ORDERS:
ORDER
I. Statement of the Case
The Petitioner, Richard Deason (taxpayer) of Saluda, South Carolina, filed with the Saluda County
Auditor, Jane B. Guy (Auditor) a protest challenging the Auditor's valuation of a 1989 Cadillac for
the 1997 tax year. The taxpayer exhausted his prehearing remedies with the Auditor and now seeks
a contested case hearing before the Administrative Law Judge Division (ALJD). Jurisdiction vests
in the ALJD under S.C. Code Ann. §§ and 1-23-310, 1-23-600(B), and 12-60-2920 (Supp. 1996).
After considering all of the testimony and evidence, the property must be valued at $1100.
II. Issue
What is the value of the taxpayer's 1989 Cadillac for the 1997 tax year?(1)
III. Analysis
1. Positions of Parties:
The taxpayer argues his 1989 Cadillac must be valued at $550 due to its high mileage and poor
physical condition. The Auditor asserts a value of $3000 is proper after discounting the vehicle for
high mileage and poor physical condition.
2. Findings of Fact:
I find, by a preponderance of the evidence, the following facts:
a. General
1. The taxpayer is the owner of an automobile and resides in Saluda County.
2. The property is located at the taxpayer's residence.
3. The license plate renewal date for the vehicle is February 28, 1997.
4. The Saluda County Auditor appraised the property for the 1997 tax year for $3,000.
5. The taxpayer appealed the value to the Auditor, who reaffirmed the value of $3,000.
b. Description of Property
6. The subject property is a 1989 Cadillac Deville sedan with 265,000 miles.
7. The vehicle has a hole in the grill, a hole in the corner of the hood (left side facing vehicle),
damaged leather on the arm rest (driver's side), a broken radio antenna, and a damaged right
rear tail light.
8. The vinyl roof, paint and interior are in good condition.
c. Method of Valuation
9. The auditor valued the property by adjusting the value established pursuant to a vehicle
valuation guide issued by the Department of Revenue (DOR).
10. DOR's vehicle valuation guide is based upon retail market values.
11. For the 1997 tax year, the DOR guideline sets the value for a 1989 Cadillac Deville sedan
at $6,381.00.
12. The DOR guideline allows a deduction for high mileage of up to 40% of the guideline value.
13. The Auditor allowed a 40% deduction ($2,552) for high mileage to arrive at a guideline value
of $3,829.
14. The Auditor allowed a reduction in value of $829 for the cost of repairs to arrive at a final
value of $3,000 for the taxpayer's 1989 Cadillac.
15. Three dealers stated they would purchase the 1989 Cadillac from the taxpayer for $500,
$550, and $600.
16. The poor physical condition of the taxpayer's 1989 Cadillac reduces the retail value of the
vehicle by $2,729.00.
17. The taxpayer's 1989 Cadillac has a fair market value for tax year 1997 of $1,100.
3. Discussion
County auditors must determine the value of a taxpayer's vehicle as of the first day of the month
preceding the beginning of the tax year for the vehicle under review. § 12-37-2680 (Supp. 1996).
The tax year for a licensed motor vehicle begins on the last day of the month in which a license is
required. § 12-37-2610 (Supp. 1996). Thus, in this case, the valuation date is January 1, 1997 since
the vehicle tag expires February 28, 1997. The issue here is what is the value of the taxpayer's 1989
Cadillac on January 1, 1997.
a. Valuation Method
All property must be valued based upon fair market value, and for automobiles the fair market value
must be derived from a nationally recognized publication of vehicle valuations. § 12-37-930 (Supp.
1996). To assist the Auditor in valuing vehicles, the Department of Revenue (DOR) is required to
prepare guides and other aids for the equitable assessment of property. § 12-4-560 (Supp. 1996). In
particular, DOR is required to publish guides and provide those guides to Auditors "as often as may
be necessary to provide for current values." § 12-37-2680 (Supp. 1996). The Auditor's use of the
DOR assessment guide is mandatory "except in unusual and extenuating circumstances" which may
include such factors as whether the "automobile was completely destroyed and worthless on the
assessment date." S.C. Regs. 117-119.
While the Auditor must comply with the DOR guide, the Auditor is granted flexibility in establishing
the value since the Auditor has an overriding duty to determine value consistent with regulations
promulgated by DOR. § 12-39-340 (1976). When considering a taxpayer's challenge to a value,
applicable regulations authorize the Auditor to "take such action as necessary to reflect the market
value of the properties . . ." S.C. Regs. 117-129.
b. Valuation Method Applied
The DOR guide relies upon retail market values for its data. The guide places the value for a 1989
Cadillac Deville sedan for the 1997 tax year as $6,381. Further, the guide allows a deduction of up
to 40% of the guideline value for high mileage. Thus, here, a deduction of $2,552 ($6,381 x .4) for
high mileage was allowed by the Auditor to arrive at a value of $3,829. The Auditor recognized that
an additional reduction in value was proper due to the poor physical condition of the vehicle.
Accordingly, under the authority of § 12-39-340 and S.C. Regs. 117-119, 117-129, the Auditor
properly allowed a further reduction of $829.
