SC Administrative Law Court Decisions

statement of the case

The above-captioned matter is before the Administrative Law Court (ALC or Court) on the request by Anonymous Corporation (Petitioner or Taxpayer) for a contested case hearing pursuant to S.C. Code Ann. §12-60-460 (2004). Petitioner contests the Final Agency Determination issued by the South Carolina Department of Revenue (Department), which held that the Petitioner is not entitled to job tax credits provided by S.C. Code Ann. §12-6-3360. The Petitioner exhausted its pre-hearing remedies pursuant to S.C. Code Ann. §12-60-470. After notice to the parties, a hearing was conducted by the undersigned at the Administrative Law Court in Columbia, South Carolina on January 23, 2006. Based upon the evidence presented at the hearing and my view of the applicable law, I find that Petitioner is entitled to claim the job tax credits in issue.

Any motions or issues raised in the proceedings, but not addressed in this Order are deemed denied pursuant to Administrative Law Court Rule 29(C).

findings of fact

I make the following Findings of Fact, taking into consideration the burden on the parties to establish their respective cases by a preponderance of the evidence, and taking into account the credibility of the witnesses:

1. This matter involves the denial of job tax credits allowed pursuant to §12-6-3360 of the South Carolina Code. Section 12-6-3360(C) provides that "a job tax credit is allowed for five years beginning in year two after the creation of the job for each new full-time job created if the minimum level of new jobs is maintained."

2. As initially enacted, the job tax credits were granted only to corporations as an offset against corporate income taxes. See §12-7-1220 (1994) (prior to renumbering in 1995). 3. In 1995, an amendment was enacted to allow the credit to be earned by pass-through entities, specifically S corporations, partnerships and limited liability companies taxed as partnerships. See §12-6-3360(K)(1) (Supp. 1995). The 1995 amendment expressly entitled shareholders, partners or members of pass-through entities “to a nonrefundable credit against taxes imposed pursuant to Section 12-6-510.” Id. Section 12-6-510 imposes taxes on individuals, trusts and estates. Section 12-6-530, which imposes taxes on corporations, is not expressly referenced in the 1995 version of subsection (K)(1).

4.                 The statute was again amended in 1999, specifically referencing §12-6-530, and therefore clearly allowing the pass-through of credits to all shareholders, partners and members of pass-through entities. See §12-6-3360(K)(1)(1999).

5. The Petitioner, a corporation, is a member in an LLC and certain other pass-through entities. The relevant entities and the ownership are as follows:

Name Owned By: % owned

ABC, LLC DEF, LLC 99%

A & Z Co. 1%

DEF, LLC A & Z Co. 99%

A & F Co. 1%

GHI, LLC XYZ Assoc. 49%

XYZ Assoc. II 1%

JKL Assoc. A & Z Hotels, Inc. 50%

JKL Assoc. II A & Z Hotels, Inc. II 50%

(hereinafter the above five entities will be collectively referred to as the “Pass-Through Entities”).

6.                 Of the credits in question, approximately 90% were attributable to jobs created and maintained by ABC, LLC.

7.                 All of the tax credits in question originated with jobs created by the Pass-Through Entities during their (and Petitioner’s) tax year ending on December 31, 1998. The jobs were maintained in 1999, 2000, 2001 and 2002.

8.                 The Department conducted a corporate income tax audit of Petitioner for the periods ending December 31, 1999 through December 31, 2002.

9.                 The Department contended that the job tax credits generated by the Pass-Through Entities from jobs created in 1998 could only pass through to individuals and trusts, not to corporations, such as Petitioner. Consequently, the Department issued a proposed assessment on February 12, 2004, disallowing the Petitioner’s claimed job tax credits.

10.             On May 10, 2004, Petitioner timely protested the disallowance of the claimed job tax credits. The Department subsequently issued its Final Agency Determination disallowing the job tax credits and the assessment of $635,584 in taxes and $125,147 in interest. The Petitioner timely filed a request for contested case hearing before this Court.

