ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
This
matter is before the Administrative Law Court (Court or ALC) pursuant to a
request for a contested case hearing filed by Ventures South Carolina, LLC,
d/b/a SunCruz Casinos (Petitioner) on October 17, 2005. Petitioner challenges
the determination by the South Carolina Department of Revenue (Department),
dated September 15, 2005, that Petitioner failed to comply with the reporting
requirements of the Gambling Cruise Act (Act), S.C. Code Ann. § 3-11-100 et seq., (eff. June 1, 2005). Petitioner argues that the Department
required more information to be provided on its official forms than is authorized
or required by statute.
After
several requests for continuances, upon notice given to both parties a hearing
was held on May 8, 2006, at the offices of the Administrative Law Court in Columbia, South Carolina. Both parties appeared and evidence was introduced, including
copies of Petitioner’s reports for the months of July and August 2005, as well
as a copy of the Department’s instructions and official monthly report form.
After
carefully weighing the evidence, reviewing the joint brief filed by both
parties prior to the hearing, and listening to oral arguments, I find that the
Petitioner must include in its monthly reports filed with the Department the
amount wagered and the amount paid out as prize money for each table game and
machine operated.
FINDINGS
OF FACT
Having
observed the exhibits presented at the hearing and closely passed upon their
credibility, taking into consideration the burden of persuasion by the parties,
I make the following Findings of Fact by a preponderance of evidence:
1. Notice
of the date, time, place and subject matter of the hearing was timely given to
all the parties.
2. Petitioner
owns and operates the SunCruz VIII, a gambling vessel located in Little River, Horry County , South Carolina. The
SunCruz VIII engages in voyages that sail into the United States or
international waters and makes no intervening stops prior to its return to
Little River. It is not a passenger cruise
liner.
3. Petitioner
is required to report to the Department each month the average daily percentage
of winnings to losses for each gambling device used on the SunCruz VIII. This
report must be delivered to the Department in a form and format determined by
the Department on the 20th day of the month for the preceding
month.
4. Petitioner
timely provided the Department with reports for the months of July and August
2005.
5. Notwithstanding,
on September 15, 2006, the Department sent a letter to Petitioner stating that
Petitioner, by failing to fill out the official forms of the Department, had
not provided all required information and data. The Department further stated
that the information provided by Petitioner did not clearly state “the amount
of winnings and losses as it only states percentages which are not identified
for each machine.” The Department advised Petitioner in the letter that it was
required to provide the totals of the amount wagered and paid out as prize
money for each table game and machine operated. The Department also stated that
if Petitioner did not provide the requested information within ten days of the
date of the letter, a penalty would be imposed in the amount of $100.00 per
gambling device for each day the report was late.
6. On September 15, 2005, Petitioner protested the Department’s
determination by letter to the Department. In its letter, Petitioner stated
that it had provided the Department the information required in S.C. Code Ann.
§ 3-11-400(C)(3)(b)(i) in its July 2005 report. Petitioner further requested
an explanation by the Department of its position. On October 17, 2005,
Petitioner requested a hearing before this Court.
CONCLUSIONS
OF LAW
Based
upon the above Findings of Fact, I conclude the following as a matter of law:
General
1. S.C.
Code Ann. § 1-23-600(B)(Supp. 2005) grants jurisdiction to the Administrative
Law Court to hear contested cases as defined in Section 1-23-310 involving
certain departments of the executive branch of government.
2. S.C.
Code Ann. § 12-60-30(1)(Supp. 2005) of the Revenue Procedures Act provides that
the Administrative Law Court conduct contested case hearings with regard to
disputes with the South Carolina Department of Revenue.
3. A
Department determination is “the final determination within the department from
which an individual can request a contested case hearing before the
Administrative Law [Court].” S.C. Code Ann. § 12-60-30(10) (Supp. 2005).
4. A
contested case hearing arising under the provisions of the South Carolina
Revenue Procedures Act has the same meaning as it has in Section 1-23-310 of
the South Carolina Administrative Procedures Act, and includes hearings
conducted by the Administrative Law Court to review Department determinations. See S.C. Code Ann. § 12-60-30(4) (Supp. 2005).
5. S.C.
Code Ann. § 12-60-510(a) of the Revenue Procedures Act requires that a taxpayer
exhaust his prehearing remedy prior to seeking a contested case hearing. A
taxpayer may exhaust his prehearing remedy by filing a written protest. See S.C. Code Ann. § 12-60-30(15)(a)(Supp. 2005).
6. A
protest is defined as “a written appeal of a proposed assessment or a division
decision made in accordance with this chapter.” S.C. Code Ann. §
12-60-30(24)(Supp. 2005). “Proposed assessment means the first written notice
sent or given to the taxpayer stating that the division within the department
has concluded that a tax is due….” S.C. Code Ann. § 12-60-30(23)(Supp. 2005).
