SC Administrative Law Court Decisions

2. A similar proposition may be found in the language of the Internal Revenue Code § 6511(a), which is almost identical to S.C. Code Ann. § 12-54-85(F)(1) (Supp. 1996). There is substantial federal case law interpreting section 6511(a), which is instructive in interpreting S.C. Code Ann. § 12-54-85(F)(1) (Supp. 1996). In the case of Arnzen v. I.R.S., 91-1 U.S.T.C. P50, 020, the taxpayers filed their 1984 federal income tax return in April 1988 requesting a refund of overpaid tax. The U.S. District Court held as follows:

Section 6511(a) must be read to refer to a "timely" filed return. Thus, if the taxpayer files a timely return, he has three years from the date the return was filed or two years from when the tax was paid in which to file a claim for a refund. If no return is timely filed, the second part of the sentence applies and the taxpayer has two years from the date the tax was paid to file a claim for refund. (emphasis added) (citations omitted).

3. In the instant case, the Taxpayer should have filed his refund claim by April 15, 1999, in order to receive a refund of the amount claimed. That is, the two-year limitation of Section 12-54-85(F)(1) would apply, rather than the three-year limitation. Since the Taxpayer failed to timely file his return initially, he had two years from the date his taxes were "paid" in which to file a refund claim. S.C. Code Ann. § 12-54-85(F)(5)(a) (Supp. 1996) provides that:

[p]ayment 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.

Inasmuch as his 1996 taxes were deemed paid on April 15, 1997, the Taxpayer's refund claim had to be submitted no later than April 15, 1999. The Taxpayer's return and refund request was not filed until April 17, 2000. ⁽³⁾4. When considering a refund statute, this tribunal is guided by settled rules of statutory construction. In South Carolina, the right to recover improperly paid taxes is statutory in nature. C.W. Matthews v. S.C. Tax Comm'n, 267 S.C. 548, 230 S.E.2d 223, 226 (1976). Accordingly, taxpayers claiming a refund of taxes must do so pursuant to the statute authorizing the refund. Guar. Bank & Trust v. S.C. Tax Comm'n, 254 S.C. 82, 173 S.E.2d 367, 370 (1970). In Asmer v. Livingston, 225 S.C. 341, 82 S.E.2d 465, 466 (1954), the South Carolina Supreme Court held that:

A refund of taxes is solely a matter of governmental grace, . . . and any person seeking such relief must bring himself clearly within the terms of the statute authorizing the same. . . .

The Taxpayer has not met this burden and is not entitled to a refund pursuant to S.C. Code Ann. § 12-54-85(F)(1) (Supp. 1996). S.C. Code Ann. § 12-54-85 (Supp. 1996) does not provide for any exceptions for individuals. ⁽⁴⁾ 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 Va. v. Cross, 196 Va. 375, 83 S.E.2d 722 (1954).

5. 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 principal 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." ⁽⁵⁾ 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 (9^th 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). Likewise, courts have consistently held that taxpayers ultimately bear the responsibility for ensuring that claims are timely filed. "The legislature is responsible for enacting a statutory scheme of taxation but each taxpayer has certain definite responsibilities, also. Taxpayer responsibility is stressed in court decisions as well as in statutes." ⁽⁶⁾ The statutory requirements cannot be waived by the Department or this tribunal. "[T]he jurisdictional requirement of a timely claim for refund stands paramount. The I.R.S. may not not waive this requirement." ⁽⁷⁾

6. Furthermore, this tribunal and the reviewing courts have no legislative powers. A court's 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 legislation rests exclusively with the legislature, whether or not we agree with the laws it enacts." Smith v. Wallace, 295 S.C. 448, 452, 369 S.E.2d 657, 659 (Ct. App. 1988) (citations omitted). In enacting S.C. Code Ann. § 12-54-85 (Rev. 2000), 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 requests for refunds after the statutory period to create a workable tax administration.

7. The U.S. Supreme Court has expressly recognized the administrative problem government would encounter if there were equitable exceptions to statutorily mandated time limits for requesting refunds of erroneously paid or assessed taxes. Writing for the unanimous Court, Justice Breyer stated:

Tax law, after all, is not normally characterized by case-specific exceptions reflecting individualized equities. . . . [A]n "equitable tolling" exception. . . 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.

U.S. v. Brockamp, 519 U.S. 347, 351, 117 Sup. Ct. 849, 852 (1997). While this situation is unfortunate for the Taxpayer and this tribunal takes no joy in its decision, the State must be able to carry out its duties and bring closure to these matters. There are no exceptions to the filing deadlines for individual tax returns or legal basis to grant the Taxpayer's request for a refund.

For the forgoing reasons, IT IS HEREBY ORDERED that the Taxpayer's request for a refund of $85 is denied.

AND IT IS SO ORDERED.

____________________________________

JOHN D. GEATHERS

Administrative Law Judge

June 29, 2001

Columbia, South Carolina

1. It was not brought to this tribunal's attention until midway through the hearing that the return in dispute was that of the Petitioner rather than that of his son. Both Petitioner and his son bear the same name. The caption of this case, as well as the caption of another case before this tribunal, likewise bear the same name. Up to the hearing, this tribunal had been proceeding on the mistaken impression that both cases involved the Petitioner's son.