ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter is before the Administrative Law Judge Division (Division) pursuant to
S.C. Code Ann. Section 12-60-2150(H) (2000) for a contested case hearing requested by the
Petitioner against the South Carolina Department of Revenue (Department). The Petitioner
challenges a Final Agency Determination issued by the Department denying the Petitioner’s
claim for refund of property taxes paid for the tax years 1993 through 1998. The Petitioner
elected to designate this action as a small claims case pursuant to S.C. Code Ann. Section
12-60-520 (2000).
A hearing was held before me at the offices of the Division in Columbia,
South Carolina, on June 17, 2003.
FINDINGS OF FACT
Having carefully considered all 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.Notice of the date, time, place, and nature of this hearing was timely given
to all parties.
2.On August 11, 1993, the Petitioner purchased a parcel of land with
improvements identified on the Richland County Tax Map as TMS #09216-08-36. After the
purchase, the Petitioner converted its use to a place for Sunday school classes and other
church small group meetings.
3.On December 28, 2001, the Petitioner submitted a property tax exemption
request to the Department. That request sought an exemption for the subject property for
tax years 1999 forward. The basis for the Petitioner’s request was S.C. Code Ann. Section
12-37-220(B)(31) (2000) which exempts church property from property taxes under certain
specified conditions.
4.On January 10, 2002, the Department granted the Petitioner’s exemption
request. As a result of the exemption determination, the Petitioner received a refund of taxes
for the 1999 and 2000 tax years. Afterwards, the Petitioner submitted a property tax refund
claim to the Department in April 2002, seeking a refund of all property taxes paid on the
subject property for tax years 1993 through 1998. The Department denied the Petitioner’s
refund request because the claim was untimely.
5.The Petitioner contends that S.C. Code Ann. Section 12-60-470(G) (2000)
provides the Department discretion to issue refunds when the Department determines that
money has been erroneously or illegally collected from a taxpayer regardless of whether a
claim for refund was timely filed. The Petitioner further contends that Section 12-37-220(D)
provides that any property tax exemption applicable to a church becomes effective upon the
church’s acquisition of the property. The Petitioner also contends that S.C. Code Ann.
Section 12-4-710 (2000) provides that the Department is bound to determine the exempt
status of property regardless of whether the taxpayer files an application for exemption.
CONCLUSIONS OF LAW
Based upon the foregoing Findings of Fact, I conclude the following as a matter of
law:
1.S.C. Code Ann. Section 1-23-600 (1986 & Supp. 2000) grants jurisdiction to
the Division to hear contested cases under the Administrative Procedures Act. Section 12-60-2150(H) further authorizes the Division to conduct contested case hearings concerning
claims for refund of property taxes denied by the Department.
2.There is no inherent tax exemption for property owned by churches or
religious organizations. Instead, such property is subject to taxation unless specifically
exempted by either constitutional provision or statute. 71 Am. Jur. 2d State and Local
Taxation § 314, p. 605. The South Carolina Constitution provides that the buildings and
premises actually occupied by churches and parsonages are exempt from ad valorem
taxation. S.C. Const., art. X, § 3(c). The General Assembly codified the Constitutional
requirements of Article X, Section 3 concerning churches and parsonages in S.C. Code Ann.
§ 12-37-220(A)(3) (2000). The General Assembly also set forth in S.C. Code Ann. § 12-37-220(B)(16)(a) (2000) that:
The property of any religious, charitable, eleemosynary, educational, or
literary society, corporation, or other association, when the property is used
by it primarily for the holding of its meetings and the conduct of the business
of the society, corporation, or association and no profit or benefit therefrom
inures to the benefit of any private stockholder or individual.
Furthermore, S.C. Code Ann. § 12-37-220(B)(31) (2000) states, in relevant part:
All real property of churches which extends beyond the buildings and
premises actually occupied by the churches which own the real property if
no profit or benefit from any operation on the churches’ real property inures
to the benefit of any private stockholder or individual and no income
producing ventures are located on the churches’ real property. . . .
I find that the Petitioner was entitled to a property tax exemption of the property pursuant
to Section12-37-220(B)(16)(a) and (31).