7. “Tax”
or “taxes” means taxes, licenses, permits, fees, or other amounts, including
interest, regulatory and other penalties, and civil fines,
imposed by Title 12 or subject to assessment or collection by the department. See S.C. Code Ann. § 12-60-30(27) (Supp. 2005). A “taxpayer” is a person who is
liable for a tax. See S.C. Code Ann. § 12-60-30 (29) (Supp. 2005).
8. The
Department may assess a gambling vessel a civil penalty up to one
hundred dollars per day per gambling device for each day that the vessel fails
to timely file with the Department the report required by the Gambling Cruise
Act. See S.C. Code Ann. 3-11-400(C)(3)(b)(ii).
9. The
letters between the Department and Petitioner, both dated September 15, 2005,
constitute the proposed assessment or Department decision and the corresponding
protest. Accordingly, Petitioner exhausted its prehearing remedy and, pursuant
to the South Carolina Administrative Procedures Act and the South Carolina
Revenue Procedures Act, this court has jurisdiction to hear this matter.
10. The
Gambling Cruise Act requires that all operators of gambling vessels engaged in
voyages that depart from the territorial waters of the state, sail into United
States or international waters, and return to the territorial waters of the
State without an intervening stop must file with the Department monthly reports
stating the average daily percentage of winnings to losses for each gambling
device used on the gambling vessel. See S.C. Code Ann. §
3-11-400(C)(3)(b)(i). Specifically, Section 3-11-400(C)(3)(b)(i) states:
Each gambling vessel
must report to the Department of Revenue, on a monthly basis, the average daily
percentage of winnings to losses for each gambling device used on a gambling
vessel. The report must be delivered to the Department of Revenue on the
twentieth day of the month for the preceding month, in a form and format
determined by the department. If no gambling devices are used, the
gambling vessel must report to the department that no gambling devices were
used. The department must perform an annual audit to verify the accuracy of
the reports. (Emphasis added).
Positions
11. Petitioner
asserts that Section 3-11-400(C)(3)(b)(i) only requires it to report the average
daily percentage of winnings to losses for each gambling device used.
12. The Department
asserts that the statute also requires a gambling vessel to provide the amount
wagered and the amount paid out as prize money for each table game and machine
operated. The Department further asserts that this information is necessary
for the Department to carry out its duty to audit under the Act. See S.C. Code Ann. § 3-11-400(C)(3)(b)(i).
Statutory
Construction of a Statute or Regulation
13. “The
cardinal rule of statutory interpretation is to ascertain the intent of the
legislature.” State v. Scott, 351 S.C. 584, 588, 571 S.E.2d 700, 702
(2002). A statute should be given a reasonable and practical construction
consistent with the purpose and policy expressed in the statute. Davis v. NationsCredit Fin. Servs. Corp., 326 S.C. 83, 484 S.E.2d 471
(1997). Furthermore, all rules of statutory construction are subservient to
the one that legislative intent must prevail if it can be reasonably discovered
in the language used, and that language must be construed in the light of the
intended purpose of the statute. McClanahan v. Richland County Council,
350 S.C. 433, 567 S.E.2d 240 (2002). The determination of legislative intent
is a matter of law. Charleston County Parks & Recreation
Comm’n. v. Somers, 319 S.C. 65, 459 S.E.2d 841 (1995).
The
legislature’s intent should be ascertained primarily from the plain language of
the statute. State v. Landis, 362 S.C. 97, 606 S.E.2d 503 (Ct. App.
2004). The language used should be given its plain and ordinary meaning
without resort to subtle or forced construction to expand or limit the scope of
the statute. Berkebile v. Outen, 311 S.C. 50, 426 S.E.2d 760 (1993).
However,
the language must also be read in a sense which harmonizes with its subject
matter and accords with its general purpose. Mun. Ass’n of South Carolina v. AT&T Communications of Southern States, Inc., 361 S.C. 576, 606
S.E.2d 468 (2004). “Once the legislature has made [a] choice, there is no room
for the courts to impose a different judgment based upon their own notions of
public policy.” South Carolina Farm Bureau Mut. Ins. Co. v. Mumford,
299 S.C. 14, 19, 382 S.E.2d 11, 14 (Ct. App. 1989). “The Court should not
consider the particular clause being construed in isolation, but should read it
in conjunction with the purpose of the whole statute and the policy of the
law.” State v. Gordon, 356 S.C. 143, 152, 588 S.E.2d 105, 110 (2003).
