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SC Administrative Law Court Decisions

SCDOR vs. Ballard Palmer American Legion Post 202, et al

South Carolina Department of Revenue

South Carolina Department of Revenue

Ballard Palmer American Legion Post 202 and Lillian M. Webster

Petitioner & Representative: S.C. Dept. of Revenue, Geoffrey Bonham, Esq.

Respondents & Representative: Ballard Palmer American Legion Post 202 and Lillian M. Webster, James L. Felder,CPA, pro se




The South Carolina Department of Revenue (DOR) brought this matter against Ballard Palmer American Legion Post 202 (Ballard) and Lillian M. Webster (Webster) concerning a violation of the Bingo Tax Act of 1996. DOR seeks a $5,000.00 penalty against Ballard and Webster for failure to remit in a timely fashion the 16.5 percent tax imposed by S.C.Code Ann. §12-21-4270 (Supp. 1998). Respondents admit that the tax was not timely paid, but they contend that the penalty is excessive given the extenuating circumstances in this case. After timely notice to the parties, a hearing was conducted on October 19, 1999 at the Administrative Law Judge Division in Columbia, South Carolina. Having considered all the evidence and the arguments, a $100.00 penalty is appropriate.


Should Ballard and Webster be required to pay an administrative penalty of $5,000.00 for violating S.C. Code Ann. § 12-21-4270 (Supp. 1998)?


A. Positions of the Parties

DOR asserts that Ballard and Webster are liable for a penalty of $5,000.00 for failing to timely remit the 16.5 percent tax imposed by S.C. Code Ann. §12-21-4270 (Supp. 1998). Neither Ballard nor Webster dispute that the tax was untimely paid. Both assert that extenuating circumstances militate against a penalty of $5,000.00.

B. Findings of Fact

Based upon the preponderance of the evidence, I make the following findings of fact:

1. Ballard applied for and received a Bingo Card Purchase Voucher on August 24, 1998 authorizing the purchase of $71,000.00 of bingo cards.

2. Ballard was aware that $11,715.00, the 16.5 percent tax, was due on September 8, 1999.

3. James L. Felder, an accountant for Ballard, attempted to pay the tax with a business check late in the day on September 8, 1999 but was notified that S.C. Code Ann. §12-21-4270 (Supp. 1998) required payment in the form of a certified check.

4. Felder was unable to obtain a certified check before the close of business on September 8, 1999.

5. Felder presented a certified check to DOR on September 9, 1999 for the full amount of the tax.

6. DOR issued regulatory violations to Ballard and Webster on September 11, 1998 for violation of S.C. Code Ann. § 12-21-4270 (Supp. 1998) and fined Ballard and Webster $5,000.00.

C. Conclusions of Law

Based on the Findings of Fact, I make the following Conclusions of Law:

1. A failure to pay the 16.5 percent tax on the total face value of bingo cards purchased within 15 days of DOR's receipt of the purchase application is a violation of S.C. Code Ann. §12-21-4270 (Supp. 1998). Here, no dispute exists that the tax was not timely paid. Given the late payment, the issue is what penalty results from a failure to timely pay the tax.

2. The failure to timely pay the tax subjects the violator to a penalty of up to $5,000.00. S.C. Code Ann. §12-21-4140 (Supp. 1998).

3. Ballard and Webster are jointly and severally liable for the penalty. S.C. Code Ann. § 12-21-3960 (Supp. 1998).

4. The Administrative Law Judge Division has the authority to establish the amount of a penalty. Inherent in and fundamental to the quasi-judicial powers of Administrative Law Judge, as the trier of fact in contested cases under the Administrative Procedures Act,(1) is the authority to decide the appropriate penalty when such is disputed. Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991).

5. A significant consideration is whether the alleged mitigating factor demonstrates reasonable cause to reduce the penalty. Kroger v. Department of Revenue, 673 N.E.2d 710 (Ill. 1996). Reasonable cause is generally absent if ordinary business care is absent. Id. What constitutes ordinary business care must be determined by the peculiar facts of each particular case. Armstrong's, Inc. v. Iowa Dept. of Revenue, 320 N.W.2d 623 (Iowa 1982). 6. In the present case, the Petitioners' attempt to pay the Bingo tax on the date due, albeit with an unacceptable form of payment, indicates reasonable care so that a $5,000.00 penalty would be inappropriate.

7. The Department references the cases of S.C. Dep't of Revenue v. Greenville Lodge No. 858, et al, Docket Nos. 98-ALJ-17-0488-CC and 98-ALJ-17-0489- CC (ALJD March 2, 1999) (Consolidated case) (Lee, J.); S.C. Dep't of Revenue v. Lexington County Voiture No. 1211, et al, Docket No. 98-ALJ-17- 0492-CC (ALJD, December 14, 1998) (Geathers, J.); and S.C. Dep't of Revenue v. Thomas W. Northern, et al, Docket No. 99-ALJ-17-0102-CC (ALJD, June 4, 1999) (Stevens, J.) for the imposition of the $5,000.00 fine. These cases, however, involve egregious violations of the Bingo Act that merit the full penalty available under the law. This Court thinks the present case is more analogous to S.C. Dep't of Revenue v. Order of AHEPA Textile City Chapter #242, Docket No. 98-ALJ-17-0559-CC (ALJD, February 5, 1999) (Geathers, J.), in which the court noted that "life sometimes intrudes upon the noblest duty of man to timely pay taxes" and fined the Respondent $100.00.


Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that DOR shall impose a penalty in the amount of $100.00 against the Respondents.




Administrative Law Judge

October _____, 1999.

Columbia, South Carolina.

1. S.C. Code Ann. §1-23-310 et seq. (1986 & Supp. 1998).

Brown Bldg.






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