3.The Petitioner seeks a refund of the property taxes it paid for the tax years
1993 through 1998. A taxpayer’s refund request must come directly within the applicable
refund statute. Asmer v. Livingston, 225 S.C. 341, 82 S.E.2d 465 (1954); Guaranty Bank
& Trust v. South Carolina Tax Comm’n, 254 S.C. 82, 173 S.E.2d 367 (1970). Here, Section
12-60-2150 (2000) provides the requirements for filing a claim for refund of property taxes.
Section 12-60-2150(A) states:
Subject to the limitations in Section 12-60-1750, and within the time
limitation of Section 12-54-85(F), a property taxpayer may seek a refund of
property taxes paid and assessed by the department by filing a claim for
refund with the department if it originally assessed the property or the
taxpayer believes the property is exempt, other than from the homestead
exemption, from property taxes.
S.C. Code Ann. Section 12-60-1750(1) (2000) states, in part:
Notwithstanding any other provision of law, no refund of property taxes must
be given:
(1) for a property tax exemption requiring an application,
unless the application was timely filed . . . .
Finally, S.C. Code Ann. § 12-54-85(F)(1) (Supp. 2002) states:
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.
(Emphasis added).
In this case, the Petitioner submitted its exemption application on December 28,
2001. Because no property tax return was required for the subject property, the Department
granted the exemption retroactively as to all taxes paid within two years of December 28,
2001. This resulted in the Petitioner receiving a property tax refund for tax years 1999 and
2000.
4.Granting the Petitioner’s refunds for tax years 1993 through 1998, for which
no applications for exemption were filed with the Department, would require the Department
to authorize retroactive exemptions beyond the two-year limitations period of Section 12-54-85 (F). The Petitioner, however, argues that the two-year limitation period of Section 12-54-85 (F) is inapplicable to its refund request. To the contrary, the Petitioner contends that S.C.
Code Ann. § 12-4-710 (2000) obligates the Department to determine in each year if any
property qualifies for exemption from property taxes under Section 12-37-220 regardless of
whether the taxpayer files an application for exemption. Therefore, the Petitioner asserts
that though the Church did not file its claim for refund within the statutory time periods, the
State likewise failed to determine that the property was exempt and communicate that
determination to the Petitioner. Accordingly, the Petitioner contends that since the tax was
unlawfully collected, it is the Department’s obligation to order a refund.
Section 12-4-710 states that:
Except for the exemption provided by Section 12-37-220(A)(9), the
department shall determine if any property qualifies for exemption from local
property taxes under Section 12-37-220 in accordance with the Constitution
and general laws of this State. This determination must be made on an
annual basis and the appropriate county official so advised by June first of
each year by the department.
However, the Petitioner’s interpretation fails to reconcile § 12-4-710 with the requirement
of S.C. Code Ann. § 12-4-720 (2000) which states, in relevant part:
(A) Applications for property exemptions, other than the exemption provided
by Section 12-37-220(A)(9), must be filed as follows:
(1) Except as otherwise provided any property owner whose
property may qualify for property exemption shall file an
application for exemption with the department within the
period provided in Section 12-54-85(F) for claims for refund.
In construing statutory language, the statute must be read as a whole, and sections
which are part of the same general statutory law must be construed together and each one
given effect. TNS Mills, Inc. v. South Carolina Department of Revenue, 331 S.C. 611, 503
S.E.2d 471 (1998). In applying that principle, “one does not look merely at a particular
clause in which a word may be used, but rather looks at the word and its meaning in
conjunction with the purpose of the whole statute, and in light of the object and policy of the
law.” South Carolina Coastal Council v. South Carolina State Ethics Comm'n, 306 S.C. 41,
45-46, 410 S.E.2d 245 (1991). Moreover, in interpreting a term set forth in a statute “the
Court must presume the legislature did not intend a futile act, but rather intended its statutes
to accomplish something” and that interpretation of a statute should also not lead to an
absurd result. TNS Mills at 476. Furthermore, “[e]ach part of a statute should be given
effect and each word given its plain meaning if this can be accomplished by any reasonable
construction.” Sea Island Scenic Parkway Coalition v. Beaufort County Bd. of Adjustments
and Appeals, 316 S.C. 231, 236, 449 S.E. 2d 254, 257 (Ct. App. 1994). Moreover, this
tribunal must reconcile conflicts if possible and is obligated to avoid a construction that
would read a provision out of a statute. Steinke v. South Carolina Dept. of Labor, Licensing
and Regulation, 336 S.C. 373, 520 S.E.2d 142 (1999). Finally, “the language of a tax
exemption statute must be . . . strictly construed against the claimed exemption.” TNS Mills
at 476; see also Town of Myrtle Beach v. Holliday, 203 S.C. 25, 26 S.E.2d 12 (1943),
(“exemptions of private property are strictly construed, because in such cases taxation is the
rule and exemption the exception. . . .”).
