(A) A withholding agent, as defined in § 12-8-10, shall withhold state income tax at the rate of seven percent of the amount of compensation paid to an individual, which compensation is reported on Form 1099 and with respect to which the individual has:

(1) failed to provide a taxpayer identification number or social security number;

(2) failed to provide a correct taxpayer identification number or social security number; or

(3) provided an Internal Revenue Service issued taxpayer identification number issued for nonresident aliens.

(B) A withholding agent who fails to comply with the withholding requirements of this subsection shall be liable for the taxes required to have been withheld unless the withholding agent is exempt from federal withholding with respect to the individual pursuant to a properly filed Internal Revenue Service Form 8233 and has provided a copy of the form to the commissioner.

(C) A withholding agent does not violate this section if the individual provides a false or incorrect social security number or taxpayer identification number that is facially correct and the withholding agent does not know or should not have known based on a reasonable investigation that the number provided is false or incorrect.

(D) The director of the South Carolina Department of Revenue shall send written notice of this section to all South Carolina employers no later than July 1, 2008.