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. § 12-60-2540 (2001)
upon request of Noel M. Hurley ("Petitioner") for a contested case hearing. Petitioner, representing himself and his wife,
Ann M. Hurley, challenge the Final Determination of Cheryl H. Morgan, the Lancaster County Auditor ("County Auditor"
or "Respondent") on the valuation of a 2001 Chevrolet Malibu purchased by them on July 10, 2001. A contested case
hearing was held at the offices of the Division in Columbia, South Carolina, on July 25, 2002. After a complete review of
the file and after considering all the evidence, the court affirms the determination of the County Auditor.
FINDINGS OF FACT
Having observed the witnesses and 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:
- Notice of the date, time, place, and nature of the hearing was timely given to all parties.
- Noel M. Hurley and Ann M. Hurley reside at 2688 Bill Thompson Road, Lancaster County, Lancaster, South Carolina.
- On July 10, 2001, Noel M. Hurley and Ann M. Hurley purchased a new 2001 Chevrolet Malibu ("vehicle") from H & H
Chevrolet, Inc., located in Kershaw, South Carolina. The original price ("sticker price") of the vehicle was $19,995.00.
The "Buyers Order" reflects a "Sales Price" of $ 18,490.00. Petitioner received credit of the sales price for two rebates:
(1) $1,500.00 from the manufacturer, and (2) $1,505.00 from the dealer.
- The total amount paid for the vehicle by Petitioner and his wife, after receiving credit for the rebates, was $16,990.00.
- In August, 2001, Petitioner received the tax notice on the vehicle. Using the assessment guide issued by the South
Carolina Department of Revenue, the County Auditor assessed the vehicle at 2020. Using the millage rate of 228 set by
Lancaster County, the gross tax was determined at $ 460.56. The final tax was set at $ 434.16, giving credit for the State
of South Carolina vehicle credit of $ 18.31, the local option sales tax credit of $ 23.09 and an addition of $15.00 for road
maintenance in Lancaster County.
- On September 20, 2001, Petitioner went to the County Auditor's office to contest the tax assessment and valuation on
the vehicle.
- Upon review of the "buyers order", the County Auditor changed the valuation of the vehicle to the "Sales Price" of $
18,490.00, which reduced the tax to $ 417.56. Although requested by Petitioner, the County Auditor refused to reduce
the "Sales Price" by the amount of $ 3,005.00 which equaled the rebates Petitioner received immediately at the time of
purchase of the vehicle.
- Petitioner requested a review conference with the County Auditor, which was held on September 24, 2001. At this
conference the County Auditor refused to apply the rebates to reduce the value of the vehicle. On December 6, 2001 and
by letter dated December 10, 2001, Petitioner was advised by the County Auditor that rebates were not used by
Lancaster County in determining the value of an automobile for property taxation purposes.
- On March 15, 2002 the Division received an appeal from Petitioner seeking the decision by an Administrative Law
Judge.
- County Auditors receive a manual from the South Carolina Department of Revenue for the valuation of new vehicles
once a year.
- The assessed value of Respondent's vehicle in the Department of Revenue manual($19,995), which did not include any
rebates, was used for the Respondent's tax valuation.
CONCLUSIONS OF LAW
Based upon the foregoing Findings of Fact, I conclude, as a matter of law, the following:
- The Division has jurisdiction over this action pursuant to S.C. Code Ann. §§ 1-23-600, 12-60-2540 and 12-4-30 (D)
(Supp. 2001).
- S. C. Code Ann. § 12-37-210 (1976), providing for the taxation of property in South Carolina, reads as follows:
All real and personal property in this State, personal property of residents of this State
which may be kept or used temporarily out of the Sate, with the intention of bringing
it into the State, or which has been sent out of the State for sale and not yet sold, and all moneys, credits and investments in
bonds, stocks, joint-stock companies or otherwise of persons resident in this State shall be subject to taxation.
- S. C. Code Ann. § 12-37-2640 (Supp. 2001) provides that the county auditor shall determine the assessed value of
motor vehicles and shall calculate the amount of taxes on the vehicle.
- S.C. Code Ann. § 12-37-2680 (Supp. 2001) sets forth the process to be followed in assessing taxes on personal
vehicles and provides:
The assessed value of the vehicle must be determined as of the first day of the month
preceding the beginning of the tax year for the vehicles. The assessed values must
be published in guides or manuals by the South Carolina Department of Revenue and provided to the auditor of each
county as often as may be necessary to provide for current values. When the value of any vehicle is not set forth in the
guide or manual the auditor shall determine the value from other available information....
