The ongoing legal feud between Richland County and South Carolina’s tax agency is now in the hands of a state judge.
At issue is millions of dollars raised by the county’s one percent sales tax which the state Department of Revenue (DOR) is withholding because its officials claim an audit found the money was being improperly spent. DOR previously ordered the county to make changes in its “Penny Tax” program in order to get the money, but county attorneys say such a move is unprecedented and violates the separation of powers.
Both sides made arguments in a Columbia circuit court Tuesday.
“In what democracy does the tax collector say how the tax revenue he collects is spent?” the county’s attorney Ned Nicholson asked. “The people, through their elected officials… say how the tax revenues are spent. Not the tax collector.”
DOR’s attorney James Smith says the tax was pitched to voters in 2012 as a road funding measure. But he said a DOR audit found millions has been diverted towards business training, consultants, and public relations firms with loose connections at best to road construction. “All of the citizens of Richland County… who are paying the tax expect it to be spend according to what the law allows,” he told Circuit Judge Thomas Cooper. “No more. No less.”
Cooper did not make a ruling Tuesday, but signaled one could come within the next week. SCDOR is required to pass along $17 million in sales tax revenue next month, which both sides believe could result in a quick decision. However, the ruling is likely to be appealed.