a debt owed to another agency, such as a hospital bill or child support. Contact the claimant agency named on the notice; SCDOR is only the collector.
How long until I get the rest of my refund?
SCDOR says any remaining refund after an offset should arrive within 8 weeks of filing. Amended-return refunds take at least 12 weeks.
Other notices
- Proposed Assessment: SCDOR proposes tax, penalty or interest you oweSCDOR's proposal of tax, penalty and interest; you have 90 days from the notice date to file a written protest.
- Notice of Assessment (C-133): SCDOR has made the assessment finalThe balance is now assessed and collectible; SCDOR says a state tax lien can follow about 30 days later if it stays unpaid.
- SCDOR noticesSouth Carolina runs its own notices, deadlines and appeal rights, separate from the IRS. Find the type of letter you received below.
Talk to a tax expert
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