11.             Prior to the hearing on this matter, Petitioner discovered that in filing its tax returns, it applied what it believes to be an erroneous, overly restrictive limit to certain job tax credits. The parties have stipulated that should the Petitioner prevail in this action, the Department will (if after appropriate audit, it agrees with the Petitioner’s position and computation) recompute Petitioner’s liability and issue an appropriate refund of tax in accordance with the terms of this decision.

discussion

The ultimate question in this case is whether the job tax credits that originated with jobs created in 1998 by the Pass-Through Entities can be passed through to Petitioner, a corporation, in 1999, the first year in which the jobs were maintained, and following years. Prior to 1999, the job tax credit statute only referenced one statutory taxing provision against which the credits could be claimed: Section 12-6-510, which imposes tax on individual and estates and trusts. See §12-6-3360(K)(1)(Supp. 1995). The statute was amended, effective June 30, 1999, to add a reference to § 12-6-530, which imposes tax on corporations:

(K)(1) An S corporation, limited liability company taxed as a partnership, or partnership that qualifies for a credit under this section may pass through the credit earned to each shareholder of the S corporation, partner of the partnership, or member of the limited liability company. For purposes of this subsection, limited liability company means a limited liability company taxed as a partnership.

(K)(2)(a) . . . This nonrefundable credit is allowed against taxes due under Section 12-6-510 or 12-6-530.

§§12-6-3360(K)(1), (K)(2)(a)(1999). With the specific reference to §12-6-530, this amendment makes clear that pass-through entities can pass through credit to corporations. Consequently, if the credits in the present lawsuit were earned by the Pass-Through Entities after the 1999 amendment came into effect, then this amendment is conclusive of the issue, and the credits in question can be passed through to Petitioner.

Therefore, the determination of two issues is critical to a proper resolution of this controversy. First, when were the credits in question “earned”? Second, because the relevant statute was amended between the time the jobs were created and the first year in which the jobs were maintained, can the credits earned pass through to Petitioner for tax years following the amendment?

I. When were the credits “earned”?

The parties agree that the credits were earned by the Pass-Through Entities but dispute when they were earned. The statute provides that taxpayers in qualifying industries are allowed an annual job tax credit for new jobs that are created and maintained over a period of time. See S.C. Code Ann. §12-6-3360(A). Subsection (C) of the statute provides that "a job tax credit is allowed for five years beginning in year two after the creation of the job for each new full-time job created if the minimum level of new jobs is maintained." Section 12-6-3360(C). Subsection (G) reiterates that “the credits available under this section are only allowed for the job level that is maintained in the taxable year that the credit is claimed.” Section 12-6-3360(G).

These provisions have remained constant throughout various revisions of the statute and form the premise of this statutory incentive: to induce business entities to both create and maintain additional jobs for a period of time. Consequently, a business cannot claim tax credits during the year in which the jobs are created. Rather, credits may first be claimed in year two after the year of the jobs’ creation and then only if the jobs have been maintained during that period. The plain language of the statute leads to the conclusion that credits are earned only after a job is maintained, not when the job is created.

As a practical matter, the amount of credit earned cannot be calculated until the close of the tax year in which the jobs are maintained. At that time, the credit earned is dependent upon the qualifying jobs maintained throughout that tax year, not upon the jobs that originated in that year. The 1999 amendment to subsection (K) reflects this simple reality, repeatedly referencing the point in time that the credit is “earned” as the same point in time the credit is passed through to the taxpayer and claimed on its tax returns. There are four references to credit earned in this subsection:

a)      A pass-through entity “may pass through the credit earned” to its members. §12-6-3360(K)(1) (emphasis added);

b)      The amount of credit passed through to each member is based on a proportionate “member’s interest in the limited liability company for the taxable year multiplied by the amount of the credit earned by the entity.” §12-6-3360(K)(2)(a) (emphasis added);

c)      Subsection (K)(2)(b) describes the treatment of “credit earned” by an S corporation that owes corporate level tax (pass-through entities must have tax years which coincide with the tax years of their members). §12-6-3360(K)(2)(b) (emphasis added);

d)      Members of a pass-through entity who cannot use all of the credit earned in one year may carry forward the credit “for fifteen years from the close of the tax year in which the credit is earned by the [pass-through entity].” §12-6-3360(K)(3) (emphasis added).

The statute’s use of the term “earned” and the past tense reflects the practical reality that the credit is earned and can pass through only when the number of jobs maintained and, therefore, eligible for credit is determined. The plain language of the statute and its mechanics show that credit cannot be calculated, passed through, or claimed, and therefore cannot be earned in the year of a job’s origination. Rather, credit can only be earned at the conclusion of the year following the job’s creation when the job is maintained. Furthermore, earned credit for up to five years following a job’s creation is dependent solely upon the job level maintained in any given tax year.

