ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
The
above-captioned matter comes before this Court upon the request of Petitioner
Douglas West (Taxpayer) for a contested case hearing to challenge the decision
of Respondent Fairfield County Assessor (Assessor) to assess “roll-back” property
taxes pursuant to S.C. Code Ann. § 12-43-220(d)(4) (2000) upon a
twenty-one-acre tract of land he owns in Fairfield County. In particular,
Taxpayer contends that roll-back taxes should not be imposed upon the formerly
agricultural land as a whole at the present time, but should only be imposed
piecemeal when the property is sold in individual residential lots. After
timely notice to the parties, a hearing of this matter was held on August 29,
2006, at the South Carolina Administrative Law Court in Columbia, South
Carolina. Based upon the arguments and evidence presented at that hearing, and
upon the applicable law, I find that the Assessor has properly assessed roll-back
property taxes upon Taxpayer’s property.
FINDINGS
OF FACT
Having
carefully considered all testimony, exhibits, and arguments presented at the
hearing of this matter, and taking into account the credibility and accuracy of
the evidence, I make the following Findings of Fact by a preponderance of the
evidence:
1. The
property at issue in this matter is a twenty-one-acre tract of land located on Trade
Mill Court in Winnsboro, South Carolina, and identified as Tax Map number
152-00-00-026-000. Taxpayer purchased the property at a special referee’s sale
in November 2003 after obtaining a judgment lien on the property as a result of
a contract dispute with the property’s former owner, Joe Louis Gladney. At the
time Taxpayer purchased the land, the property had an existing homestead constructed
on approximately one acre of cleared land, with timberland on the remaining
acreage of the property. During the time he owned the property, Gladney had
claimed the property as agricultural timberland to be assessed under the
reduced rate for agricultural property, and the property was assessed under the
agricultural use assessment by the Assessor.
2. At
the time he purchased the property, Taxpayer did not submit a written
application to the Assessor to claim the special agricultural use assessment on
the land. In fact, Taxpayer has not, at any time, applied to the Assessor for
the special agricultural use assessment rate for his property.
3. Nor
has Taxpayer actually put the property into agricultural use. While Taxpayer
harvested and sold some of the timber on the property approximately six months
after purchasing the land, he did not replant the harvested area of the
property with seedlings, work with a forester to develop a program for growing
and harvesting timber on the property, or take any other actions to put the
property in use as agricultural timberland.
4. Rather,
Taxpayer is preparing the property for sale as a residential development.
Taxpayer sold the parcel containing the existing home on the property in early
2005 and has subdivided the remaining portion of the property into a nine-lot
residential development known as Oak Park Subdivision. The plat for this
subdivision was submitted to the Fairfield County Planning Commission on April
13, 2004, and received final approval from the Commission on August 27, 2004.
Each of these lots has received its own tax map identification number, and the
lots are currently being marketed for sale as individual home sites. However,
at the time of the hearing, none of the subdivision lots had been sold and no
building permits had been issued for any of the lots.
5. Because,
as of December 31, 2004, Taxpayer’s property was no longer classified as
agricultural property, the Assessor assessed roll-back taxes upon the property
for tax year 2005 and the preceding five years pursuant to S.C. Code Ann. §
12-43-220(d)(4) (2000). Taxpayer challenged the assessment of these roll-back
property taxes before the Fairfield County Board of Assessment Appeals, which
upheld the Assessor’s imposition of the roll-back taxes. Taxpayer now
challenges the imposition of roll-back taxes upon his property before this
Court.
CONCLUSIONS
OF LAW
Based
upon the foregoing Findings of Fact, I conclude the following as a matter of
law:
This
property tax dispute is before this Court pursuant to S.C. Code Ann. §
12-60-2540(A) (2000) for a contested case hearing, in which the Assessor’s
imposition of roll-back taxes upon Taxpayer’s property will be reviewed de
novo. See Smith v. Newberry County Assessor, 350 S.C. 572,
577, 567 S.E.2d 501, 504 (Ct. App. 2002). By the parties’ own concession, the
material facts presented in this matter regarding Taxpayer’s property are not
generally in dispute. Rather, the parties disagree as to the legal implications
of those facts. In particular, the question is whether Taxpayer’s property, in
its state as of December 31, 2004, is subject to roll-back taxes pursuant to
S.C. Code Ann. § 12-43-220(d)(4) (2000), because the property no longer
qualifies for the special reduced assessment for agricultural property.