Read as a whole, Sections 12-4-710 and 720 require the Department to annually
review the applications filed pursuant to Section 720 to determine if “any” of those
properties qualify for exemption from local property taxes under Section 12-37-220. More
importantly, the Petitioner’s interpretation would require the Department to scour not just
the application but the entire State to determine whether properties are subject to an
exemption. Such a result would be absurd. Both of those results contradict a proper
construction of the statutes.
Additionally, in TNS Mills, the South Carolina Supreme Court addressed the issue
of whether allowing retroactive exemptions under S.C. Code Ann. §§ 12-4-710 to 730
(2000) would fit with the procedural scheme set out by the General Assembly. The Court
held that:
The plain language of these Code sections, when read together, show the
legislature intended to set clear deadlines for applying for exemptions as part
of an overall plan to enable counties and school districts to plan budgets for
each fiscal year. Any interpretation allowing the Department to grant
exemptions after the deadline would negate the benefit of this plan.
Id. at 476. Furthermore, the Court held that any contrary interpretation would “negate the
purpose of notifying county officials by June first because the information given them would
be worthless; the amount of exempted property, would change every time the Department
granted a retroactive exemption.” Id.
Moreover, in TNS Mills, the South Carolina Supreme Court also addressed an issue
similar to the argument raised by the Petitioner. In that case, the taxpayer sought a refund
arguing that since S.C. Code § 12-4-730 (2000) did not set forth a deadline to seek a refund
based upon an exemption, the Department had discretion to authorize a retroactive
exemption for any period of time it found that the property was exempt. Section 12-4-730
provided that:
The department, upon receipt of an application and upon proper
investigation, may declare the real and personal property of a property owner
qualifying for an exemption from ad valorem taxation identified in this
chapter as exempt and shall certify the exemption to the auditor's office in the
county in which the property is located. Upon certification by the
department, the auditor shall void any tax notice applicable to the property.
The Court then held that nothing in Section 12-4-730 modified the provisions of Section 12-4-720 (A)(2), which set forth a “mandatory deadline for applying for an exemption.” Id. at
476. The Court noted that “if 12-4-730 is interpreted as allowing retroactive exemptions,
the mandatory deadlines set by the General Assembly are rendered meaningless.” Id. Here,
allowing retroactive exemption under Section 12-4-720 (A)(1) would likewise render the
mandatory deadlines of that provision meaningless.
5.The Department argues that it has no discretion in determining whether to
grant the Petitioner’s refund request. The Petitioner contends that S.C. Code Ann. § 12-60-470(G) (2000) provides the Department discretion to issue refunds when the Department
determines that money has been erroneously or illegally collected from a taxpayer regardless
of whether a claim for refund was timely filed. I find Section 12-60-470(G) inapplicable for
two reasons.
Section 12-60-470, which is located in Article 5 of Chapter 60, sets forth the appeals
procedures for state revenue. On the other hand, property taxes provide revenue to the
county in which the property is located and not to the state. Therefore, Article 9 of Chapter
60 is the applicable statutory provision to address the procedures for appeals and refunds of
property taxes (county revenue). Section 12-60-2150(G), within Article 9, establishes a
provision applicable to property taxes that is similar to Section 12-60-470(G) with a notable
exception. Section 12-60-2150(G) states:
Even if a taxpayer has not filed a claim for refund, where no question of fact
or law is involved, and it appears from the record that money has been
erroneously or illegally collected from a taxpayer or other person under a
mistake of fact or law, the department may, subject to the limitations in
Section 12-60-1750, within the period specified in Section 12-54-85 and
upon making a record in writing of its reasons, order a refund to the taxpayer
or other person.
