ORDERS:
ORDER DENYING MOTION FOR RECONSIDERATION
By Final Order and Decision dated November 28, 2006, The Department of Revenue (“Department”) found that the taxpayer’s (“Petitioner”) income was subject to South Carolina Income Tax and that the Petitioner owed the Department $2,091.85 in taxes for the 2001 tax year. A hearing was held in this matter on June 26, 2007. By Order dated August 20, 2007, this court upheld the Department’s Determination. On August 28, 2007, Petitioner filed a Motion for Reconsideration under ALC Rule 29(D) asserting that the Court “should withdraw its order and re-open its case so that the working man can receive credit for business expenses, withholding, etc. and the true and correct tax be figured.”
Rule 29(D) states that any party may move for reconsideration of a final decision of an administrative law judge in a contested case, subject to the grounds for relief set forth in Rule 60(B) (1 through 5) of the SCRCP. Rule 60(B) sets forth the following grounds for relief from a final judgment:
(1) Mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence which by due diligence could not have been discovered in time for a new trial under Rule 59(B);
(3) fraud, misrepresentation, or other misconduct of an adverse party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application.
Petitioner’s Motion is not sufficient to establish any of the aforementioned grounds for relief. His arguments are essentially based on two issues that were addressed in this Court’s prior Order.
The first issue he raises is whether the court erred in determining that the electronic information given by the Internal Revenue Service (“IRS”) and relied upon by the Department in making its proposed assessment violates the hearsay rule and is the best information available to the Department.
When a taxpayer fails to file a return, S.C. Code Ann. §12-60-430 (Supp. 2006) allows the Department to issue a proposed assessment based on the best information available. As that statute states:
if a taxpayer fails or refuses to make a report or to file a return as required by the provisions of this title or required to be filed with the Department, the Department may make an estimate of the tax liability from the best information available and issue a proposed assessment for the taxes including penalties and interest.
The Petitioner did not file a return for the 2001 tax year. In such a situation, the above statute authorizes the Department to issue a proposed assessment based on the best information available. The best information available to the Department was the IRS information. Further, the Department’s use of the proposed assessment at trial does not constitute a violation against the hearsay rule. Rule 801(c), SCRE, defines “hearsay” as a statement, other than one made by the declarant while testifying at trial or hearing offered in evidence to prove the truth of the matter asserted.” The Department has not offered the proposed assessment to prove the truth of the matter asserted, i.e., that the taxpayer earned $37,982.00 in income. Rather, the underlying information available was used to issue a proposed assessment once the taxpayer failed to file a 2001 income tax return.
The second issue that the Petitioner raises is whether the court erred in determining that he was not entitled to exemptions or deductions for his alleged business expenses. He asserts that he provided to the court the number of days that he worked out of town and the locations “so that anybody can figure out his travel expenses.” This is not the appropriate means to establish that he is entitled to deductions and exemptions. To receive additional deductions and exemptions, the taxpayer should have filed a tax return as required by S.C. Code Ann. §12-6-4910. Moreover, any deductions or exemptions claimed by the taxpayer should have been supported by records or other documentation. See S.C. Code Ann. §12-54-210(A)(Supp. 2006) (persons liable for taxes are required to keep records), also see M. Lowenstein & Sons, Inc. v. South Carolina Tax Commission, 277 S.C. 561, 290 S.E.2d 812(1982) (taxpayers seeking tax deductions must establish they come squarely within the terms of the statutes authorizing such deductions). In the instant situation, the taxpayer has failed to meet either of these requirements. In fact, he has stated to the court during a motion to compel hearing that he does not have any documentation in the form of checks, credit cards, or the like to substantiate any of his alleged deductions.
Because Petitioner has failed to prove that he is entitled to a Reconsideration of the Court’s Order,
IT IS HEREBY ORDERED THAT the Petitioner’s Motion for Reconsideration is denied.
AND IT IS SO ORDERED.
Carolyn C. Matthews
Administrative Law Judge
Petitioner filed a “Motion to Re-hear” which is essentially a Motion for Reconsideration and will be addressed as such throughout this Order.
Although Petitioner’s Motion has thirteen separate paragraphs, the only issues raised are the two that are discussed. |
