SC Administrative Law Court Decisions

This matter is before me pursuant to the request of the Petitioner (Taxpayer) for a contested case hearing to review a Final Agency Determination issued by the Respondent, South Carolina Department of Revenue (Department) on June 5, 1998. The Department denied Taxpayer's claim for refund because the claim was untimely made under S.C. Code Ann. Section 12-47-440 (Supp. 1994). The Taxpayer, on the other hand, asserts that he should not be required to comply with the limitation period of Section 12-47-440 due to extenuating circumstances.

A hearing was held before me at the Administrative Law Judge Division on January 5, 1999. At that time, the Department requested that its previously filed Motion for Summary Judgment be granted. The motion was denied. However, at the close of the Taxpayer's case, the Department made a Motion for Involuntary Nonsuit. For the reasons set forth below, I granted that motion.

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the Parties, I make the following Findings of Fact by a preponderance of evidence:

1. Notice of the time, date, place and subject-matter of the Hearing was given to the Petitioner and the Respondent.

2. In 1990, Taxpayer earned taxable income, part of which was withheld for income taxes by the State of South Carolina. Due to illness, Taxpayer did not file a timely tax return for 1990. However, though the circumstances during the illness were difficult, the taxpayer did not establish that he was incapable of filing a return.

3. On January 31, 1995, Taxpayer filed a South Carolina income tax return for 1990 claiming a tax refund of $1,706. The Department determined Taxpayer's request was untimely and denied the refund.

1. The Administrative Law Judge Division has jurisdiction over this matter pursuant to S.C. Code Ann. § 12-60-460 (Supp. 1998).

2. In South Carolina, the right to recover improperly paid taxes is statutory in nature. C. W. Matthews Contracting v. S.C. Tax Com'n, 267 S.C. 548, 230 S.E.2d 223 (1976). Accordingly, anyone seeking the refund of such taxes must do so pursuant to the appropriate authorizing statute. Guaranty Bank & Trust Co. v. South Carolina Tax Commission, 254 S.C. 82, 173 S.E.2d 367 (1970).

The Department denied Taxpayer's claim pursuant to Section 12-47-440, ⁽¹⁾ which provides in pertinent part:

... if it appears to a person that any tax or fee administered by the department has been erroneously, improperly, or illegally assessed, collected, or otherwise paid over to the department, the person, by whom or on whose behalf the tax or fee was paid, may apply to the department to abate or refund in whole or in part the tax or fee.... The provisions of this section...are only available where the application provided for here is made in writing to the department within three years from the date the tax or fee was due to have been paid, without regard to extensions of time for payment, or if a later date would result, within one year of payment where an additional tax or fee is assessed and paid.... (Emphasis added)

Therefore, pursuant to Section 12-47-440, the last day for Taxpayer to timely file his claim for refund was April 15, 1994. It is uncontested, however, that Taxpayer did not submit his refund claim until January 31, 1995; thus, there is no authority under Section 12-47-440 to allow the refund.

While the circumstances surrounding Taxpayer's untimely filing are unfortunate, the refund of taxes is solely a matter of governmental grace and any party seeking such must bring itself squarely within the authorizing statute. Asmer v. Livingston, 225 S.C. 341, 82 S.E.2d 465 (1954). Therefore, once Taxpayer failed to timely file his refund claim, the Department was deprived of the authority to act.

3. ALJD Rule 52 sets forth that an Administrative Law Judge may apply the South Carolina Rules of Civil Procedure to resolve questions not addressed by the ALJD Rules. SCRCP Rule 41(b) sets forth that a party may move for an involuntary nonsuit when "upon the facts and the law the plaintiff has shown no right to relief." Rule 41(b), SCRCP. Since Taxpayer has shown no right to relief in the instant matter, I find that the Department's Motion for Involuntary Nonsuit is proper and should be granted. Accordingly, the Taxpayer's claim for refund of $1,706 was properly denied.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY

ORDERED that Respondent's Motion for Involuntary Nonsuit is granted. The Department of Revenue shall deny Taxpayer's claim for refund.

AND IT IS SO ORDERED.

Ralph King Anderson, III

Administrative Law Judge

March 25, 1999

Columbia, South Carolina

1. Section 12-47-440 was amended in 1994 to insure its application to income taxes. Act No. 464, 1994 S.C. Acts, Section 3(B) made §12-47-440 applicable to previous tax years beginning with 1990.