SC Administrative Law Court Decisions

This matter comes before me pursuant to S.C. Code Ann.  12-60-2510, et seq., and  12-43-220(c) (Supp. 1995) upon a request for a contested case hearing involving Petitioner's request for a partial refund of real property taxes paid for tax year 1995 on 23 Green Heron Road, Hilton Head, South Carolina, shown as Beaufort County Tax Map #R550-018-00A-0063-0000. Petitioner asserts that the subject property was his legal residence for tax year 1995 and subject to continued classification at the 4% special assessment ratio for legal residences under  12-43-220(c) and that the County wrongfully reclassified the property at the normal 6% ratio. The Assessor maintains that the Petitioner did not qualify for the 4% special assessment ratio pursuant to  12-43-220(c) and did not timely file an application for such classification. A hearing before the Administrative Law Judge Division was held at the Beaufort County Courthouse on September 10, 1996. Upon review of the relevant and probative evidence and the applicable law, I find that the Petitioner is entitled to a partial refund of property taxes paid for 1995.

FINDINGS OF FACT

By a preponderance of the evidence, I find:

1. The subject property is 23 Green Heron Road, Hilton Head, South Carolina, shown as Beaufort County Tax Map #R550-018-00A-0063-0000.
2. From 1966 until January 8, 1996, the subject property was the legal residence of Petitioner Cyril M. Stewart.
3. From 1966 through January 8, 1996, Cyril M. Stewart maintained the subject property and paid all expenses related to the maintenance and improvement of the residence, including utility charges and all property taxes.
4. From 1966 until 1982, Petitioner Cyril M. Stewart held fee simple title to the subject property.
5. In 1982, Cyril Stewart conveyed fee simple title in the subject property to his second wife, Dorothy Jean Stewart.
6. Dorothy Jean Stewart died testate on March 20, 1993, devising her fee simple interest in the subject property to her children, Hank Haines, Jr., Don Scot Haines, Jon R. Haines, and Pamela LaBoda (hereinafter referred to as the "Haines children").
7. As the surviving spouse, Cyril M. Stewart was entitled to an elective share of Dorothy Jean Stewart's estate but did not exercise that right through formal proceedings or court documents.
8. By Deed of Distribution dated March 3, 1994, and filed in the Beaufort County RMC Office in Deed Book 695, at Page 2566, the subject property was conveyed to the Haines children.
9. Subsequent to Dorothy Jean Stewart's death, by agreement of the Haines children and Cyril Stewart, Stewart continued to maintain the subject property as his legal residence, being liable for all utility expenses and taxes owed.
10. By deed dated on or about October 31, 1995, the Haines children conveyed the subject property to James P. Kenney.
11. In lieu of filing for and receiving an elective share of the estate of Dorothy Jean Stewart, by agreement of Cyril M. Stewart and the Haines children, Cyril M. Stewart received a one-third share of the net proceeds of the sale of the subject property to Kenney.
12. Cyril Stewart continued to reside at the subject property from November 1, 1995, through January 8, 1996, under a written lease agreement with James P. Kenney.
13. At some point prior to the death of Dorothy Jean Stewart, an application was filed for the subject property for classification of the subject property for the legal residence 4% ratio, and the application was granted by the Assessor.
14. From the date first classified, through 1994, the subject property was continuously classified as a legal residence and assessed at the 4% ratio.
15. For tax year 1995, the Beaufort County Assessor assessed the subject property at the normal 6% ratio rather than the 4% ratio for property classified as legal residences.
16. Cyril M. Stewart paid the 1995 tax bill, but by letter dated November 16, 1995, to Jannette Holmes of the Beaufort County Assessor's office, Mr. Stewart requested that the assessment ratio be corrected and reinstated at 4%.
17. By letter from Jannette Holmes of the Beaufort County Assessor's office, dated December 13, 1995, Cyril Stewart was informed that the County took the position that the subject property was no longer entitled to the 4% ratio for property classified as an owner-occupied legal residence.
18. Upon request of the Assessor's office, Cyril Stewart provided additional information to the Assessor on or about January 29, 1996, in support of his request.
19. By decision dated February 16, 1996, Assessor Wright denied Cyril Stewart's request for the reinstatement of the 4% ratio classification for the subject property for tax year 1995.
20. By letter dated February 27, 1996, Cyril Stewart appealed the Assessor's denial to the Beaufort County Tax Equalization Board.
21. By decision dated May 3, 1996, the Beaufort County Tax Equalization Board denied Mr. Stewart's request for the 4% ratio classification for the subject property for tax year 1995 on the basis that Stewart was not the legal owner of the subject property for tax year 1995.
22. Upon receiving the Board's decision, Cyril Stewart timely requested a contested case hearing on the matter to the Administrative Law Judge Division on or about May 31, 1996.
23. Although Cyril Stewart had communicated with the Assessor's office on many occasions by telephone and written correspondence requesting the reinstatement of the special assessment ratio for the subject property, the Assessor's Office never requested that Mr. Stewart file an application for reclassification.
24. A contested case hearing was held in this matter on September 10, 1996, at the Beaufort County Courthouse.

