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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
Thomas P. Tolpa vs. Beaufort County Assessor

AGENCY:
Beaufort County Assessor

PARTIES:
Petitioners:
Thomas P. Tolpa

Respondents:
Beaufort County Assessor
 
DOCKET NUMBER:
08-ALJ-17-0088-CC

APPEARANCES:
n/a
 

ORDERS:

ORDER

STATEMENT OF THE CASE

This matter is before the Administrative Law Court (ALC or Court) pursuant to S.C. Code Ann. § 12-60-2940 (Rev. 2000). Thomas P. Tolpa (Petitioner or Taxpayer) asserts that his residence is entitled to be taxed on an assessment of four percent of the fair market value of his property notwithstanding the fact that the property was rented for 134 days during the tax year in question (2006). I disagree.

Petitioner’s primary contentions are as follows:

  1. The portion of S.C. Code Ann. § 12-43-220 (c)(1) (Supp. 2007) which disqualifies property containing rented residences or businesses from eligibility for the 4% assessment applies only to the leased property referred to in the sentence which precedes the disqualifying language; and,
  2. The provisions of S.C. Code Ann. §12-43-220 (c)(7) (Supp. 2007) do not limit the number of days that a residence can be rented yet still qualify for the 4% assessment and instead provides a “safe harbor” of 14 days.

FINDINGS OF FACT

Having carefully considered all testimony, exhibits, and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following findings of fact by a preponderance of evidence:

  1. This Court has procedural and subject matter jurisdiction over this case.
  2. The parties have exhausted their pre-hearing remedies. Furthermore, notice of the date, time, place and subject matter of the hearing was timely given to all parties.
  3. Petitioner is the owner of a home on Hilton Head Island in Beaufort County S.C. and is a resident of and is domiciled in Beaufort County, S.C. This home is his legal residence. Before the tax year of 2006, Petitioner’s residence was assessed at the 4% ratio.
  4. During the tax year 2006, Petitioner rented his legal residence for 134 days. Petitioner spent 83 nights at his legal residence during the tax year in question. The property was available for rent for the entire tax year in question. Petitioner would have rented this residence out at any time during the tax year in question, although anticipated renting the property for only 3 to 4 months out of the year. Petitioner is not claiming the 4% ratio on any other property that he owns.
  5. The Beaufort County Assessor (Respondent) has denied Petitioner’s request to be taxed at the 4% assessment for the tax year of 2006 because he rented his residence for more than 14 days in the tax year in question. Respondent asserts that the disqualification found in S.C. Code Ann. § 12-43-220 (c)(1) ( Supp. 2007) and S.C. Code Ann. § 12-43-220 (c)(7) (Supp. 2007) is applicable to all legal residences.
  6. Petitioner maintains a business at a different address on Hilton Head Island.
  7. Petitioner did receive some business mail at his legal residence, but it was not such as would result in the location being deemed a business and would not prevent him from receiving the 4% assessment if otherwise qualified.

CONCLUSIONS OF LAW

The cardinal rule of statutory construction is to determine and effectuate the intent of the legislature. Wieters v. Bon-Secours-St. Francis Xavier Hosp., Inc., 378 S.C. 160, 168, 662 S.E.2d 430, 434 (Ct. App. 2008). “Where the statute’s language is plain and unambiguous…the rules of statutory interpretation are not needed and the court has no right to impose another meaning.” Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000). The words of a statute “must be given their plain and ordinary meaning without resort to subtle or forced construction to limit or expand the statute’s operation.” Hitachi Data Sys. Corp. v. Leatherman, 309 S.C. 174, 178, 420 S.E.2d 843, 846 (1992). “[W]here a statute is ambiguous, the Court must construe the terms of the statute.” Wade v. Berkeley County, 348 S.C. 224, 229, 559 S.E.2d 586, 588 (2002).

