Gardner v. South Carolina Dept. of Revenue
| Decision Date | 27 January 2003 |
| Docket Number | No. 25587.,25587. |
| Citation | 353 S.C. 1,577 S.E.2d 190 |
| Parties | Ronald F. GARDNER, Daryl S. Gardner, Nancy D. Helton a/k/a Nancy Foster, Robert S. Helton, James R. Bonner, David A. Hart, W. Denise Reeder, George R. Donnels, Patricia C. Donnels and Shunda Cureton, Plaintiffs/Respondents, v. SOUTH CAROLINA DEPARTMENT OF REVENUE, Woodruff-Roebuck Water District, Spartanburg Regional Medical Center, B.J. Workman Memorial Hospital, Gaffney Board of Public Works, Laurens County Hospital, Greenville Hospital System, Self Memorial Hospital, the Municipal Association of South Carolina, the South Carolina Association of Counties and all related affiliates and subsidiaries of such entities and all other entities in the State of South Carolina that have purported to avail themselves of any provision of the South Carolina Setoff Debt Collection Act, Defendants/Appellants, Abbeville County Memorial Hospital, Allendale County Hospital, Bamberg County Hospital, Barnwell County Hospital, Beaufort Memorial Hospital, Charleston Memorial Hospital, Chester County Hospital, Clarendon Memorial Hospital, Edgefield County Hospital, Fairfield Memorial Hospital, Hampton Regional Medical Center, Kershaw County Medical Center, Lexington County Health Services District, Inc., d/b/a Lexington Medical Center, Loris Community Hospital, Marion County Medical Center, Newberry County Memorial Hospital, Palmetto Health Alliance as assignee of Richland Memorial Hospital, and the Regional Medical Center of Orangeburg and Calhoun Counties, Intervenors/Appellants. |
| Court | South Carolina Supreme Court |
C. Mitchell Brown and B. Rush Smith, III, of Nelson Mullins Riley & Scarborough, L.L.P., of Columbia, for Named and Class Defendants/Appellants.
General Counsel & Deputy Director Harry T. Cooper, Jr., Chief Counsel for Revenue Litigation Ronald W. Urban, and Counsel for Revenue Litigation Joe S. Dusenbury, Jr., all of Columbia, for Named Defendant/Appellant South Carolina Department of Revenue.
Robert E. Stepp and Elizabeth Van Doren Gray, of Sowell Gray Stepp & Laffitte, LLC, of Columbia, and H. Spencer King of Leatherwood Walker Todd & Mann, of Spartanburg, for Named Defendant/Appellant Municipal Association of South Carolina.
Thornwell F. Sowell of Sowell Gray Stepp & Laffitte, LLC, of Columbia, for Named Defendant/Appellant South Carolina Association of Counties.
H. Sam Mabry, III, J. Derrick Quattlebaum, and Matthew P. Utecht, of Greenville, for Named Defendant/Appellant Greenville Hospital System.
Edwin E. Evans and Henry J. White, of Columbia, for Class Defendant/ Appellant State Budget and Control Board, South Carolina Retirement Systems. Attorney General Charles M. Condon, Deputy Attorney General Treva G. Ashworth, Assistant Deputy Attorney General J. Emory Smith, Jr., of Columbia, for Defendant/Appellant State Class Defendants; James R. Allen of Barnes, Alford, Stork and Johnson, LLP, of Columbia, for Defendant/Appellant State Education Assistance Authority.
William C. Hubbard and Dwight Drake of Nelson Mullins Riley & Scarborough, L.L.P., of Columbia, for Class Defendant/Appellant South Carolina Public Service Authority; C. Mitchell Brown and B. Rush Smith, III, of Nelson Mullins Riley & Scarborough, L.L.P., of Columbia, for Intervenors/Appellants; Wilburn Brewer, Jr., and Thomas C.R. Legare of Nexsen Pruet Jacobs & Pollard, LLP, of Columbia, for Class Defendants/Appellants 42 Putative Class Members.
James W. Sheedy and W. Chaplin Spencer, Jr., of Spencer & Spencer, P.A., of Rock Hill, for Class Defendants/Appellants York County Natural Gas Authority of Rock Hill, South Carolina Lancaster County Natural Gas Authority, Rock Hill Housing Authority, and Fort Mill Housing Authority.
Charles E. Carpenter, Jr., and Sam G. Stathos, of Richardson, Plowden, Carpenter & Robinson, P.A., of Columbia, for Class Defendants/Appellants Morris College, Voorhees College, and Newberry College.
Steve A. Matthews, Manton M. Grier, and Phillip Florence, Jr., of Haynsworth Sinkler Boyd, P.A., of Columbia, for Class Defendants/Appellants Local Entities.
David S. Black, of Howell, Gibson & Hughes, of Beaufort, for Appellant Beaufort County EMS.
David L. Morrison, of Davidson, Morrison & Lindeman, of Columbia, for Defendants/Appellants City of Irmo, City of Williamston, Sumter County Clerk of Court, Abbeville County, Chester County, Greenwood County, and McCormick County.