In
this matter, Taxpayer contends that, while his property has been subdivided and
marketed for sale as residential property, the property is still undeveloped
property that has seen few physical changes since qualifying as agricultural
property under the prior owner and, thus, the property should not be considered
property that has been “applied to a use other than agricultural” and subject
to roll-back taxes under Section 12-43-220(d)(4). Instead, Taxpayer argues
that the roll-back taxes should only be imposed piecemeal upon each subdivided
lot as it is sold and actually put into residential use.
The Assessor, on the other hand, argues that, as of December 31, 2004,
Taxpayer’s property was no longer property actually put into use for
agricultural purposes, but was vacant residential property, and, as such, was
subject to roll-back taxes under the plain language of Section
12-43-220(d)(4). For the reasons set forth below, I find that the Assessor
properly assessed roll-back taxes upon Taxpayer’s property for tax year 2005
and the preceding five tax years.
As a
preliminary matter, it must be noted that Taxpayer bears the burden of proof in
this case. See Cloyd v. Mabry, 295 S.C. 86, 88, 367 S.E.2d 171,
173 (Ct. App. 1988) (“A taxpayer contesting an assessment has the burden of
showing that the valuation of the taxing authority is incorrect.”). Further,
in applying the agricultural use tax exemption statutes at issue in this
matter, this Court recognizes the general rule that “the language of a tax
exemption statute must be given its plain, ordinary meaning and must be
construed strictly against the claimed exemption.” Owen Indus. Prods., Inc.
v. Sharpe, 274 S.C. 193, 195, 262 S.E.2d 33, 34 (1980); see also John
D. Hollingsworth on Wheels, Inc. v. Greenville County Treasurer, 276 S.C.
314, 317, 278 S.E.2d 340, 342 (1981) (same). Accordingly, in order to claim
such an exemption, a taxpayer “must clearly bring himself within the
constitutional or statutory language upon which he relies.” York County
Fair Ass’n, Inc. v. S.C. Tax Comm’n, 249 S.C. 337, 341, 154 S.E.2d 361, 363
(1967) (quoting Textile Hall Corp. v. Hill, 215 S.C. 262, 54 S.E.2d 809
(1949)).
This
case turns upon the application of the statutes and regulations governing the
special tax assessment ratio for real property put into use for agricultural
purposes. Pursuant to S.C. Code Ann. § 12-43-220(d)(1)(A) (2000),
“[a]gricultural real property which is actually used for such agricultural
purposes” may be taxed based upon a reduced 4% assessment ratio. However, when
property that is in agricultural use and being valued, assessed, and taxed
under the reduced tax assessment “is applied to a use other than agricultural,”
it is subject to additional taxes, referred to as “roll-back taxes,” for the
tax year in which the change in use was made and for the five tax years
immediately preceding the change in use. S.C. Code Ann. § 12-43-220(d)(4)
(2000). These roll-back taxes amount to the difference between the taxes paid
under the reduced assessment for those years and the taxes that would have been
paid for the property had it been valued as other real property in the taxing
district during that time. Id. In the instant case, the property at issue
was in agricultural use as timberland and assessed under the special
agricultural use ratio at the time Taxpayer purchased the property. Therefore,
the sole remaining question is whether, since acquiring the property, Taxpayer
has applied the property to a use other than an agricultural use, such that the
property is subject to roll-back taxes under Section 12-43-220(d)(4). Because
Taxpayer has put his property to a use other than an agricultural use, both in
form and in practice, I find that the property is subject to roll-back taxes.
