ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter comes before the Administrative Law Judge Division (ALJD) pursuant to S.C. Code Ann. § 12-60-470(F) (2000) and S.C. Code Ann. § 1-23-600 (Supp. 2000). The Taxpayers requested a contested case
hearing to seek review of a Final Agency Determination issued by the Respondent, South Carolina
Department of Revenue (Department). The Department denied the Taxpayers' claim for a refund of income
taxes because the Department determined that the claim for the refund was not timely filed. After notice to all
parties, a hearing was conducted on August 23, 2001 at the office of the Division in Columbia, South
Carolina.
FINDINGS OF FACT
Having carefully considered the testimony and the arguments of both sides, and taking into account the
credibility of the evidence and witnesses, I find by a preponderance of the evidence:
1. Notice of the time, date, place and subject matter of the hearing was given to all parties in a timely manner.
2. In 1996, the Taxpayers had taxable income, part of which was withheld for income tax purposes and
remitted to the Department.
3. The Taxpayers did not file their 1996 South Carolina Income Tax Return by the due
date of April 15, 1997. The Taxpayers requested an extension which was granted until August 15, 1997. The
Taxpayers filed their 1996 Income Tax Return on April 15, 2000 and claimed a refund of one thousand nine
hundred ten dollars ($1910.00).
3. The Department denied the Taxpayers' claim for refund on June 28, 2000, and issued a Final Agency
Determination on November 15, 2000.
4. The Taxpayers assert that their 1996 Income Tax Return was timely filed. Taxpayers contend that they are
entitled to a refund because they believe they are entitled to a three year time limitation. They base this on
interpretation of the law and the instructions in the 1996 tax booklet prepared by the Department. (1)
5. The 1996 Individual Income Tax Return booklet only mentions a three year statute of limitations once and
that is found on Page 4 under the heading "WHAT TAX RECORDS DO I NEED TO KEEP?" It reads, "Keep
a copy of your return. Also, keep the original or a copy of any schedules or statements you used to prepare
your return. Keep your records that support an item of income or a deduction appearing on a tax return until
the statute of limitations for the return runs out. The statute of limitations is generally THREE YEARS."
6. The 2000 Individual Income Tax Return contains nearly the same language,
but underneath adds a note which reads, "If you do not file your return by the due date or extended due date,
you will only have two years from the original due date to file for a refund." The Taxpayers assert that this
clarification shows the Department believed the 1996 booklet was confusing.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude, as a matter of law, the following:
1. The ALJD has subject matter jurisdiction over this action pursuant to S.C. Code Ann. § 12-60-470(F)
(2000) and S.C. Code Ann. § 1-23-600 (Supp. 2000).
2. The right to recover taxes from the State of South Carolina was created by statute. C.W. Matthews
Contracting Co., Inc. v. S.C. Tax Comm'n, 267 S.C. 548, 230 S.E.2d 223 (1976).
3. In this case, the applicable refund statute is S.C. Code Ann. § 12-60-470 (2000). This statute gives the
Department the authority to issue refunds provided such claims are submitted within the time limitations of
S.C. Code Ann. § 12-54-85. The applicable reading of §12-54-85 is from the 1996 S.C. Code of Laws.
4. S.C. Code Ann. § 12-54-85(F)(1) (1996) states the following:
. . . 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.
5. If the Taxpayers had filed a timely return, they would have had three years to file a claim for refund.
However, Taxpayers did not timely file a return and, therefore, they only had two years from the date their
taxes were "paid" in which to file a refund claim. Inasmuch as their 1996 taxes were deemed paid on April
15, 1997, (2) Taxpayers' refund claim had to be submitted no later than April 15, 1999. Taxpayers' return was
not filed until April 15, 2000, three years after it was due.
6. Therefore, Taxpayers do not meet the time limitations set forth in S.C. Code Ann. § 12-54-85(F)(1)
(1996) and there are no exceptions to these statutes. This result may be harsh, but the right to apply for a
refund is purely statutory, and it is incumbent upon those seeking relief to proceed according to the statute
affording such relief. Commonwealth of Virginia v. Cross, 196 Va. 375, 83 S.E.2d 722 (1954).
Furthermore, this tribunal has no legislative powers. Its responsibility is to determine and give effect to the
intention of the legislature. To do otherwise is to legislate, not interpret. The responsibility for the justice or
wisdom of laws rests exclusively with the legislature. Smith v. Wallace, 295 S.C. 448, 369 S.E.2d 657 (Ct.
App. 1988).