“In construing a statute, the court looks to the language as a whole in light of its manifest purpose.” Wieters 662 S.E.2d at 435. Courts will rebuff an interpretation which leads to a result that is so plainly absurd that it could not have been intended by the legislature. Id at 436. “A court should not consider a particular clause in a statute as being construed in isolation, but should read it in conjunction with the purpose of the whole statute and the policy of the law.” Id (emphasis added); see also Mid-State Auto Auction v. Altman, 324 S.C. 65, 69, 476 S.E.2d 690, 692 (1996) (when determining legislative intent, courts should consider the language of the statute as a whole).

Importantly, statutory ambiguities will be resolved against a taxpayer claiming an exemption. SCANA Corp. v. S. C. Dep’t of Revenue, 2008 WL 2572595 at *2 (2008); see also State v. Life Ins. Co. of Georgia, 254 S.C. 286, 292, 175 S.E.2d 203, 206 (1970) (stating the general rule that statutory language creating exemptions from taxation will not be strained or liberally construed in favor of a taxpayer claiming an exemption, the taxpayer must clearly bring himself within the statutory language upon which he relies); Guaranty Bank & Trust Co. v. S. C. Tax Comm’n, 254 S.C. 82, 90, 173 S.E.2d 367, 370 (1970) (“A refund of taxes is solely a matter of governmental or legislative grace and any person seeking such relief must bring himself clearly within the terms of the statute authorizing the same.”).

Each of the constructions that follow are, standing alone, enough to support a finding in favor of Respondent.

I. CONSTRUCTION BASED ON UNIFORMITY AND EQUALITY AND READING THE STATUTE AS A WHOLE

Here, the operative statute is S.C. Code Ann. §12-43-220. It provides, in pertinent part:

Except as otherwise provided, the ratio of assessment to value of property in each class shall be equal and uniform throughout the State. All property presently subject to ad valorem taxation shall be classified as follows…

(c)(1) The legal residence and not more than five acres contiguous thereto, when owned totally or in part in fee or by life estate and occupied by the owner of the interest, and additional dwellings located on the same property and occupied by immediate family members of the owner of the interest, are taxed on an assessment equal to four percent of the fair market value of the property.

If residential real property is held in trust and the income beneficiary of the trust occupies the property as a residence, then the assessment ratio allowed by this item applies if the trustee certifies to the assessor that the property is occupied as a residence by the income beneficiary of the trust.

When the legal residence is located on leased or rented property and the residence is owned and occupied by the owner of a residence on leased property, even though at the end of the lease period the lessor becomes the owner of the residence, the assessment for the residence is at the same ratio as provided in this item. If the lessee of property upon which he has located his legal residence is liable for taxes on the leased property, then the property upon which he is liable for taxes, not to exceed five acres contiguous to his legal residence, must be assessed at the same ratio provided in this item.

If this property has located on it any rented mobile homes or residences which are rented or any business for profit, this four percent value does not apply to those businesses or rental properties. For purposes of the assessment ratio allowed pursuant to this item, a residence does not qualify as a legal residence unless the residence is determined to be the domicile of the owner-applicant.[1]

S.C. Code Ann. §12-43-220 (Supp. 2007) (emphasis added).

S.C. Code Ann. §12-43-220 (c) continues:

(7) Notwithstanding any other provision of law, the owner-occupant of a legal residence is not disqualified from receiving the four percent assessment ratio allowed by this item if the taxpayer's residence meets the requirements of Internal Revenue Code Section 280A(g) as defined in Section 12-6-40(A) and the taxpayer otherwise is eligible to receive the four percent assessment ratio.

S.C. Code Ann. §12-43-220 (c)(7) (Supp. 2007).

Internal Revenue Code Section 280 A(g) provides, in pertinent part:

(g) Special rule for certain rental use. Notwithstanding any other provision of this section…if a dwelling unit is used during the taxable year by the taxpayer as a residence and such dwelling is actually rented for less than 15 days during the taxable year, then (1) no deduction otherwise allowable under this chapter because of the rental use of such dwelling unit shall be allowed, and (2) the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer under section 61.

I.R.C. § 280 A(g).