- S.C. Reg. 117-119, as mandated by Act 208 of 1875, provides that "personal property is to be listed and assessed by the
county auditor according to manuals, guidelines and rule and regulations promulgated by the Commission [now the
South Carolina Department of Revenue].
Under this authority, the Commission declares the use of assessment guides to be mandatory with respect to their use by
county auditors for assessment of personal property such as automobiles..." (Emphasis added).
Further, S.C. Reg. 117-119 states that "The assessment guides must be used exactly as furnished except in unusual and
extenuating circumstances. . .
The regulation states that "'Unusual and extenuating circumstances' would be present when,
for example, evidence clearly indicates that an automobile was completely destroyed and worthless on the assessment
date."
- A strict construction of Reg. 117-119 infers that only the values set forth by the Department of Revenue in its manuals
can be utilized by the county auditors in establishing assessed values for personal property for taxation purposes.
However, in S. C. Reg. 117-129, entitled "Appeal of valuation", the South Carolina General Assembly authorizes an
owner of personal property aggrieved by the valuation place on his property, may appeal the valuation to the county
auditor. The auditor is to review the same ant take such action as necessary to reflect the market value of the property.
From that determination, the taxpayer can appeal to the Division [formerly the Commission] which can accept and
consider additional evidence.
- Although it first appears that based upon the provisions of S.C. Code Ann. §12-60-2540 (Supp. 2001) and S.C. Reg.
117-119, county auditors are required to use the value of a vehicle as listed in the manuals and guides published and
issued to them by the Department of Revenue for assessment purposes, at second glance, when applicable facts
establish a value other than that set forth in the Department of Revenue guidelines or manuals, the auditor must consider
them and make the necessary changes.
- The Department of Revenue manuals and guides do not provide guidelines or assistance to county auditors in adjusting
the valuation of personal property items when taxpayers receive "rebates" or "other incentives" at the time of purchase.
The sole discretion in the auditors is as set forth in Reg. 117-129 when an appeal is filed with the county auditor.
- County auditors in South Carolina are almost overwhelmingly refusing to lessen the assessment guide values for
personal property [obtained from the Department of Revenue] for "rebates" or "other incentives." (1) Such rebates and
other incentives are a "marketing tool" used by automobile vendors and the automobile industry to sell new vehicles.
They do not affect the market value all across the State of South Carolina for all vehicles in a specific class. A valuation
system applicable statewide must be fair and equitable to all its citizens, with each county applying the millage rate
determined by its governing body. There must be uniformity in classifying and valuing items of personal property. All
property must be assessed uniformly and equitably throughout the State. S.C. Code Ann. §12-43-210(A). "Since
"rebates" and "other incentives" do not apply "across the board" to vehicles of like kind sold and thus they can not be
utilized in determining the fair market value of new vehicles sold in this state.
- The appraisal of property is not an exact science and absolute accuracy with respect to valuation is not practically
attainable. Wasson v. Mayes, 252 S. C. 503, 167 S. E. 2d 304 (1969). The county auditors have the discretion to
review evidence to support lower values. However, "rebates" and "other incentives" are not the kinds of circumstances
our legislature intended county auditors should use in adjusting the valuations outlined by the Department of Revenue in
its guides and manuals. High mileage and damage considerations are certainly issues which would give the county
auditor discretion to lessen the value of a vehicle from another like-kind vehicle with less mileage and no damage.
- Since there is no evidence in the record showing Petitioner's vehicle was not like all other similar Chevrolet Malibu
automobiles for the year 2001 when it was purchased in July 2001, it is concluded that the value applied by the County
Auditor is correct and is affirmed by this court.
ORDER
Based upon the above Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that the final assessment value of 2020, as determined by the Lancaster County Auditor, for Petitioner's
Chevrolet Malibu is correct; and it is further
ORDERED that "rebates" and "other incentives" which reduce the sales price of a new vehicle at the date of sale do not
affect the fair market value of the vehicle for purposes of assessment and taxation purposes in the State of South Carolina.
AND IT IS SO ORDERED.
__________________________________
MARVIN F. KITTRELL
Chief Administrative Law Judge
August 1, 2002
Columbia, South Carolina
1. Possibly Aiken County and Charleston County give limited credits for rebates. |