In this instance the parties stipulate that the jobs at issue were created in 1998 and maintained in 1999, 2000, 2001 and 2002. It is without dispute that, pursuant to the law existing in 1998, the Pass-Through Entities were legally capable of generating credits from these jobs, provided the jobs were maintained, at minimum, through the following tax year. See §12-6-3360(K)(1) (Supp. 1995). Therefore, at the close of the 1998 tax year, no credits could have been earned by the Pass-Through Entities, as qualifying jobs were created but not yet maintained. At the close of the 1999 tax year, however, the jobs had been maintained. Consequently, for the first time, at the close of the 1999 tax year, the Pass-Through Entities earned the credits at issue. Likewise, at the close of tax years 2000, 2001 and 2002, the Pass-Through Entities earned credit commensurate with the jobs maintained in each of these years.

II. Can the Earned Credits Pass Through to Petitioner Beginning in the 1999 Tax Year?

Because the relevant statute was amended between the time the jobs at issue were created and the first year in which the jobs were maintained, the parties dispute which version of the statute governs these earned credits. Petitioner claims that because the credits were earned at the close of 1999, at which time the amendment was in effect, the credits should pass through to Petitioner pursuant to the 1999 amendment. The Department submits that the law in effect at the time of the jobs’ creation controls the later pass through of the credits.

A. The Plain Language of the Statute

Prior to 1999, the statute expressly entitled shareholders, members and partners of pass-through entities “to a nonrefundable credit against taxes imposed pursuant to Section 12-6-510.” §12-6-3360(K)(1)(1995). Section 12-6-510 imposes taxes on individuals, trusts and estates. The Department relies solely on the absence in this language of an additional reference to §12-6-530, the statute imposing corporate taxes, to prohibit the credit from passing through to Petitioner, a corporate taxpayer. The Department has argued that the “character” of the credit is determined when the job is created, and, from that point forward, the credit itself is created, with eligibility to claim the credit in later years based on the law in effect at the time of its creation. For this reason, the Department asserts that a job created in 1998 creates credit in 1998, which is controlled by the law in effect in 1998, regardless of later amendments. When the 1998 job is then maintained in 1999, the Department submits that the credit cannot pass through to Petitioner because at the time the job and, in its view, the credit were created, the 1998 law did not provide for a pass-through to corporations. I do not find this argument persuasive. I can find no express or implied language in the pass through provision of the statute limiting its application to jobs originating in 1999 or later or denying the pass through to jobs created prior to 1999. There is no requirement to “look back” to the jobs’ creation date to determine whether credit may pass through to a shareholder, partner or member.

Following the Department’s position that jobs must originate in 1999 for the 1999 amendment to apply, no credit would be eligible for pass through to corporations until 2000. This position ignores the amendment’s express June 30, 1999 effective date. The amendment governs “credit earned” as of 1999, which is the end of the 1999 tax year. I find no support in the language of the statute to postpone the effectiveness of the amendment beyond that of its June 30, 1999 effective date. The credits at issue in this case were earned by the Pass-Through Entities and were eligible to be claimed for the first time in the 1999 tax year, which closed on December 31, 1999. At that time, the amendment had been in effect for six months. As a result, the plain language of the 1999 amendment dictates that the credits earned by the Pass-Through Entities in 1999 may pass through to Petitioner for its 1999 tax year. For the same reason, credit earned by the Pass-Through Entities in later years from jobs originating in 1998 may also pass through to Petitioner.

B. Rules of Statutory Construction

Both parties raised arguments regarding various rules of statutory construction in support of their respective positions, some of which I need not address based on the holding above.

1. The Purpose of the Statute

It is well-settled that “all rules of statutory construction are subservient to the one that legislative intent must prevail.” Eagle Container Co. v. County of Newberry, 622 S.E.2d 733, 739 (Ct. App. 2005).[1] The South Carolina Court of Appeals has recently reiterated these longstanding principles:

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 . . . A statute as a whole must receive a practical, reasonable, and fair interpretation consonant with the purpose, design, and policy of the lawmakers. The real purpose and intent of the lawmakers will prevail over the literal import of the words. Courts will reject a statutory interpretation which would lead to a result so plainly absurd that it could not have been intended by the legislature or would defeat the plain legislative intention. 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. The language must also be read in a sense which harmonizes with its subject matter and accords with its general purpose.

