ORDERS:
ORDER ON MOTION TO DISMISS ISSUES AND ON MOTION FOR REMAND
I. Introduction
This matter is a challenge by the taxpayer to additional tax, penalties, and interest imposed by the South
Carolina Department of Revenue for the taxpayer's 1998 and 1999 tax years. Two motions are pending. In
the first, DOR seeks to prohibit the taxpayer from raising specific issues and to clarify others. In the
second, the taxpayer seeks a remand. After considering the matters before me, this case is ENDED and a
REMAND to DOR with instructions for further consideration is ordered.
II. Limitation of Issues
DOR seeks to prohibit the taxpayer from raising several issues and seeks clarification of other issues.
First, DOR asks that the taxpayer be prohibited from challenging the penalties and interest imposed in the
1998 and 1999 Final Agency Determination since the taxpayer's Preliminary Tax Statement fails to present
that issue to the ALJD. Second, DOR asks that the taxpayer's issue of "Proof of Liability to pay South
Carolina Income tax" be construed to mean a decision on "whether the amounts earned by the taxpayer are
subject to state income tax." Finally, DOR seeks to prohibit any issue before the ALJD on the claiming of
"allowable deductions" because the "taxpayer would not provide such information to [DOR]" before
seeking a contested case.
In the first issue, DOR argues that the taxpayer may not challenge the imposition of penalties and interest.
I disagree with DOR. The request for a contested case challenges DOR's actions in imposing penalties and
interest. Thus, DOR has not been without notice on the issue and thus has been in a position to prepare its
position on the matter. Rather than lack of notice, the issue is one of deciding whether the taxpayer has
chosen to abandon the issue. While it is certainly true that the taxpayer does not directly address the
penalties and interest in his preliminary tax statement, on the whole, I do not read any filings by the
taxpayer suggesting an abandonment of the issue raised in the request for a contested case. Accordingly,
no abandonment has occurred, and the taxpayer may challenge the imposition of penalties and interest.
For its second position, DOR asks that the taxpayer's issue of "Proof of Liability to pay South Carolina
Income tax" be construed to mean that the issue for decision is "whether the amounts earned by the
taxpayer are subject to state income tax." I agree with DOR. The taxpayer's consistent argument in his
filings has been below and now is before the ALJD that wages are not taxable income. Thus, the issue to be
addressed is "whether the amounts earned by the taxpayer are subject to state income tax."
Finally, DOR seeks to prohibit any issue before the ALJD on whether the taxpayer may claim "allowable
deductions." DOR's basis for seeking to deny argument on this issue is that the "taxpayer would not
provide such information to [DOR]" before seeking a contested case. Thus, the matter was not presented
below during the prehearing remedy before DOR, and the taxpayer is now seeking to raise either new facts,
new issues, or both. Accordingly, given the requirements of § 12-60-510, the issue is whether a remand is
proper.
III. Remand
The taxpayer seeks a remand in this matter. Remands of tax disputes are controlled by § 12-60-510:
If the taxpayer failed to provide the department with the facts, law, and other authority supporting his
position, he shall provide the department with the facts, law, and other authority he failed to present to
the department earlier. The Administrative Law Judge . . . shall then remand the case to the department
for reconsideration in light of the new facts or issues unless the department elects to forego the remand.
In the instant case, the taxpayer "failed to present" facts at the prehearing remedy stage before DOR on
the "allowable deductions" issue. The taxpayer now seeks to raise new facts supporting that issue and he
seeks to raise that issue before the ALJ. Further, the use of the mandatory directive of "shall" requires
the ALJ to remand the matter "unless the department elects to forego the remand."
Here, DOR plainly stated in its Motion To Dismiss Certain Issues that it opposes allowing the "allowable
deductions" issue to be argued before the ALJ since "it was neither raised nor addressed below." Thus,
DOR's objection seeks to have the issue raised below and equates to a decision not to forego the remand.
Further, DOR's objection is satisfied if the facts and issue the taxpayer now seeks to raise are first raised
and addressed below. Accordingly, a remand is ordered so that the taxpayer may present facts, law, and
any other authority to DOR on the "allowable deductions" issue.
IV. Order
The following Order is entered:
1. This case is ENDED and a REMAND to DOR with instructions for further consideration is ordered.
2. As a result of this case being ended, no exchange of evidence is due and the hearing scheduled for June 6,
2002 is cancelled.
3. Pursuant to the remand, DOR shall meet with the taxpayer no later than May 31, 2002 and at such
meeting the taxpayer shall present facts, law, and any other authority to DOR on the "allowable
deductions" issue.
4. DOR shall consider the information presented and, in due course, shall issue an Amended Final Agency
Determination addressing (along with the penalties, interest and wages issues previously addressed) the
new facts, law, and other authority on the "allowable deductions" issue.
5. Once the Amended Final Agency Determination is issued, if the taxpayer disagrees with DOR's
determination, the taxpayer must request a new contested case hearing before the ALJD pursuant to § 12-60-460 with that request being made within thirty days after the date DOR's determination is sent by first
class mail or delivered to the taxpayer.
AND IT IS SO ORDERED
______________________
RAY N. STEVENS
Administrative Law Judge
Dated: May 7, 2002
Columbia, South Carolina |