The crux of the dispute, however, in my view, is whether $829 (the amount allowed by the Auditor)
is a sufficient reduction for the damage to the taxpayer's vehicle. The evidence establishes that the
vehicle has a hole in the grill, a hole in the corner of the hood (left side facing vehicle), damaged
leather on the arm rest (driver's side), broken radio antenna, and damaged right rear tail light. The
impact on value from these damages is disputed and each side supports a value based upon
unobjected-to hearsay evidence. The Auditor relied upon a telephone conversation with a body shop
employee who informed the Auditor that the described damage represents an $829 cost to repair.
On the other hand, the unobjected-to evidence from the taxpayer is that the local Cadillac dealer
found the damage placed the vehicle in such poor physical condition that a value of $550 was proper.
While hearsay evidence admitted without objection may be considered as if it were in law
admissible, the weight to be given such evidence is a matter for the fact-finder to decide. State v.
White, 215 S.C. 450, 55 S.E.2d 785 (1949). Here, the Auditor's telephone conversation with a body
shop is of very little probative value. The degree and the cost of repair to an automobile body is not
easily decided through a telephone conversation. Rather, a physical inspection of the vehicle is
warranted. On the other hand, the personal inspection of the taxpayer's vehicle by a Cadillac dealer
is entitled to greater consideration. The Cadillac dealer expressed his statement of value in writing
and based his $550 value on the existing damage on the vehicle.(2) Thus, while realizing the appraisal
is based upon hearsay evidence, the appraisal is more probative than the Auditor's cost-to-repair data.
Even though the taxpayer's appraisal is of some help in reaching a value, I am unable to accept $550
as the value of the vehicle. The taxpayer testified the $550 value was the price the Cadillac
dealership would pay the taxpayer for his 1989 Cadillac. Since dealership's purchase vehicles at
wholesale prices but sell at retail, to keep the appraisal consistent with the retail values upon which
the DOR guide is based, an estimate must be made of the retail value of a damaged 1989 Cadillac
whose wholesale price is $550. While the evidence is sparse, considering this case as a whole results
in a retail value of $1100 as not being unreasonable. Thus, the value of the vehicle is calculated as
follows:
DOR Guideline Value $ 6,381.00
High Mileage Discount <2,552.00>
Loss of Value For Damage <2,729.00>
1997 Value 1,100.00
4. Conclusions of Law
Based on the foregoing Findings of Fact and Discussion, I conclude the following as a matter of law:
1. All property must be valued based upon fair market value with fair market value for vehicles
derived from a nationally recognized publication of vehicle valuations. § 12-37-930 (Supp.
1996).
2. County auditors must determine the value of a taxpayer's vehicle as of the first day of the
month preceding the beginning of the tax year for the vehicle under review. § 12-37-2680
(Supp. 1996).
3. Since the tax year for a licensed motor vehicle begins on the last day of the month in which
a license is required, the Auditor must value the vehicle as of January 1, 1997 since the
vehicle tag expires February 28, 1997. § 12-37-2610 (Supp. 1996).
4. To assist the Auditor in valuation issues, DOR is required to prepare guides and other aids
for the equitable assessment of property. § 12-4-560 (Supp. 1996).
5. As to automobiles, DOR is required to publish guides and provide those guides to Auditors
"as often as may be necessary to provide for current values." § 12-37-2680 (Supp. 1996).
6. The Auditor's use of the DOR assessment guide is mandatory "except in unusual and
extenuating circumstances" which may include such factors as whether the "automobile was
completely destroyed and worthless on the assessment date." S.C. Regs. 117-119.
7. The Auditor has an overriding duty to determine value consistent with regulations
promulgated by DOR. § 12-39-340 (1976).
8. Regulations allow the Auditor to consider a taxpayer's challenge to a value and allows the
Auditor to "take such action as necessary to reflect the market value of the properties . . ."
S.C. Regs. 117-129.
9. The DOR guide relies upon retail market values for its data. § 12-37-930 (Supp. 1996).
10. Deductions in addition to the high mileage discount may be made based upon documented
poor physical condition of a vehicle. § 12-39-340; S.C. Regs. 117-119, 117-129.
11. While hearsay evidence admitted without objection may be considered as if it were in law
admissible, the weight to be given such evidence is a matter for the fact-finder to decide.
State v. White, 215 S.C. 450, 55 S.E.2d 785 (1949).
12. The fair market value of the taxpayer's 1989 Cadillac Deville sedan for tax year 1997 is
$1,100.
IV. ORDER
Based upon the foregoing Findings of Fact, Discussion, and Conclusions of Law, the following
ORDER is issued:
The Auditor shall value the property identified as a 1989 Cadillac Deville sedan owned by Richard
Deason at a value of $1,100 for the 1997 tax year.
IT IS SO ORDERED.
RAY N. STEVENS
Administrative Law Judge
This 10th day of July, 1997
1. Only tax year 1997 is capable of review since no timely challenge was filed for prior tax
years. See § 12-60-2910 (objection to assessment must be in writing and made to the Auditor
within 30 days of mailing of tax notices).
2. The taxpayer presented two other appraisals that gave similar values. |