Id. at 739-740 (internal citations omitted).

In response to the Department’s position that the pre-1999 version of the statute controls the credits, Petitioner argues that the omission of an explicit reference to §12-6-530 (imposing corporate taxes) in subsection (K) was mere scrivener’s error and that to read otherwise defeats the legislative intention of the statute as a whole. While I need not reach this issue because the statute in effect prior to June 30, 1999 does not govern this case, the other provisions of the job tax credit statute do support the theme that the statute was intended to benefit corporate business entities that met the job creation and maintenance requirements and that subsequent amendments to the statute expanded these benefits.

For example, the job tax credits statute was initially enacted in 1994 as a legislative effort to stimulate corporate business growth and development. Credits were only allowed to corporations as an offset against corporate income taxes. See §12-6-3360(A)(1995) (Credits “may be claimed against income taxes imposed by Section 12-6-530”); (M) (“taxpayer” is defined as “a sole proprietor, partnership, corporation of any classification, limited liability company, or association taxable as a business entity which is subject to South Carolina taxes as contained in Sections 12-6-510 and 12-6-530”). In 1995, the statute was amended to also allow pass-through entities, such as S corporations, partnerships and limited liability companies, to generate the credit.

Petitioner submits that it is reasonable to assume that this 1995 amendment to subsection (K) merely ensured that in addition to corporate beneficiaries, individuals could also claim the credit by virtue of ownership in a pass-through entity. Petitioner argues that to read this expansion of the job tax credit in a manner that restricts benefits for corporations – the statute’s intended beneficiaries – ignores the premise of the statute. Finally, Petitioner claims that granting credit to individuals, trusts and estates, all of which have much less likelihood of creating the jobs the legislature hoped to promote than do corporations, while refusing the pass-through credit to corporations, leads to an absurd result. See Eagle, 622 S.E.2d at 739-740; State ex rel. McLeod v. Montgomery, 244 S.C. 308, 136 S.E.2d 778 (1964).

Whatever the reason for the absence of a reference to §12-6-530 in the earlier version of the statute’s pass through provision or the resulting effect of that absence, it is clear that the common thread throughout the statute’s provisions and amendments was the premise of allowing corporate tax benefits for qualifying job creation and maintenance. The plain language and effective date of the 1999 amendment, which allows pass through of the credits to Petitioner in this case, comports with the history and purpose of the job tax credit statute.

2. Retroactive application

The Department argues that to allow the credits in question to pass through to the Petitioner requires a retroactive application of the 1999 amendment. This argument stems from the Department’s position that the credits take on an irreversible “character” at the time the jobs are created and that characteristic then determines whether the credit can be passed through in later years. As stated above, the jobs were created in the Pass-Through Entities. Because the jobs were maintained through 1999, the credit was first earned by the Pass-Through Entities at the close of 1999. The credit was earned and could be passed through to and claimed by Petitioner only at the close of Petitioner’s 1999 tax year. At that time, the 1999 amendment governing the pass-through to corporations was in effect. Applying the amendment six months after it became effective on June 30, 1999 is not giving the amendment a retroactive application.

3. Absence of Longstanding Administrative Practice

The Department submitted one policy document: Revenue Ruling 99-5. This ruling was issued by the Department on January 11, 1999, prior to the enactment of the 1999 amendment that I find controlling. Because this ruling could not address a later amendment, it does not provide direct authority on this matter. It is interesting to note that the ruling is over 50 pages in length and addresses a myriad of questions about the application of the jobs tax credit. Example 38 in this ruling is relied upon by the Department for the proposition that the credits cannot pass through to Petitioner. The Department admits that this example cannot be on point because it could not address the 1999 amendment which post-dated the ruling. Instead, the Department argues that the ruling is analogous because the example illustrates that credit from a job created in a year prior to enactment of the 1995 amendment could not pass through to a taxpayer in a later year, at which time an amendment was in effect.

