ORDERS:
FINAL ORDER
The matter in dispute is an individual income tax controversy in which the
South Carolina Department of Revenue (Department) assessed liabilities on a portion of
the proceeds of a legal settlement received by the Petitioner. More specifically, the
Department assessed liabilities on the punitive damages and the post judgment interest.
The parties, while not conceding their respective positions on the issues in this case,
recognize the inherent hazards of litigation and have entered into settlement negotiations
and reached the following agreement to resolve this dispute:
1.The taxpayer agrees to pay taxes of $70,654.00 plus interest in the
amount of $16,108.30
in full satisfaction of his 1995 individual income tax liability. All
penalties previously assessed are hereby waived. The parties agree that full payment will
be made no later than 5:00 P.M. on February 17, 2004. Such payment will be made
payable to the South Carolina Department of Revenue, and sent to the attention of
Malane Pike, 301 Gervais Street, Post Office Box 125, Columbia, South Carolina. If the
Petitioner fails to pay the tax and interest in full by the date specified above, the parties
agree that the Department will immediately invoke collection procedures to collect the
tax, 100% of the interest due, and all applicable penalties.
2.The above tax computation assumes that attorney fees incurred in
obtaining the punitive damages and post judgment interest are deductible as a
miscellaneous itemized deduction rather than as a direct offset to the gross income
therefrom. The Department acknowledges that this issue is currently on appeal to the
South Carolina Court of Appeals in the case of Anonymous Taxpayers v. South Carolina
Department of Revenue, C/A No: 02-CP-40-0094. As such, the Department agrees to
afford this taxpayer the same treatment as is finally determined by the South Carolina
courts in C/A No. 02-CP-40-0094 provided that the taxpayer files a protective claim for
refund with the Department requesting such treatment within two years of payment of the
above stated tax and interest. Interest on any refund will be computed from October 30,
2000 to the date paid. The claim for refund should be sent to Malane Pike at the above
stated address.
3.All parties and their counsel agree that the resolution of this matter
may not be used in any other tax matter or with regard to any other taxpayer for any
purpose.
Pursuant to the terms indicated above, the parties wish to end this
litigation.
Based on the consent of the parties, as evidenced by the signatures of the
parties below, it is the order of this Court that this matter is forever ended and dismissed
with prejudice to all parties to this suit, as well as those parties in privity to such parties.
___________________________
Carolyn Matthews
Administrative Law Judge
February 18, 2004 |