(Emphasis added).
Therefore, the Department’s discretion to issue refunds of property taxes when the
taxpayer has not filed a claim for refund is subject to the limitations period established in
Section 12-54-85 and the exemption application requirement imposed by Section 12-60-1750. Since the Petitioner failed to meet those requirements for tax years 1993 through
1998, its refund request must be denied pursuant to the provisions of Section 12-60-2150(G),
itself.
Furthermore, the Petitioner’s property was privately held until it was purchased by
the Petitioner. At that point it was converted to use as church property and became subject
to a statutory exemption from property taxes. In TNS Mills, supra., the South Carolina
Supreme Court addressed a similar issue. There the taxpayer sought a refund pursuant to
S.C. Code Ann. § 12-47-420 (repealed by Act No. 60, 1995 S.C. Acts 405) which provided
that:
Whenever after due hearing the Commission by majority vote
shall determine that any tax has been paid under an
erroneous, improper or illegal assessment, the Commission
shall order the officer having custody of the tax so
erroneously, improperly or illegally paid to refund it. . . .
The Court held that since the property was not automatically exempt but that the property
owner was required to apply for an exemption, the assessment of the property was therefore
“not erroneous, illegal or improper.” Therefore, no refund was warranted pursuant to that
provision. Likewise, the Petitioner in this case was not forced to pay property taxes “under
an erroneous, improper or illegal assessment.”
6.The Petitioner also contends that S.C. Code Ann. § 12-37-220(D) (2000)
provides that any property tax exemption applicable to a church becomes effective upon the
church’s acquisition of the property. “The cardinal rule of statutory construction is to
ascertain and effectuate the legislative intent whenever possible. [citations omitted]. All
rules of statutory construction are subservient to the one that legislative intent must prevail
if it reasonably can be discovered in the language used, and that language must be construed
in the light of the intended purpose of the statute.” Kiriakides v. United Artists
Communications, Inc., 312 S.C. 271, 440 S.E.2d 364 (1994). City of Camden v. Brassell,
326 S.C. 556, 486 S.E.2d 492, 494 (Ct. App. 1997). I find that the purpose of Section 12-37-220(D) is to permit a pro-rata exemption for a church in the year of acquisition because
property taxes are billed to the owner of record as of December 31 of the prior year. Thus,
without this statute, a church could be held liable for property taxes for the year that the
property was acquired because the transferor would be considered the owner of record and,
therefore, the church would not be able to claim the exemption. Furthermore, even if
Section 12-37-220(D) were applied as interpreted by the Petitioner, it would still be
inapplicable to the instant matter because the language of the statute subjects this provision
to the application filing requirements imposed by Section 12-4-720. The Petitioner did not
file applications for exemption for the tax years 1993 through 1998. Additionally, Section
12-37-220(D) is also inapplicable to the instant matter because this Section was not enacted
until 1999.
7.Therefore, I find that the Petitioner was required to file an application for
property exemption with the Department within the time period provided in Section 12-54-85(F) to receive a refund for the property taxes it paid. Furthermore, Section 12-60-470(G)
does not grant the Department discretion to issue refunds even here because the tax was not
erroneously or illegally collected from a taxpayer but rather the Petitioner simply failed to
take advantage of its opportunity to claim an exemption. Additionally, Section 12-60-470(G) provides no authority to seek a refund of taxes beyond the period provided in Section
12-54-85(F). Consequently, the Petitioner can only properly seek a refund of the taxes that
were paid within two years of its refund claim. Because the Petitioner filed its refund claim
in April 2002, only those taxes that were paid between April 2000 and April 2002 can be
refunded. None of the taxes for tax years 1993 through 1998 were paid during this time
period. Accordingly, the Department’s refund denial was proper.
ORDER
Based upon the above Findings of Fact and Conclusions of Law:
IT IS HEREBY ORDERED that the Petitioner’s claim for a refund of property
taxes paid for the tax years 1993 through 1998 is denied.
AND IT IS SO ORDERED.
Ralph King Anderson, III
Administrative Law Judge
July 16, 2003
Columbia, South Carolina |