The Petitioner argues that the disqualifying language pertaining to rental property found in § 12-43-220(c)(1) should only apply to the leasehold interests mentioned in the sentence preceding the disqualifying language. An examination of the language of § 12-43-220 reveals that the legislature intended otherwise.

The preliminary language of § 12-43-220 reflects the true intention of the legislature, to wit, that equality be achieved in the assessment of all property. See S.C. Code Ann. § 12-43-220 (Supp. 2007), supra. Section 12-43-220(c)(7), supra, was added as an amendment in 2005 after the parent subsection was enacted in 2002. The obvious intent of the amendment was to prevent the strict disqualification by rental in (c)(1) from denying the 4% assessment to taxpayers who may have occasion to rent their legal residences for 14 days or less in the tax year in question. Thus, this is clearly an instance of “legislative grace”. See SCANA Corp., supra.

II. CONSTRUCTION BASED ON LANGUAGE IN § 12-43-220 (c)(7)

Special note should be given to the portion of § 12-43-220 (c)(7) which states: “…the owner occupant of a legal residence is not disqualified from receiving the four per cent assessment ratio …”. S.C. Code Ann § 12-43-220(c)(7) (Supp. 2007) (emphasis added). The language of the amendment plainly recognizes that there are disqualifying terms contained within the operative statute, and the enactment of the amendment allowing the 14 day exemption to the “owner-occupant of a legal residence” clearly points to the intention for the exemption to apply to all legal residences, not just those on leased properties. As noted above, the only disqualification applying to legal residences found in § 12-43-220 is the rental and business disqualification contained in (c)(1).

Since the “is not disqualified” language of (c)(7) can only refer to the rental and business disqualifications of (c)(1), the amendment clearly presumes that the rental and business qualification applies to all legal residences. Plainly stated, there would have been no need for the exemption to apply to all if the disqualification did not apply to all. Therefore, reading the statute as a whole, it is evident that the provisions of (c)(7) apply to make less restrictive the provisions of (c)(1), and that the disqualifying language found in (c)(1) should be applied uniformly to all legal residences. To hold otherwise would not only avoid the equality and uniformity sought by the legislature in the opening paragraph of § 12-43-220, but would also contravene the well settled rule resolving ambiguities against the taxpayer in matters involving “legislative grace”. See SCANA Corp., supra.

The Taxpayer also contends that, even if the exemption of § 12-43-220 applies to all property, the fourteen day exemption operates only as a “safe harbor” and does not prevent a taxpayer who rents his legal residence from obtaining the 4% assessment ratio if otherwise qualified. I disagree.

When read in conjunction with § 12-43-220 in its entirety, neither § 12-43-220 (c)(7) nor I.R.C. § 280 A(g) support the contention that properties rented in excess of fourteen (14) days are entitled to a case by case analysis to determine whether the 4% ratio applies. The foregoing subsections clearly do not provide any language pertaining to an expansion of taxpayer recourse beyond the prescribed fourteen day limitation.[2] Accordingly, this court will not seek to impose another meaning in this regard. See Wieters, supra (“Where the statute’s language is plain and unambiguous…the rules of statutory interpretation are not needed and the court has no right to impose another meaning.”).

Additionally, as noted above, § 12-43-220 was enacted with the express purpose of uniformly applying the rules set forth therein. See S.C. Code Ann. § 12-43-220, supra. I find that expanding the scope of § 12-43-220 would prove to be an obvious frustration of this intent.

ORDER

Accordingly, based on the forgoing reasons, I find that the Beaufort County’s application of the 6% tax assessment ratio to Petitioner’s legal residence for the tax year of 2006 is hereby AFFIRMED.

AND IT IS SO ORDERED.

______________________________

John D. McLeod, Judge

Administrative Law Court

August 11, 2008

Columbia, SC



[1] The previous four paragraphs are but one in the S.C. Code. They are separated here for ease of understanding.

[2] A more simple expression of (c)(7) would be: The owner occupant of a legal residence is not disqualified from receiving the four percent assessment ratio so long as the legal residence is not rented for more than fourteen (14) days in the tax year in question.


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