In construing a statute, the court looks to the language as a whole in light of
its manifest purpose. Adams v. Texfi Industries, 320 S.C. 213,
464 S.E.2d 109 (1995).
In
enacting the Gambling Cruise Act, the intent of the General Assembly was to
delegate to counties and municipalities in South Carolina the authority to
prohibit or regulate the operation of certain gambling vessels which depart
from and return to the territorial waters of South Carolina without an
intervening stop. See Act 104 of 2005, §1. As part of this regulatory
authority, Section 3-11-400(C)(2) permits a county or municipality to “assess a
surcharge of up to ten percent of each ticket sold per gambling cruise, and a
surcharge of up to five percent of the gross proceeds of each gambling vessel.” For the purposes of Section 3-11-400(C), “gross proceeds” is defined as the
“total amount wagered or otherwise paid, in cash or credit, by a passenger or
user of a gambling device aboard a gambling vessel.”
Furthermore,
as part of this regulatory scheme, the General Assembly charged the Department
with certain reporting and auditing duties. Each gambling vessel must report its
winnings to losses to the Department on a monthly basis. See Section
3-11-400(C)(3)(b)(i). The Department is then required to make this information
available to the public and the governing body of the county or municipality
from which the gambling vessel originates. See Section 3-11-400(C)(3)(b)(iii). The Department is also required to conduct an
annual audit to verify the accuracy of the reports submitted to it by the
gambling vessels. See Section 3-11-400(C)(3)(b)(i).
Although
Section 3-11-400(C)(3)(b)(i) states that “the average daily percentage of
winnings to losses for each gambling device used on a gambling vessel” is
required to be reported to the Department, that section cannot be read in
isolation. The General Assembly explicitly charged the Department with a duty to
conduct an audit on an annual basis to verify the accuracy of the reports
submitted by the gambling vessels. In order to carry out that statutorily
mandated duty, the Department must be able to verify the percentages reported.
If a gambling vessel does not provide the amount wagered and amount paid out,
it will be difficult for the Department and the county or municipality to
determine the surcharge to be assessed on the gross proceeds for tickets sold
and on the profit from the amounts wagered. A mere listing of a percentage of
winnings to losses does not provide an amount of profits to which the
county or municipality can assess the gambling vessel a surcharge. To allow
such an interpretation would lead to an unreasonable result. See Carolina
Power & Light Co. v. Pageland, 321 S.C. 538, 543 471 S.E.2d 137, 140
(1996) (“Courts will reject a meaning when to accept it
would lead to a result so plainly absurd that it could not possibly have been
intended by the legislature or would defeat the plain legislative intent.”)
Sections
3-11-400(C)(2) and 3-11-400(C)(3)(b)(i) must be read together and be harmonized
to give effect to both provisions in light of legislative intent and with
reference to the objective to be accomplished by the Gambling Cruise Act. To
the extent there is a conflict between Sections 3-11-400(C)(2) and 3-11-400(C)(3)(b)(i),
if reasonably possible they must be construed to allow both to stand and to
give effect to each. Chris J. Yahnis Coastal, Inc. v. Stroh Brewery Co.,
295 S.C. 243, 368 S.E.2d 64 (1988). Also, our courts have repeatedly held that
there is a presumption that the Legislature intended to accomplish something
with a statute when it passed it rather than engage in a futile exercise. Berkebile
v. Outen, 311 S.C. 50, 53-54, 426 S.E.2d 760,
762 (1993). To allow the interpretation espoused by Petitioner
would create a presumption that the Legislature engaged in a futile exercise.
Thus,
the Court finds and concludes that it is reasonable for the Department to
require gambling vessels to provide in the monthly reports the amount wagered
and the amount paid out as prize money for each table game and machine operated
in order for the Department to comply with its statutory duty to review the
reports, make the information available on a quarterly basis, and conduct its
annual audits.
ORDER
Accordingly, based upon
the findings of facts and conclusions of law,
IT
IS HEREBY ORDERED that Petitioner must include in its monthly
reports filed with the Department the amount wagered and the amount paid out as
prize money for each table game and machine operated; and
IT
IS FURTHER ORDERED that within fifteen (15) days of the date of this order
Petitioner must provide a report to the Department which contains the information
requested by the Department on its official form for each month the Sun Cruz
VIII has operated as a gambling vessel.
AND
IT IS SO ORDERED.
__________________________________
July 27, 2006 Marvin F. Kittrell
Columbia, South Carolina Chief
Administrative Law Judge
5 Section 3-11-400(C)(2) of the Gambling Cruise Act states that if a
county or municipality does not adopt an ordinance prohibiting a gambling
vessel from operating, the county or municipality may add a surcharge of up to
ten percent of each ticket sold per gambling cruise and a surcharge of up to
five percent of the gross proceeds of each gambling vessel. Pursuant to Section
3-11-40(C)(3)(a), the surcharges must be paid to the county or municipality
from which the gambling vessel originates its cruise. “Surcharge” is defined
as “an additional tax, charge, or cost.” Blacks Law Dictionary, 7th Ed., 1999, p. 1455.
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