ORDERS:
FINAL ORDER
STATEMENT OF THE CASE
This matter is before the Court pursuant to Randy and Julie Jorgenson’s (hereinafter referred to as “Husband” and “Wife” or collectively as “Taxpayers”) request for a contested case hearing as set forth in S.C. Code Ann. §12-60-470(F) (2006). The issues presented to the court are: whether the Wife timely filed her claim for a refund of income tax as required by S.C. Code Ann. §12-54-85(F)(1) (2006) for the 2000 tax year; whether Taxpayers timely filed their claim for a refund for the 2001 tax year; and whether the refunds can be applied to estimated tax liability for subsequent years if they were timely filed? The South Carolina Department of Revenue (hereinafter referred to as “the Department”) denied Wife and Taxpayers’ claims for refunds because they were untimely filed. After notice to the parties and the filing of Briefs, oral arguments in this matter were heard at the Administrative Law Court (“ALC”) in Columbia, South Carolina on November 5, 2007.
FINDINGS OF FACT
Having carefully considered the testimony and the arguments of both sides taking into account the credibility of the evidence and witnesses, I find by a preponderance of the evidence:
1. That in 2000, Julie Jorgenson or “Wife” earned taxable income in South Carolina. Based on this income, the Department issued a proposed assessment on November 1, 2005, in the amount of $5,688.58, for income earned during 2000. The original due date for filing a South Carolina individual Income Tax Return for 2000 was April 15, 2001. The Wife failed to file her 2000 return by its due date and did not request an extension to file. The Wife subsequently provided information to the Department and filed the 2000 return on January 17, 2006 showing no tax liability for 2000, but claiming a refund due in the amount of $951.00.
2. On February 7, 2006, the Department removed the assessment against Wife and notified her that the refund was denied because it has been filed beyond the time period provided by law. On April 17, 2006, Wife timely protested the denial of the claim for refund and requested that she be given credit for this amount for taxes owed for years 2004 and 2005.
3. In 2001, Husband and Wife earned taxable income in South Carolina. Based on this income, the Department issued a proposed assessment on November 1, 2005 in the amount of $4,130.06 for income earned during 2001. The original due date for filing a South Carolina Individual Income Tax Return was April 15, 2002. The Taxpayers failed to file their tax return by its due date. The Department received no extension request. The Taxpayers subsequently provided information to the Department and filed the 2001 return on January 17, 2006, showing no tax liability for 2001 but instead claiming a refund due in the amount of $1,108.00.
4. On February 7, 2006, the Department removed the assessment against Taxpayers and notified them that the refund was denied because it was filed beyond the time period provided by law.
5. Taxpayers timely protested the denial of the claim for refund on April 17, 2006. The Department issued its final determination denying this claim on December 28, 2006. Taxpayers timely appealed this Final Determination to the ALC.
6. It is undisputed that Wife untimely filed her tax return for the year 2000 and that the Taxpayers untimely filed their tax return for the 2001 tax year. However, Petitioners assert that they are entitled to this refund despite the late filings because the statutes governing the time frames are inequitable. The Department is not given a deadline by which it can request payment for taxes, but Taxpayers are given a deadline by which they must request a refund under S.C. Code Ann. § 12-54-85(F)(1).
CONCLUSIONS OF LAW
1. The Administrative Law Court has subject matter jurisdiction over this action pursuant to S.C. Code Ann. § 12-60-470(F)(2006) and S.C. Code Ann. § 1-23-600 (2006).
2. The right to recover taxes from the State of South Carolina was created by statute. C.W. Matthews Contracting Co., Inc. v. S.C. Tax Comm'n, 267 S.C. 548, 230 S.E.2d 223 (1976). Accordingly, anyone seeking such a refund of taxes must do so pursuant to the appropriate refund statute. Guaranty Bank and Trust v. South Carolina Tax Commission, 254 S.C. 82, 173 S.E.2d 367 (1970).
3. In this case, the applicable refund statute is S.C. Code Ann. § 12-60-470 (2006). This statute gives the Department the authority to issue refunds provided such claims are submitted within the time limitations of S.C. Code Ann. § 12-54-85 (2007).
4. S.C. Code Ann. § 12-54-85(F)(1) provides:
Except as provided in subsection (D), claims for credit or refund must be filed within three years from the time the return was filed, or two years from the date the tax was paid, whichever is later. If no return was filed, a claim for credit or refund must be filed within two years from the date the tax was paid. A credit or refund may not be made after the expiration of the period of limitation prescribed in this item for the filing of a claim for credit or refund, unless the claim for credit or refund is filed by the taxpayer or determined to be due by the department within that period.
5. Under S.C. Code Ann. 12-54-85(F)(2), if the claim was filed by Taxpayers during the three-year period prescribed in item (1), the amount of the credit or refund may not exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to three years plus the period of any extension of time for filing the return.
