ORDERS:
FINAL ORDER AND DECISION
I. Statement of the Case
These cases were heard together since the dispute in each involves the same issue arising from similar facts. After reviewing the evidence and the arguments made, the properties here in dispute are properly taxable for tax years 1998, 1999, and 2000.
II. Issue
May the assessor in tax year 2001 assess taxes for tax years 1998, 1999, and 2000 on untaxed improvements to land when the land upon which the improvements have been made have previously been taxed for the 1998, 1999, and 2000 tax years?
III. Analysis
A. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
Two properties in Beaufort County are in dispute here. The property owned by Bruce and Theresa Baker is identified as District R-520, Map 12‑A, Parcel 96 and the property owned by Rollin J. Stickle is identified as District 510, Map 8, Parcel 289. In 1996, the properties were unimproved lots and were valued as such. However, as of December 31, 1997, in each case, new improvements to the properties were fully complete.
The Baker improvement was $564,000 not including the value of the underlying real estate. Similarly, not including the underlying real estate, the Stickle improvement was $446,000.
In making the improvements, both Baker and Stickle were required to obtain building permits from the Town of Hilton Head, Department of Building Inspections. That office is not affiliated with the office of the county assessor or the county auditor. Further, no evidence establishes that any building permits for the two properties in this dispute were provided to the assessor.
The new improvements were not entered upon the tax duplicate for Beaufort County during the years 1998, 1999 or 2000 and, accordingly, no taxes were imposed on the values of these new improvements for those tax years. Not until 2001 did the Beaufort County Auditor discover that the improvements had not been taxed for tax years 1998, 1999, and 2000 and that their respective values were not on the county duplicate. Accordingly, the improvements and their values were entered upon the tax duplicate in the year 2001. Further, the taxes on such improvements for the taxes of 1998, 1999, and 2000 were also charged to the taxpayers in the 2001 tax year.
B. Conclusions of Law
Based on the foregoing Findings of Fact, I conclude the following as a matter of law:
1. Introduction
The facts of these cases demonstrate that beginning in the tax year 1996 the lots were unimproved real property. As such, the assessor valued the properties as unimproved. However, significant improvements to the land were in place as of December 31, 1997. Notwithstanding the improvements, the assessor continued to value the property as unimproved and did so until the 2001 tax year. Thus, for each of the 1998, 1999, and 2000 tax years, the taxpayers timely paid the taxes levied but the taxes levied did not include the value of the improvements.
In 2001, the auditor discovered that both parcels had been significantly improved and that the improvements were complete as of December 31, 1997. Indeed, on the December 31, 1997 date, the Baker property had an improvement valued at $564,000 and that value did not include the value of the underlying land. Likewise, the value of the Stickle improvement was $446,000 and that value also did not include the value of the underlying real estate. Thus, based on the new information, tax bills were generated for the then current tax year, tax year 2001, that included both the underlying land and the improvements. Further, the bills also included additional taxes owed for 1998, 1999, and 2000 due to the untaxed improvements. The issue here is whether the county’s actions are authorized by law.
2. Applicable Law
Previously untaxed property can be taxed if the requirements of S.C. Code Ann. § 12-39-220 are satisfied:
And if the owner of any real estate or new structure thereon, subject to taxation, has not reported it for taxation, according to the requirements of this chapter, and it has not been appraised for taxation, the auditor shall, upon discovery thereof, appraise it and, upon making return of such appraisement, shall charge it upon the duplicate, with the taxes of the then current year and the taxes of each preceding year it may have escaped taxation, with twenty per cent penalty upon such taxes of preceding years.
The statutory requirements are met here.
In the instant case, the auditor found that a new structure of $564,000 was owned by Baker and that a new structure of $446,00 was owned by Stickle. Thus, both Baker and Stickle were owners of new structures having substantial value.
Further, the value of the new structures were “not reported” to the assessor. Here, the assessor was unaware of the additions until the additions were discovered by the auditor in 2001. No evidence establishes that the parties in any independent act reported the additions to the assessor. In addition, no evidence establishes that any third party reported the new structures to the assessor. Indeed, despite the existence of a duty that “[e]very municipality in the county requiring building permits shall furnish copies of said permit to the county assessor within ten days after such issuance” (see S.C. Code Ann. § 12-43-240 (Supp. 2002)), the taxpayers candidly stipulated that “there is no evidence that the building permits relevant to the new improvements at issue in these cases were provided to the assessor.” Stipulations p. 5, ln. 10 through ln. 12.
Finally, the new structures were not previously appraised. Under the facts of this case, the only previous appraisal entered by the assessor was that of the unimproved lots. Not until 2001 did the assessor and the auditor learn of the new structures and only then did an appraisal result on the new structures. Thus, the new structures were not previously appraised.
Having satisfied the requirements of S.C. Code Ann. § 12-39-220, the auditor is permitted to
appraise it and, upon making return of such appraisement, shall charge it upon the duplicate, with the taxes of the then current year and the taxes of each preceding year it may have escaped taxation, with twenty per cent penalty upon such taxes of preceding years.
Thus, the county properly imposed taxes on the improved property for tax year 2001 and properly imposed taxes for the tax years of 1998, 1999, and 2000 for which the new structures escaped taxation.
IV. Order
The property owned by Bruce and Theresa Baker identified as District R-520, Map 12‑A, Parcel 96 is taxable for the 1998, 1999, and 2000 tax years at a value of the new structure of $564,000 plus the value of the underlying real estate. Further, the property owned by Rollin J. Stickle identified as District 510, Map 8, Parcel 289 is taxable for the 1998, 1999, and 2000 tax years at a value of the new structure of $446,000 plus the value of the underlying real estate.
AND IT IS SO ORDERED.
____________________________
RAY N. STEVENS
Administrative Law Judge
Dated: August 22, 2003
Columbia, South Carolina
The taxpayers have agreed that the values of the improvements as listed in the body of this order are proper values and were “untaxed” for tax years of 1998, 1999, and 2000.
I note that the county has not imposed any penalty as allowed by S.C. Code Ann. §12-39-220. Thus, no penalty assertion is before me and I make no determination on that issue.
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