SC Administrative Law Court Decisions

This matter is before the Administrative Law Judge Division (Division) pursuant to the motion of the Respondent, Greenville County Assessor (Assessor), to dismiss this action for lack of subject matter jurisdiction. A hearing on the motion was held on January 8, 1997. For the following reasons, I conclude that the Division does have subject matter jurisdiction to hear this case. Therefore, the Motion to Dismiss is hereby denied. However, I further conclude 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 by the Assessor for late payment of property taxes for the tax year 1995.

Petitioner owns certain real and personal property located in Greenville County. On October 31, 1995, the property tax notices concerning those properties were mailed to Petitioner. The Petitioner contends that it processed and mailed the payments for those property taxes on January 2, 1996, prior to the January 15, 1996 deadline. However, the Respondent never received those payments. Petitioner was unaware that the checks had not been cashed until early in April, 1996, during a review of its outstanding checks. Upon the discovery that the checks had not been cashed, Petitioner mailed another set of checks for the taxes due, plus a total penalty of $28,890.06, on April 12, 1996. Petitioner then filed a request for a refund of the penalties paid. Pursuant to S.C. Code Ann. §12-60-2560 (Supp. 1996), the Greenville County Auditor, Tax Collector, and Assessor met to consider the request. By letter dated July 19, 1996, the Petitioner's request for a refund of penalties was denied. Petitioner then appealed the denial to the Greenville County Board of Assessment Appeals (Board). The Board denied Petitioner's request for a refund by letter dated October 7, 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.

The Assessor filed a Motion to Dismiss this action, contending that the Division lacks subject matter jurisdiction to hear matters in which a taxpayer is seeking a refund of penalties for late payment of real property taxes.

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, Respondent's Motion to Dismiss must be denied.

However, it is inappropriate at this time for the Division to hold a hearing on the merits of this matter. Although the Petitioner's claim for refund was reviewed by the county auditor, assessor, and tax collector, 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 Respondent's Motion to Dismiss is hereby denied, 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

February 27, 1997