6. In the instant situation, the Taxpayers collectively as well as the Wife individually, fall within this statute because they filed their refund claim within three years of their tax return, in that the tax return they filed served simultaneously as their refund claim. The Wife’s 2000 return was timely to claim a refund for any 2000 taxes paid during the period of January 17, 2003 through January 17, 2006. This amount is zero because under 12-54-85(F)(5)(B), all of her 2000 taxes were deemed paid on April 15, 2001. Similarly, Taxpayers’ 2001 return was timely to claim a refund for any 2001 taxes paid during the period of January 17, 2003 through January 17, 2006. This amount is zero because under 12-54-85(F)(5)(B), all of their 2001 taxes were deemed paid on April 15, 2002.
7. It is undisputed that the Taxpayers collectively, as well as the Wife individually, failed to file a refund request within three years of April 15, 2001 and April 15, 2002 for the 2000 and 2001 tax years respectively. As a result, Taxpayers fall outside of the statutory period for requesting a refund of overpayment of taxes for those years.
8. Taxpayers contend that their having to pay their taxes without receiving a refund is inequitable. However, there are no equitable exceptions that would allow late filing of income taxes because:
“an ‘equitable tolling’... could create serious administrative problems by forcing the IRS to respond to, and perhaps litigate, large numbers of late claims, accompanied by requests for ‘equitable tolling’ which, upon close inspection, might turn out to lack sufficient equitable justification.... The nature and potential magnitude of the administrative problem suggest that Congress decided to pay the price of occasional unfairness in individual cases (penalizing a taxpayer whose claim is unavoidably delayed) in order to maintain a more workable tax enforcement system.” See United States v. Brockamp, 519 U.S. 347 (1997). See also; Anonymous Taxpayers v. South Carolina Department of Revenue, 2001 WL 1185428 (S.C. Administrative Law Judge Div.).
While this situation is unfortunate for the Taxpayers, the legislature has clearly outlined the requirements for obtaining a refund. Taxpayers simply do not meet the statutory requirements.
ORDER
IT IS HEREBY ORDERED that Wife’s request for a refund in the amount of $951.00 for the 2000 tax year and Taxpayers’ request for a refund in the amount of $1,108 for the 2001 tax year are denied.
AND IT IS SO ORDERED.
___________________________________
Carolyn C. Matthews
Administrative Law Judge
January 14, 2008
S.C. Code Ann. 12-54-85(5)(b) states that for the purposes of this subsection: STATEMENT OF THE CASE
This matter is before the Court pursuant to Randy and Julie Jorgenson’s (hereinafter referred to as “Husband” and “Wife” or collectively as “Taxpayers”) request for a contested case hearing as set forth in S.C. Code Ann. §12-60-470(F) (2006). The issues presented to the court are: whether the Wife timely filed her claim for a refund of income tax as required by S.C. Code Ann. §12-54-85(F)(1) (2006) for the 2000 tax year; whether Taxpayers timely filed their claim for a refund for the 2001 tax year; and whether the refunds can be applied to estimated tax liability for subsequent years if they were timely filed? The South Carolina Department of Revenue (hereinafter referred to as “the Department”) denied Wife and Taxpayers’ claims for refunds because they were untimely filed. After notice to the parties and the filing of Briefs, oral arguments in this matter were heard at the Administrative Law Court (“ALC”) in Columbia, South Carolina on November 5, 2007.
FINDINGS OF FACT
Having carefully considered the testimony and the arguments of both sides taking into account the credibility of the evidence and witnesses, I find by a preponderance of the evidence:
1. That in 2000, Julie Jorgenson or “Wife” earned taxable income in South Carolina. Based on this income, the Department issued a proposed assessment on November 1, 2005, in the amount of $5,688.58, for income earned during 2000. The original due date for filing a South Carolina individual Income Tax Return for 2000 was April 15, 2001. The Wife failed to file her 2000 return by its due date and did not request an extension to file. The Wife subsequently provided information to the Department and filed the 2000 return on January 17, 2006 showing no tax liability for 2000, but claiming a refund due in the amount of $951.00.
2. On February 7, 2006, the Department removed the assessment against Wife and notified her that the refund was denied because it has been filed beyond the time period provided by law. On April 17, 2006, Wife timely protested the denial of the claim for refund and requested that she be given credit for this amount for taxes owed for years 2004 and 2005.
3. In 2001, Husband and Wife earned taxable income in South Carolina. Based on this income, the Department issued a proposed assessment on November 1, 2005 in the amount of $4,130.06 for income earned during 2001. The original due date for filing a South Carolina Individual Income Tax Return was April 15, 2002. The Taxpayers failed to file their tax return by its due date. The Department received no extension request. The Taxpayers subsequently provided information to the Department and filed the 2001 return on January 17, 2006, showing no tax liability for 2001 but instead claiming a refund due in the amount of $1,108.00.
4. On February 7, 2006, the Department removed the assessment against Taxpayers and notified them that the refund was denied because it was filed beyond the time period provided by law.
5. Taxpayers timely protested the denial of the claim for refund on April 17, 2006. The Department issued its final determination denying this claim on December 28, 2006. Taxpayers timely appealed this Final Determination to the ALC.