This example is not analogous. It discusses credit originating from jobs created by pass-through entities in years before pass-through entities were allowed to generate the job tax credit at all. Prior to the 1995 amendment which allowed pass-through entities to generate credit, jobs created by pass-through entities did not qualify for the credit. 1995 was the first year in which pass-through entities could originate jobs that would qualify for credit if the jobs were maintained through 1996. Therefore, there was no credit to pass through in 1995 pursuant to the new amendment. The facts in the present case occurred well after the 1995 amendment which allowed pass through entities to earn the credit. The qualifying jobs originated in 1998 and were maintained through 1999, satisfying the requirements of earning the credits by the Pass-Through Entities. Contrary to the 1995 amendment, the 1999 amendment only addresses the pass through of these earned credits, not the criteria for earning the credits.

The primary reason for reviewing administrative action, such as Revenue Ruling 99-5, is to determine whether the administrative agency has demonstrated longstanding, consistent administrative construction of a statute. If so, then the legislature is presumed to have known of the agency’s construction and by its inaction, is deemed to have acquiesced to that construction as the intended interpretation of the statute. The facts presented before me show that there has been no publication by the Department on point or analogous with the circumstances in this case that could have given notice to a taxpayer or the legislature of the Department’s interpretation of the 1999 amendment. Furthermore, the Department’s actions in this matter, as evidenced by the trial exhibits and the testimony, do not support a consistent application of the 1999 amendment to corporate taxpayers.

4. The Equal Protection Clause of the South Carolina Constitution

Finally, Petitioner argues that the Department’s proposed assessment, if upheld, requires a construction of the job tax credit statute that violates the equal protection clause found in Article I, Section 3 of the South Carolina Constitution. When faced with an equal protection challenge, a court must determine: 1) whether the law treats “similarly situated” entities differently; 2) if so, whether the Legislature has a rational basis for the disparate treatment; and 3) whether the disparate treatment bears a rational relationship to a legitimate government purpose. See Bibco Corp. v. City of Sumter, 332 S.C. 45, 504 S.E.2d 112 (1998).

In this case it is undisputed that corporations are treated differently than individuals and other entities under the Department’s construction of the pre-1999 statute. To assess the second two prongs of the test, this Court must view the statute in its entirety to determine both the legitimate government interest and the rational basis for treating corporations differently from all other entities. See South Carolina Coastal Council v. South Carolina State Ethics Comm’n., 306 S.C. 41, 410 S.E.2d 245 (1991) (a court must look to the statute’s language and meaning in conjunction with the purpose of the whole statute and the policy of the law).

As stated above, the job tax credit statute clearly seeks to allow a benefit to corporations in order to spur the creation and maintenance of new jobs. A rational basis must, therefore, be found for allowing the credit in question to pass through to individuals, trusts and other entities, but not to corporations. Cf. Ed Robinson Laundry and Dry Cleaning, Inc., 356 S.C. 120, 588 S.E.2d 97 (2003) (split court finding rational basis existed for disparate treatment based on purpose and language of statute, over dissent by Justice Toal and Acting Justice Goodstein finding the disparate treatment arbitrary, capricious and unconstitutional as applied to the petitioner corporate taxpayer). Unlike the statute at issue in Robinson, the Department’s proposed disparate treatment in the present case appears to oppose the legislative purpose of the statute, bearing no obvious rational relationship to the policy of the statute. The statute was designed to allow, not restrict, credits to corporate taxpayers. A legitimate government interest supporting the Department’s position is not readily apparent.

South Carolina courts have repeatedly held that:

It is axiomatic that legislation must be construed so as to be constitutional. A basic rule of statutory interpretation requires a construction which is constitutional. Constitutional constructions of statutes are not only judicially preferred, they are mandated; a possible constitutional construction must prevail over an unconstitutional interpretation.

State v. Peake, 345 S.C. 72, 80, 545 S.E.2d 840, 844 (Ct. App. 2001), aff’d. 353 S.C. 499, 579 S.E.2d 297 (2003); Henderson v. Evans, 268 S.C. 127, 132, 232 S.E.2d 331, 333-34 (1977). Because the 1999 amendment governs the pass through of the credits in the present case, it is unnecessary to determine the constitutionality of the Department’s interpretation of the former statute.

CONCLUSIONS OF LAW

Based on the foregoing Findings of Fact, I conclude, as a matter law:

1. The Administrative Law Court has jurisdiction of this matter pursuant to S. C. Code Ann. §12-60-460.

2.                 The standard of proof in administrative proceedings is a preponderance of

the evidence. Anonymous v. State Board of Medical Examiners, 329 S.C. 371, 496 S.E.2d 17 (1998).

