SC Administrative Law Court Decisions

STATEMENT OF THE CASE

The above-captioned case is before this Court pursuant to a request for a contested case filed by Petitioners under the South Carolina Revenue Procedures Act, S.C. Code Ann. § 12-60-460 (Supp. 2006). George R. Whitehead, on behalf of himself and Lauren B. Whitehead, requested that the Department expunge the 2004 satisfied tax lien levied against his bank account based on the extenuating circumstances of his case and his prompt payment when the error was discovered. Petitioners seek review of a final agency determination issued by Respondent South Carolina Department of Revenue (Department), in which the Department stated that it had no authority to expunge a tax lien. On July 25, 2007, the Department moved for summary judgment on the ground that the only applicable statute providing grounds for expungement, S.C. Code Ann. § 12-58-160(A) (Supp. 2006), “only authorizes the Department to expunge a lien when the Department made an error in filing the lien. It does not allow the Department to expunge a lien when the taxpayer has made some mistake in not paying the tax liability which ultimately resulted in a lien being filed.” See Department’s Motion at 1. Petitioner did not file a response to this motion. In its Prehearing Statement, the Department requests that the motion be decided prior to discovery or a merits hearing, since it is dispositive of the case. For the reasons set forth below, I find that there is no issue of material fact and thus the Department’s Motion for Summary Judgment must be granted.

FACTS

The relevant facts are undisputed, leaving only a question of law. The Department alleges and the taxpayer admits that his CPA failed to include a check with his voluminous 1,000 page tax return due to her serious medical problems. In his Notice of Appeal, Mr. Whitehead states he signed the check and had no knowledge of the failure to pay until his bank complied with the Department’s levy, emptying his account. The very next day, Mr. Whitehead delivered a check for the balance to the Department, including penalties. He also states that an attached affidavit from the CPA “verifies the chronology of events described above”, even though no affidavit was attached to the Notice of Appeal. See Notice of Appeal at 1-2. However, this omission is of no consequence, since for purposes of summary judgment, the Department does not dispute these facts and this court may safely assume them to be true. As a result, the satisfied lien has negatively impacted Mr. Whitehead’s credit as a real estate developer, making it more difficult and expensive to obtain loans.

LAW / ANALYSIS

Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. In determining whether any triable issue of fact exists, the evidence and all inferences which can reasonably be drawn therefrom must be viewed in the light most favorable to the nonmoving party. See, e.g., Hansson v. Scalise Builders of S.C., 374 S.C. 352, 650 S.E.2d 68 (2007); Nelson v. Charleston County Parks & Recreation Comm’n, 362 S.C. 1, 605 S.E.2d 744 (Ct. App. 2004); Redwend Ltd. P’ship v. Edwards, 354 S.C. 459, 468, 581 S.E.2d 496, 501 (Ct. App. 2003).

The sole legal authority cited by Mr. Whitehead in his initial filing to support his position is in the definitional section of the South Carolina Revenue Procedures Act. Section 12-60-30(13) states: “’Division decision’ means a decision by a division of the department that affects the rights or obligations of a person for which no specific appeals rights are provided by this act. Division decision includes the refusal to expunge or satisfy a lien.” As he correctly points out, this section “makes no reference to the standards or conditions under which the Department may expunge a tax lien.” See Notice of Appeal at 2. This section, however, provides no substantive law for when an expungement may be granted. Section 12-60-30(13) is definitional only and confers no discretion or power on a division of the Department to expunge a tax lien. Rather, as this court’s independent review of the applicable statutes confirms, the Department correctly argues that its “only authority to expunge a tax lien is found” in section 12-58-160(A), which provides:

If the department determines that filing a lien was in error, it shall mail a release to the taxpayer and the entity recording a lien as soon as possible after this determination and the receipt of lien-recording information and shall take necessary action to expunge the recording of the lien from the taxpayer’s record. The release must contain a statement that the lien was filed in error. If the erroneous lien is obstructing a lawful transaction, the department shall immediately issue a release of lien to the taxpayer and the entity recording the lien.

S.C. Code Ann. § 12-58-160(A) (Supp. 2006) (emphasis added). The Department states in its determination that:

There is a condition that must be satisfied in order for the Department to have the statutory power to expunge a lien. The condition is that the Department must determine that it filed the lien in error. In other words, the only time the Department may expunge a lien is when the Department has made some mistake, which, in the end, resulted in a notice of tax lien being filed. The only circumstance that would qualify as a mistake on the Department’s part is some defect in the assessment process or that the liability was paid prior to the Department mailing the notice of lien to the Register of Deeds.