6. It is undisputed that Wife untimely filed her tax return for the year 2000 and that the Taxpayers untimely filed their tax return for the 2001 tax year. However, Petitioners assert that they are entitled to this refund despite the late filings because the statutes governing the time frames are inequitable. The Department is not given a deadline by which it can request payment for taxes, but Taxpayers are given a deadline by which they must request a refund under S.C. Code Ann. § 12-54-85(F)(1).
CONCLUSIONS OF LAW
1. The Administrative Law Court has subject matter jurisdiction over this action pursuant to S.C. Code Ann. § 12-60-470(F)(2006) and S.C. Code Ann. § 1-23-600 (2006).
2. The right to recover taxes from the State of South Carolina was created by statute. C.W. Matthews Contracting Co., Inc. v. S.C. Tax Comm'n, 267 S.C. 548, 230 S.E.2d 223 (1976). Accordingly, anyone seeking such a refund of taxes must do so pursuant to the appropriate refund statute. Guaranty Bank and Trust v. South Carolina Tax Commission, 254 S.C. 82, 173 S.E.2d 367 (1970).
3. In this case, the applicable refund statute is S.C. Code Ann. § 12-60-470 (2006). This statute gives the Department the authority to issue refunds provided such claims are submitted within the time limitations of S.C. Code Ann. § 12-54-85 (2007).
4. S.C. Code Ann. § 12-54-85(F)(1) provides:
Except as provided in subsection (D), claims for credit or refund must be filed within three years from the time the return was filed, or two years from the date the tax was paid, whichever is later. If no return was filed, a claim for credit or refund must be filed within two years from the date the tax was paid. A credit or refund may not be made after the expiration of the period of limitation prescribed in this item for the filing of a claim for credit or refund, unless the claim for credit or refund is filed by the taxpayer or determined to be due by the department within that period.
5. Under S.C. Code Ann. 12-54-85(F)(2), if the claim was filed by Taxpayers during the three-year period prescribed in item (1), the amount of the credit or refund may not exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to three years plus the period of any extension of time for filing the return.
6. In the instant situation, the Taxpayers collectively as well as the Wife individually, fall within this statute because they filed their refund claim within three years of their tax return, in that the tax return they filed served simultaneously as their refund claim. The Wife’s 2000 return was timely to claim a refund for any 2000 taxes paid during the period of January 17, 2003 through January 17, 2006. This amount is zero because under 12-54-85(F)(5)(B), all of her 2000 taxes were deemed paid on April 15, 2001. Similarly, Taxpayers’ 2001 return was timely to claim a refund for any 2001 taxes paid during the period of January 17, 2003 through January 17, 2006. This amount is zero because under 12-54-85(F)(5)(B), all of their 2001 taxes were deemed paid on April 15, 2002.
7. It is undisputed that the Taxpayers collectively, as well as the Wife individually, failed to file a refund request within three years of April 15, 2001 and April 15, 2002 for the 2000 and 2001 tax years respectively. As a result, Taxpayers fall outside of the statutory period for requesting a refund of overpayment of taxes for those years.
8. Taxpayers contend that their having to pay their taxes without receiving a refund is inequitable. However, there are no equitable exceptions that would allow late filing of income taxes because:
“an ‘equitable tolling’... could create serious administrative problems by forcing the IRS to respond to, and perhaps litigate, large numbers of late claims, accompanied by requests for ‘equitable tolling’ which, upon close inspection, might turn out to lack sufficient equitable justification.... The nature and potential magnitude of the administrative problem suggest that Congress decided to pay the price of occasional unfairness in individual cases (penalizing a taxpayer whose claim is unavoidably delayed) in order to maintain a more workable tax enforcement system.” See United States v. Brockamp, 519 U.S. 347 (1997). See also; Anonymous Taxpayers v. South Carolina Department of Revenue, 2001 WL 1185428 (S.C. Administrative Law Judge Div.).
While this situation is unfortunate for the Taxpayers, the legislature has clearly outlined the requirements for obtaining a refund. Taxpayers simply do not meet the statutory requirements.
ORDER
IT IS HEREBY ORDERED that Wife’s request for a refund in the amount of $951.00 for the 2000 tax year and Taxpayers’ request for a refund in the amount of $1,108 for the 2001 tax year are denied.
AND IT IS SO ORDERED.
___________________________________
Carolyn C. Matthews
Administrative Law Judge
January 14, 2008
S.C. Code Ann. 12-54-85(5)(b) states that for the purposes of this subsection: any tax actually withheld at the source in respect of the recipient of income, is considered to have been paid by the recipient on the last day prescribed for filing his return for the taxable year, determined without regard to any extension of time for filing the return, with respect to which the taxpayer would be allowed a credit for the amount withheld.
style='color:black'>any tax actually withheld at the source in respect of the recipient of income, is considered to have been paid by the recipient on the last day prescribed for filing his return for the taxable year, determined without regard to any extension of time for filing the return, with respect to which the taxpayer would be allowed a credit for the amount withheld.
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