3. The trier of fact must weight and pass upon the credibility of evidence presented. See S.C. Cable Television Ass’n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). The trial judge who observes a witness is in the best position to judge the witness’ demeanor and veracity and evaluate his testimony. See e.g. McAlister v. Patterson, 278 S.C. 281, 299 S.E.2d 322 (1982).

4.                 The language used in a statute should be given its plain and ordinary meaning without resort to subtle or forced construction to expand or limit the scope of a statute. See Berkebile v. Outen, 311 S.C.50, 426 S.E.2d 760 (1993).

5.                 The rules of statutory construction are provided to remove doubt but never to create doubt. See 73 Am. Jur. 2d Statutes §146, citing Englewood Water Dist. V. Tate, 332 So.2d 626 (Fla. App. 1976). The primary rule of statutory construction is to ascertain and give effect to the legislature’s intention or purpose as expressed in the statute. Scholtec v. Estate of Reeves, 327 S.C. 551, 490 S.E.2d 603, 606 (Ct. App. 1997). All rules of statutory construction are for the purpose of ascertaining legislative intent. Truesdale v. South Carolina Hwy. Dept., 264 S.C. 221, 213 S.E.2d 740 (1975).

6.                 Although tax credit statutes must be strictly and narrowly construed, they are not to be construed in a manner to subvert the clear language of the statute or to defeat or destroy the legislative intent. See State of Arizona v. Capitol Castings, Inc., 88 P.3d 159, 160 (Ariz. 2004); Sharp v. Tyler Pipe Indus., Inc., 919 S.W.2d 157, 161 (Ct. App. Tex. 1996)(terms ‘liberal’ and ‘strict’ as applied to statutory construction can be misleading where other principles are at work; construing tax exemption statutes too narrowly could defeat legislative purpose); Idaho State Tax Comm’n. v. Haener Bros., 828 P.2d 304, 307 (Idaho 1992); Amoena Corp. v. Strickland, 238 S.E.2d 894, 897 (Ga. 1981).

7. Section 12-6-3360(C) provides “a job tax credit is allowed for five years beginning in year two after the creation of the job . . . if the minimum level of new jobs is maintained.” The job tax credit is not available in the year a taxpayer creates a job. The credit is earned only when a taxpayer has maintained the job in the year following the job’s creation.

8. The only plausible reading of the statute as a whole and of subsection (K) is that job tax credits cannot be calculated and earned until the close of the year following the year in which the jobs originate. Credits from jobs created in 1998 by pass-through entities were not earned by those entities until the jobs were maintained in the 1999 tax year.

9. Section 12-6-3360(K)(1) provides for the pass through of job tax credits from pass-through entities to their owners. This subsection was amended by 1999 Act No. 114, §4G and §4Y. The amendment makes clear that credits earned by pass-through entities may pass through to corporations after June 30, 1999. Allowing credits earned after June 30, 1999, to pass through to corporations does not require a retroactive application of the 1999 amendment.

10. In the present case, the Pass-Through Entities created jobs in 1998 pursuant to the job tax credit statute and maintained those jobs through 1999, and through the later years under the audit (2000, 2001 and 2002). The credits at issue in this case were earned by the Pass-Through Entities and eligible to be claimed for the first time for the 1999 tax year, which closed on December 31, 1999. At that time, the 1999 amendment had been in effect for six months. As a result, the credits earned by the Pass-Through Entities in 1999 may pass through to Petitioner for its 1999 tax year. Further, credits earned by the Pass-Through Entities based on the maintenance of these jobs in years 2000, 2001 and 2002 may also pass through to Petitioner for its corresponding tax years.

order

Based upon the above Findings of Fact and Conclusions of Law,

IT IS HEREBY ORDERED that the job tax credits claimed for jobs that originated in 1998 and that were denied by the Department in the Final Agency Determination are allowable and the proposed assessment of additional tax is void; and

IT IS FURTHER ORDERED that based upon the stipulation of the parties, the Department shall grant a refund of tax with appropriate interest to Petitioner based on job tax credits which were not claimed on Petitioner’s original returns but which, in accordance with that stipulation and the terms of this Order, are available to Petitioner.

AND IT IS SO ORDERED.

Marvin F. Kittrell

April 13, 2006 Chief Administrative Law Judge

Columbia, South Carolina