See Department Determination at 2. Ordinarily, the construction of a statute by an agency charged with its administration will be accorded the most respectful deference and will not be overruled absent compelling reasons. See Brown v. S.C. Dep’t of Health & Envtl. Control, 348 S.C. 507, 515, 560 S.E.2d 410, 414 (2002); Dorman v. S.C. Dep’t of Health & Envtl. Control, 350 S.C. 159, 565 S.E.2d 119 (Ct. App. 2002); Dunton v. S.C. Bd. of Exam’rs in Optometry, 291 S.C. 221, 223, 353 S.E.2d 132, 133 (1987); Pressley v. REA Constr. Co., Inc., 374 S.C. 283, 648 S.E.2d 301 (Ct. App. 2007). Moreover, the agency’s construction logically follows from the statutory language. Unlike other sections that grant the Department discretion in extending deadlines or assessing penalties, here expungement is proper only where the lien should not have been filed initially, where it was filed in error. Here, Taxpayer admits the money was owed and promptly paid once he learned of the deficiency.

Further, the two statutes can be read together consistently. It is well settled and deeply rooted in South Carolina law that:

[S]tatutes in pari materia . . . should be so construed, if possible, as to harmonize, and force and effect should be given to the provisions of each; if, however, they are necessarily inconsistent, a statute which deals with the common subject-matter in a minute and particular way will prevail over one of a more general nature. . . . Where there is one statute dealing with a subject in general and comprehensive terms and another dealing with a part of the same subject in a more minute and definite way, the two should be read together and harmonized, if possible, with a view to giving effect to a consistent legislative policy. . . .

Smith v. S.C. State Highway Comm’n, 138 S.C. 374, 136 S.E. 487 (1927); see also Bell Fin. Co. v. S.C. Dep’t of Consumer Affairs, 297 S.C. 111, 374 S.E.2d 918 (Ct. App. 1988) (recognizing statutes dealing with same subject matter must be harmonized if possible and finding no conflict or inconsistency between two statutes dealing with same subject).

The cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the legislature. Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000). In ascertaining the intent of the legislature, a court should not focus on any single section or provision but should consider the language of the statute as a whole. Mid-State Auto Auction of Lexington, Inc. v. Altman, 324 S.C. 65, 69, 476 S.E.2d 690, 692 (1996). Statutes dealing with the same subject matter are in pari materia and must be construed together, if possible, to produce a single, harmonious result. Joiner ex rel. Joiner v. Rivas, 342 S.C. 102, 109, 536 S.E.2d 372, 375 (2000).

Howell v. U.S. Fid. & Guar. Ins. Co., 370 S.C. 505, 636 S.E.2d 626 (2006). “[S]tatutes in pari materia must be construed together as one system and as explanatory of each other.” United Technologies v. S.C. Second Injury Fund, 318 S.C. 213, 456 S.E.2d 901 (1995) (citing Fishburne v. Fishburne, 171 S.C. 408, 172 S.E. 426 (1934)). Under the definitional section 12-60-30(13) and the chapter that follows, which is the South Carolina Revenue Procedures Act, a division decision does have the power to expunge a lien if the substantive conditions are met under section 12-58-160(A). However, nothing in either of these two sections can be read to confer discretion on the Department in making that determination.

Mr. Whitehead makes an equitable argument that while the Department has marked the tax lien as satisfied, its mere existence is substantially harmful to his credit score and, as the owner of a real estate development company, creates a “negative public record” that makes loans “more difficult to underwrite and more costly for Taxpayer to obtain, primarily in the form of higher interest rates and origination fees.” See Notice of Appeal at 3. While this situation is unfortunate and this Court takes no joy in its decision, no equitable grounds exist under the statute, leaving the Department no discretion to expunge the satisfied tax lien.

ORDER

Based on the foregoing, IT IS THEREFORE ORDERED that Respondent’s Motion for Summary Judgment is hereby GRANTED. Because a hearing is no longer required, the August 3, 2007, order scheduling a hearing for March 19, 2008, is VACATED. AND IT IS SO ORDERED.

______________________________

November 6, 2007 JOHN D. GEATHERS

Columbia, South Carolina Administrative Law Judge

November 6, 2007

Columbia, South Carolina