7. In enacting S.C. Code Ann. § 12-54-85, the General Assembly protected the rights of taxpayers against
erroneous assessments. At the same time, in not providing exceptions for untimely refund claims, the
legislature virtually ensured that the Department would not be inundated with many requests for refunds after
the expiration of the statutory period.
8. The U.S. Supreme Court has recognized the problem government would encounter if there were equitable
exceptions to statutorily mandated time limits for requesting refunds of erroneously paid or assessed taxes:
An "equitable tolling" . . . could create serious administrative problems by forcing the IRS to respond to, and
perhaps litigate, large numbers of late claims, accompanied by requests for "equitable tolling" which, upon
close inspection, might turn out to lack sufficient equitable justification. . . . The nature and potential
magnitude of the administrative problem suggest that Congress decided to pay the price of occasional
unfairness in individual cases (penalizing a taxpayer whose claim is unavoidably delayed) in order to
maintain a more workable tax enforcement system. At the least it tells us that Congress would likely have
wanted to decide explicitly whether, or just where and when, to expand the statute's limitations periods,
rather than delegate to the courts a generalized power to do so wherever a court concludes that equity so
requires.
United States v. Brockamp, 519 U.S. 347 (1997). While this situation is unfortunate for the Taxpayers, the
State must be able to carry out its duties and bring closure to these matters.
9. The Taxpayer's reliance on the information contained in the 1996 booklet prepared by the Department is
understandable, but misplaced. The booklet is not the law. It is a long-established principle of law that a state
agency cannot be estopped from the legitimate exercise of its police power because of an error of its agent
that has been relied on by a third party to his detriment. See S.C. Coastal Council v. Vogel, 292 S.C. 449, 357
S.E.2d 187 (1987); Texaco, Inc. v. Wasson, 269 S.C. 255, 237 S.E.2d 75 (1977); Colonial Life & Accident
Insurance Co. v. S.C. Tax Comm'n., 248 S.C. 334, 149 S.E.2d 777 (1966); One Hundred Second Calvary
Officers v. Heise, 201 S.C. 68, 21 S.E.2d 400 (1942). This tribunal does not find the instructions misleading;
rather, the information was general and not necessarily applicable to every specific situation. Nonetheless,
even if the information provided by the Department in the booklet was misleading, this fact would not excuse
the Taxpayer from complying with the time limitations of § 12-54-85 or give the Department authority to
exceed the refund powers granted it by the General Assembly.
Likewise, other jurisdictions have held that misleading instructions are an insufficient basis to support a claim
for refund. "Such an argument is not sufficient to overcome the statutory requirements for timely filing of
refund claims." (3) Where a tax form published in subsequent years was revised to explain the disputed
provision, the Ninth Circuit refused to find that:
the IRS should be estopped from denying the provisions of the admittedly inadequate form. However, as was
noted in Adler v. United States [64-1 USTC P 9388], 330 F.2d 91 (9th Cir. 1964), "[n]or can the interpretation
by taxpayers of the language used in government pamphlets act as an estoppel against the government, nor
change the meaning of the taxing statutes. . ." Id., at 93. This is especially true where the Code itself is clear
on the prerequisites. . . .
Pants Rack, Inc. v. U.S., 81-1 USTC P 9345 (E.D.N.C. 1980).
ORDER
IT IS THEREFORE ORDERED that Taxpayers' request for a refund of $1910.00 is denied.
AND IT IS SO ORDERED.
______________________________________
Carolyn C. Matthews
Administrative Law Judge
Columbia, South Carolina
September 19, 2001
1. The Taxpayers assert that the U.S. Internal Revenue Service (IRS) paid the 1996 federal refund which was
filed on the same day as the return at issue and that should be reason for the Department to do likewise.
However, South Carolina law is clear and governs in this matter. It is irrelevant what the IRS did with the
documents filed with them. Nevertheless, testimony at the hearing was that it most likely was an error by the
IRS because the application of the pertinent federal law, IRC Section 6511(a), has been the same as the
Department's application of state law.
2. See S.C. Code Ann. § 12-54-85(F)(5)(a) (" . . .Payment of any portion of the tax made before the last day
prescribed for the payment of the tax is considered made on the last day. The last day prescribed for filing the
return or paying the tax must be determined without regard to any extension of time.)
3. Getchell v. Smith, 71 A.F.T.R.2d 93-2025, 93-1 USTC P 50, 362 (D. Colo. 1993) (citing Republic
Petroleum Corp. v. U.S., 613 F.2d 518, 527 (5th Cir. 1980) (holding that equitable principles may not override
statutory requirements); Joseph v. IRS, 637 F.Supp. 1219, 1220 (D.Mass. 1983)).
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