CONCLUSIONS OF LAW

Based upon the foregoing Findings of Fact, I conclude as a matter of law the following:

1. All real property in the State of South Carolina is subject to taxation, S.C. Code Ann.  12-37-210 (1995).
2. The Administrative Law Judge Division has jurisdiction in this property tax assessment case pursuant to S.C. Code Ann.  1-23-600 and 12-60-2510, et seq. (Supp. 1995).
3. S.C. Code Ann.  12-43-220(c) sets forth the criteria and procedure for classification of a residential property eligible for the 4% special assessment ratio.
4. S.C. Code Ann.  12-43-22(c) (Supp. 1995) provides in part: "If the lessee of property upon which he has located his legal residence is liable for taxes on the leased property, then the property upon which he is liable for taxes, not to exceed five acres contiguous to his legal residence, must be assessed at [4%]."
5. From the date of his wife's death, on March 20, 1993, until January 8, 1996, the subject property was Cyril Stewart's legal residence. During that time, he was the continuous lessee of the subject property, liable for taxes on the leased property. S.C. Code Ann.  12-43-220(c) (Supp. 1995).
6. S.C. Code Ann.  12-43-220(c) (Supp. 1995) also provides in part: "No further applications [for legal residence classification] are necessary while the property for which the initial application was made continues to meet the eligibility requirements of this item."
7. Although the fee simple titleholder, Dorothy Jean Stewart, died on March 20, 1993, the subject property continued to meet the requirements of  12-43-220(c) to be assessed at the 4% ratio throughout the period that Cyril Stewart occupied the property as his legal residence. Therefore, it was not necessary to file a new application for classification.
8. S.C. Code Ann.  12-43-220(c) (Supp. 1995) also provides in part: "Notwithstanding any other provision of law, a taxpayer may apply for a refund of property taxes paid when the property could have been taxed at the legal residence assessment ratio."
9. Subject to the time limitations set forth in S.C. Code Ann.  12-54-85(F) (Supp. 1995), a taxpayer may seek a refund of real property taxes assessed by the county assessor and paid by filing a claim for refund with the county assessor who made the property for which the tax refund is sought. S.C. Code Ann.  12-60-2560 (Supp. 1995).
10. Claims for credit or refund must be filed within three years of the time the return was filed, or two years from the date of payment, whichever is later. If no return was filed, a claim for refund must be filed within two years from the date of payment. S.C. Code Ann.  12-54-85(F) (Supp. 1995).
11. Cyril Stewart qualifies for the special assessment ratio for a legal residence for tax year 1995. S.C. Code Ann.  12-43-220(c) (Supp. 1995).
12. Pursuant to S.C. Code Ann.  12-43-220(c), 12-54-85(F), and 12-60-2560 (Supp. 1995), Cyril Stewart is entitled to a refund of property taxes paid for tax year 1995. The amount of refund owed is the difference between the amount actually paid and the amount which should have been levied and paid had the subject property correctly remained classified at the special 4% legal residence ratio.
13. If, within two years of the date of payment of taxes paid, a taxpayer files an application with the Beaufort County Assessor for a refund of property taxes paid when the property could have been taxed at the legal residence assessment ratio, the County must refund the difference owed between the amount actually paid and the amount which should have been levied and paid had the subject property correctly remained classified at the special 4% legal residence ratio. S.C. Code Ann.  12-54-85(F) (Supp. 1995).

ORDER

IT IS THEREFORE ORDERED that upon the filing of an application with the Beaufort County Assessor for a refund of property taxes paid by Cyril M. Stewart for tax year 1995, the County Assessor shall refund to Cyril M. Stewart the difference between the amount of property taxes actually paid for 23 Green Heron Road, Hilton Head, South Carolina, shown as Beaufort County Tax Map #R550-018-00A-0063-0000, and the amount which should have been levied and paid had the subject property remained correctly classified for the special 4% legal residence ratio.

AND IT IS SO ORDERED.

_____________________________
STEPHEN P. BATES
ADMINISTRATIVE LAW JUDGE

October 23, 1996
Columbia, South Carolina