SC Administrative Law Court Decisions

This matter is before the Administrative Law Judge Division (Division) pursuant to the request of the Petitioner, Oakridge/McGuire Partners, for a refund of penalties assessed for late payment of property taxes on certain real property located in Greenville County, South Carolina. A hearing in this case was held on December 3, 1996. At the close of the hearing, the undersigned made an oral ruling dismissing the case for lack of subject matter jurisdiction. I now conclude, however, that the Division does have subject matter jurisdiction to hear this case. Therefore, the oral ruling made at the hearing on December 3, 1996, is hereby vacated. I further conclude, however, that this matter must be remanded to the Greenville County Board of Assessment Appeals for a hearing on the merits of Petitioner's claim for a refund of penalties imposed for late payment of property taxes for the tax year 1995.

Petitioner owns certain real property located in Greenville County. On October 31, 1995, the property tax notice for the tax year 1995 concerning that property was mailed to Petitioner. The Petitioner contends that it (through the manager of the property in question, Summit Properties), processed and mailed the payment for those property taxes on December 22 or 23, 1995, prior to the January 15, 1996 deadline. The payment was mailed to a post office box in Columbia, South Carolina, which was programmed into Summit Properties'computer and which had formerly been used by the County to receive tax payments. However, at the time the payment at issue was mailed, the County was no longer using that address. Instead, the proper mailing address was listed both on the tax notice and on a self-addressed envelope which was enclosed with the notice. The County never received the payment sent in December, 1995. Petitioner was unaware that the check had not been cashed until February of 1996, when it conducted a review of outstanding checks. Upon the discovery that the check had not been cashed, Petitioner, through Summit Properties, stopped payment on the first check and mailed another check for the taxes due on February 14, 1996. This check was received by the County Tax Collector on February 15, 1996. However, since the check did not include any penalties, the Tax Collector notified the Petitioner that the check would be held but not accepted as payment until payment for the penalties due was received. By check dated March 15, 1996, the Petitioner submitted payment under protest of the penalties due, in the amount of $9,816.74. Petitioner then filed a protest and claim for refund of the penalties paid. This request was denied by letter of the County Attorney dated April 17, 1996. Petitioner then appealed the denial to the Greenville County Board of Assessment Appeals (Board). The Board denied the Petitioner's request for a refund by letter dated June 4, 1996, stating that "there is no state statute providing authority to the Board of Assessment Appeals to waive penalities [sic]." Petitioner then timely requested a contested case hearing before the Division.

At the close of the hearing in this matter on December 3, 1996, the undersigned made an oral ruling dismissing this case for lack of subject matter jurisdiction. Upon further review of the issues, however, I now conclude that the Division has subject matter jurisdiction to hear this case. Therefore, the oral ruling of December 3, 1996, is hereby vacated. See First Union National Bank v. Hitman, Inc., 306 S.C. 327, 411 S.E.2d 681 (Ct. App. 1991), aff'd, 308 S.C. 421, 418 S.E.2d 545 (1992) (no order is final until it is written and entered; until the order is written and entered, the trial judge retains discretion to change his mind and amend his oral ruling accordingly).

If the Division has subject matter jurisdiction to hear this action, that jurisdiction must be derived from the South Carolina Revenue Procedures Act, S.C. Code Ann. §12-60-10 et seq. (Supp. 1996). The intent of the General Assembly in enacting the Revenue Procedures Act was "to provide the people of this State with a straightforward procedure to determine any disputed revenue liability. The South Carolina Revenue Procedures Act must be interpreted and construed in accordance with, and in furtherance of, that intent." S.C. Code Ann. § 12-60-20 (Supp. 1996) (emphasis added). Section 12-60-80 of that Act further provides that "[t]here is no other remedy other than those provided in this chapter in any case involving the illegal or wrongful collection of taxes, or attempt to collect taxes." Pursuant to S.C. Code Ann. §12-60-30(27), "taxes" is defined as "all taxes, licenses, permits, fees, or other amounts, including interest and penalties, imposed by this title. . . ." (Emphasis added.) Accordingly, the sole remedy for the wrongful collection of penalties must be found in the Act.

Prior to the enactment of the Revenue Procedures Act, it is clear that a taxpayer's remedy for the wrongful collection of penalties was found in S.C. Code Ann. §§12-47-70 through 12-47-90 (Supp. 1994). Pursuant to those sections, claims for abatement or refund of incorrect property tax assessments or collections by a county were reviewed by the county auditor, treasurer, and tax assessor. Although the statute did not expressly include relief from erroneously imposed penalties, the South Carolina Attorney General stated in a 1990 opinion that "a penalty incorrectly levied may be abated or refunded by the county auditor, treasurer and assessor under Sections 12-47-70 through 12-47-90." S.C. Op. Atty. Gen. No. 90-6 (1990). See also S.C. Op. Atty. Gen. No. 87-66 (1987) (holding that certain incorrect property tax payments, including any penalty thereon, could be refunded under Sections 12-47-70 through 12-47-90).

Under the Revenue Procedures Act, a similar procedure is provided in S.C. Code Ann. §12-60-2560 (Supp. 1996) for refunds of "real property taxes" assessed by the county assessor and paid. Pursuant to this section, an aggrieved taxpayer must first file a claim for refund with the county assessor. The assessor immediately notifies the county treasurer and auditor of the claim, and the majority of those three officers determines whether a refund shall be issued. Further review of refund claims is made by the county board of assessment appeals. Thereafter, a taxpayer or assessor may appeal the board's decision by requesting a contested case hearing before the Division. §12-60-2560(C).

I conclude that the term "real property taxes" contained in Section 12-60-2560(A) must necessarily include penalties erroneously assessed. "Property tax" is defined in S.C. Code Ann. §12-60-30(18) (Supp. 1996) as "all ad valorem taxes on real and personal property." "Taxes" is defined in Section 12-60-30(27) as "all taxes. . . including interest and penalties, imposed by this title. . . ." (Emphasis added). Under these definitions, which apply throughout the Act, "taxes" includes penalties. Therefore, a taxpayer may seek a refund of penalties pursuant to Section 12-60-2560, and the Division has jurisdiction to conduct contested case hearings to review decisions of the county boards of assessment appeals concerning those refunds. This conclusion is further supported by the fact that S.C. Code Ann. §12-60-1740 (Supp. 1996), which is applicable to all property tax protests, appeals, and refunds, contemplates the refund of penalties. It states in pertinent part: "If it is determined that any tax in excess of the amount due was paid to or collected by a county, municipality, or other political subdivision, the treasurer within thirty days of the final determination shall refund the taxes and penalties, if any, so paid." (Emphasis added.) Accordingly, the Division has jurisdiction to hear this matter.

However, it is inappropriate at this time for the Division to rule on the merits of this matter. Although the Petitioner's claim for refund was reviewed by several county officials, and although a timely appeal was made to the Greenville County Board of Assessment Appeals, the Board summarily dismissed the appeal without holding a conference as required by Section 12-60-2560(B). Therefore, this matter must be remanded to the Board in order to afford the Petitioner the opportunity to exhaust its prehearing remedies by presenting its evidence concerning whether its tax payments were in fact timely mailed.

For all the foregoing reasons, the oral ruling of December 3, 1996, is hereby vacated, and this matter is remanded to the Greenville County Board of Assessment Appeals for a conference as required by S.C. Code Ann. § 12-60-2560(B).

AND IT IS SO ORDERED.

_____________________________________

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

March 5, 1997