First,
Taxpayer has not, as a formal legal matter, brought his property within the
ambit of the special tax assessment ratio for agricultural property. Under
S.C. Code Ann. § 12-43-220(d)(3) (2000), “[a]gricultural real property does not
come within the provisions of this section [providing for the special reduced
assessment] unless the owners of the real property or their agents make a
written application therefor on or before the first penalty date for taxes
due for the first tax year in which the special assessment is claimed.” Id. (emphasis added). This application must be made to the assessor for the county
in which the property is located, on forms provided by the county, and the
failure to apply for the special assessment constitutes a waiver of the special
assessment for the tax year in question. Id. In the case at hand,
Taxpayer has not, at any time, filed an application with the Assessor for his
property to be assessed at the reduced rate for agricultural property, and the
agricultural use assessment ratio has not been applied to the property since it
was purchased by Taxpayer. Therefore, pursuant to Section 12-43-220(d)(3),
Taxpayer’s property cannot be considered “agricultural real property” for tax
purposes. And, because Taxpayer’s property cannot be deemed to be in
agricultural use, it must further be concluded that, as a matter of law, the
property has been “applied to a use other than agricultural” such that Taxpayer
is subject to roll-back taxes for the property.
Second,
beyond legal formalities, Taxpayer has not actually put his property into use
as agricultural property, but rather is developing the property for residential
use. Generally, the agricultural real property eligible for the special assessment
ratio includes “any tract of real property which is used to raise, harvest or
store crops, feed, breed or manage livestock, or to produce plants, trees, fowl
or animals useful to man.” S.C. Code Ann. § 12-43-230(a) (2000). But, in
order to qualify for the reduced assessment, such property must not be
agricultural in name only, but must genuinely be committed to agricultural
uses. See 27 S.C. Code Ann. Regs. 117-1780.1 (Supp. 2005).
Accordingly, vacant land this is merely awaiting development, and not actually
committed to agricultural purposes, is specifically precluded by regulation from
qualifying as agricultural real property. Id. Here, it cannot be
plausibly argued that Taxpayer’s efforts to develop and market the property for
sale as residential home sites is a bona fide agricultural use contemplated by
the law, regardless of how few physical changes have occurred on the property
since he purchased it. Rather, Taxpayer’s property is vacant residential land
awaiting sale. Clearly, then, the use of the property has changed from an
agricultural use under the prior owner, to a new use as vacant residential
property under Taxpayer’s ownership. Accordingly, the property is subject to
roll-back taxes under Section 12-43-220(d)(4).
In
short, in both law and fact, Taxpayer has changed the use of his property from
its agricultural use as timberland under the prior owner to a new use as vacant
residential property. Under the plain terms of Section 12-43-220(d)(4), such a
change in use of property receiving the special reduced assessment for
agricultural property subjects the property to roll-back taxes for the tax year
in which the change in use occurs and the preceding five years. Further,
Taxpayer’s remaining arguments to the contrary based upon prior practice in the
county and upon Virginia law are simply unavailing. Taxpayer has not
established, or sought to establish, that the Assessor should be estopped from
imposing roll-back taxes that are otherwise due based upon the county’s prior
practice under a former assessor. And, the Virginia provision Taxpayer relies
upon for instructive purposes still requires a new owner of property receiving
an exemption to “continue[] the real estate in the use for which it is
classified under the conditions prescribed” in order to avoid roll-back taxes. See Va. Code Ann. § 58.1-3237(D); see also Chesterfield County
v. Stigall, 554 S.E.2d 49, 54 (Va. 2001) (holding that the new owners of a
tract of timberland were not liable for roll-back taxes on the property because
“the property continued to be devoted to forest use and qualified for reduced
assessment and taxation under the County's special land use tax program”). In
the present case, Taxpayer has not continued his property in its formerly
agricultural use, and cannot, therefore, avoid roll-back taxes upon the
property.
ORDER
Based
upon the Findings of Fact and Conclusions of Law stated above,
IT
IS HEREBY ORDERED that the Assessor’s imposition of roll-back property
taxes pursuant to S.C. Code Ann. § 12-43-220(d)(4) (2000) upon Taxpayer’s
property on Trade Mill Court in Winnsboro, South Carolina, for tax year 2005
and the five preceding tax years is SUSTAINED.
AND
IT IS SO ORDERED.
______________________________
JOHN D.
GEATHERS
Administrative
Law Judge
1205 Pendleton
Street, Suite 224
Columbia, South
Carolina 29201-3731
November 2, 2006
Columbia, South Carolina
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