Michael N. Duncan, of Whiteside-Smith Firm, of Spartanburg, Appellant City of Chesne, City of Cowpens and City of Wellford.
Emma Ruth Brittain, of Thompson Law Firm, of Myrtle Beach, for Appellant Claflin University. James R. Thompson, of Saint-Amand, Thompson & Brown, of Gaffney, for Appellant Gaffney Board of Public Works.
J. Michael Turner, of Turner, Able & Burney, of Laurens, for Appellant Laurens County Hospital.
Steven M. Pruitt, of McDonald, Patrick, Tinsley, Baggett & Poston, of Greenwood, for Defendant/Appellant Self Memorial Hospital.
Edwin C. Haskell, III, Smith & Haskell, of Spartanburg, for Appellants Spartanburg Regional Medical Center and B.J. Workman Memorial Hospital.
D. Garrison Hill, of Hill & Hill, of Greenville, for Unnamed Class Defendants/Appellants Greer Commission of Public Woks and Seneca Light and Water Plant.
Nancy T. Hobbs of McDonald, Patrick, Tinsley, Baggett & Poston, L.L.P., of Greenwood, for Class Defendants/Appellants Greenwood Commissioners of Public Works and Erskine College.
Kenneth C. Anthony, Jr., of the Anthony Law Firn, and Patrick E. Knie, of Patrick E. Knie, P.A. both of Spartanburg for Plaintiffs/Respondents.
This appeal concerns the 1995 Setoff Debt Collection Act (1995 Act)1 and 1999 amendments2 thereto. The 1995 Act permits a "claimant agency" to seize the South Carolina income tax refund of a taxpayer who has a delinquent debt with the claimant agency. We affirm in part, reverse in part, and remand.
Plaintiffs/Respondents (Plaintiffs) brought this declaratory judgment action against Defendants/Appellants (Defendants) asserting Defendants, as claimant agencies, improperly seized their income tax refunds. Plaintiffs sought injunctive relief, the return of their seized tax refunds, and damages. In addition, Plaintiffs sought to be certified as class representatives of all taxpayers who incurred a reduction in their income tax refund in the amount of $100 or more and requested the Defendants be certified as class representatives of all claimant agencies which had availed themselves of the 1995 Act by recovering debts of $100 or more.
The trial judge granted Plaintiffs' motion for summary judgment. Through a series of orders, the trial judge 1) held certain notices did not substantially comply with the 1995 Act 2) refused to presently consider the Named Defendants' counterclaims against the Named Plaintiffs, 3) ordered the return of seized income tax refunds for 1996, 1997, and 1998, plus related administrative fees and interest, 4) ordered a return of administrative fees, plus interest, collected by Defendants/Appellants Municipal Association of South Carolina (MASC) and South Carolina Association of Counties (SCAC)3 in 1999, and 5) enjoined the South Carolina Department of Revenue (DOR) from collecting any claims submitted by the Associations for tax year 1999. In addition, the trial judge certified a bilateral class action. Thereafter, the trial judge denied Intervenors/Appellants (Intervenors) petition to intervene as parties in the matter. Defendants appeal.4
In 1988, the General Assembly enacted the "Setoff Debt Collection Act." Act No. 474, 1988 S.C. Acts 4020. This Act permits "claimant agencies" to seize the South Carolina income tax refunds of taxpayers who owe delinquent debts to the agencies.5 Defendants are currently defined as "claimant agencies." In relevant part, § 12-56-60(A) of the 1995 Act provides:
A request for setoff [by the claimant agency to the DOR] may be made only after the claimant agency has notified the debtor of its intention to cause the debtor's refund to be set off. This notice must be given in person, left at the dwelling or usual place of business of the debtor, or sent by certified or registered mail to the debtor's last known address no less than thirty days before the claimant agency's request to the [DOR]. The notice shall include a statement which sets forth administrative appeal procedures available to the debtor and alternatives available to the debtor which could prevent setoff. The claimant agency promptly shall notify the debtor when the liability out of which the set off arises is satisfied.
(Underline added).
Section 12-56-60(B) provides:
Upon receiving the certification of the claimant agency of the amount of the delinquent debt, the [DOR] shall determine if the debtor is due a refund. If the debtor is due a refund of more than twenty-five dollars, the DOR shall set off the delinquent debt against the amount of the refund in excess of twenty-five dollars and transfer the amount set off to the claimant agency. The department may retain an amount not to exceed twenty-five dollars of each refund set off to defray its administrative expenses ... The [DOR] shall consider any certified delinquent debt and debtor list provided by a claimant agency as correct. Reviews of refund setoffs are with the claimant agency. If, after appropriate review the claimant agency determines that the setoff amount is excessive, it shall refund the appropriate amount to the taxpayer. If, after appropriate review, the claimant agency determines that it is entitled to no part of the amount set off, it shall refund the entire amount plus the administrative fee retained by the [DOR]. That portion of the refund reflecting the administrative fee must be paid from claimant agency funds. If a refund has been retained in error, the claimant agency shall pay interest to the taxpayer calculated as...
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