FINAL ORDER AND DECISION
I. STATEMENT OF THE CASE
This matter comes before me pursuant to S.C. Code Ann. § 12-60-2540 (2000) and S.C. Code Ann. §§ 1-23-310 et seq.
(1986 & Supp. 2000). Petitioner Edgefield, LLC (Taxpayer) challenges the Edgefield County Assessor's (Assessor)
decision to tax the dwelling located at 995 Highway 25 North, Edgefield, South Carolina at the default rate of 6% of market
value for the 1999, 2000, and 2001 tax years. The Taxpayer claims that the property has been held in trust and occupied by
a beneficiary of that trust for those tax years, and that the property, therefore, should have been taxed at the 4% legal
residence ratio under S.C. Code Ann. § 12-43-220(c) (2000). The Assessor, however, contends that the Taxpayer has failed
to sufficiently establish that the property is held in trust so as to qualify for the 4% residential tax rate.
After timely notice to the parties, a hearing was conducted on October 23, 2001, at the Administrative Law Judge Division,
Columbia, South Carolina. Based upon the testimony given and evidence presented at that hearing, I find that the Taxpayer
has not sufficiently shown that it is entitled to the 4% residential tax assessment ratio on the property located at 995
Highway 25 North, Edgefield, South Carolina.
II. 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
1. By deed dated August 27, 1998, and recorded in the office of the Edgefield County Clerk of Court on September 2, 1998,
the entire interest in the property at 995 Highway 25 North, Edgefield, South Carolina was conveyed to Edgefield, LLC, the
named grantee in the deed. For tax purposes this parcel is identified as Tax Map Number 115-00-01-010.
2. The South Carolina Secretary of State has certified that Taxpayer is not a registered corporation in South Carolina.
3. The evidence, while incomplete, suggests that Taxpayer is ostensibly a limited liability company organized under
Georgia law and registered with the Georgia Secretary of State.
4. The C&K Head Family Trust was created on December 19, 1996, by Betty J. Head to provide for the needs of various
family members, including her children, Clark W. Head, Jr. and Kathleen Head Pruitt, both of whom are beneficiaries under
the trust. In addition to his status as a beneficiary, Clark W. Head, Jr. is the trustee of the C&K Head Family Trust.
5. Funds from the C&K Head Family Trust were used to purchase the subject property to which Taxpayer holds title.
Kathleen Head Pruitt occupies the property in question as her legal residence and is the person who initiated this contested
6. Taxpayer claims that it-Edgefield, LLC-is actually a trust, which is subsidiary to the C&K Head Family Trust and which
was established for the benefit of Kathleen Head Pruitt. Taxpayer further argues that, as a trust, it is entitled to have the
property that it owns and that Ms. Pruitt, a beneficiary of the trust, occupies as her domicile assessed at the 4% legal
residence ratio. The Assessor, however, contends that Taxpayer has not established that the subject property is, in fact,
property held in trust for the benefit of the occupant. Therefore, the Assessor maintains that the subject property should not
be assessed at the legal residence ratio.
III. CONCLUSIONS OF LAW
Taxpayer's claim that the property at 995 Highway 25 North should be taxed at the 4% legal residence assessment ratio
under S.C. Code Ann. § 12-43-220(c) (2000) must ultimately fail.
Section 12-43-220(c) creates an exemption from the default property tax assessment ratio for property occupied as a legal
residence under certain circumstances. Under this exemption, property on which a qualifying legal residence is located is
assessed at 4% of market value rather than at the default rate of 6% of market value. See S.C. Code Ann. § 12-43-220(c)(1)
(2000) (legal residence exemption); S.C. Code Ann. § 12-43-220(e) (2000) (default rate). Property held in trust and
occupied by a beneficiary of the trust can qualify for this special assessment ratio:
If residential real property is held in trust and the income beneficiary of the trust occupies the property as a residence, then
the assessment ratio allowed by this item [i.e., S.C. Code Ann. § 12-43-220(c)(1)] applies if the trustee certifies to the
assessor that the property is occupied as a residence by the income beneficiary of the trust.
§ 12-43-220(c)(1). Here, Taxpayer contends that the property it owns at 995 Highway 25 North should be taxed under this
special assessment ratio as property held in trust and occupied as a residence by a beneficiary of the trust.
As a preliminary matter, it must be noted that the weight of the law is against Taxpayer. As Section 12-43-220(c) makes
clear, "the burden of proof for eligibility for the four percent [residential] assessment ratio is on the owner-occupant." S.C.
Code Ann. § 12-43-220(c)(2)(iv) (2000). Further, as noted above, Section 12-43-220(c) only allows the legal residence
ratio on property held in trust "if the trustee certifies to the assessor that the property is occupied as a residence by the
income beneficiary of the trust." § 12-43-220(c)(1) (emphasis added). Additionally, South Carolina courts have
consistently held that exemptions from generally applicable tax statutes, such as the 4% residential exception to the default
6% tax assessment ratio at issue here, must be narrowly construed. The South Carolina Supreme Court discussed this
principle of construction at length in Southeastern-Kusan, Inc. v. South Carolina Tax Commission, 276 S.C. 487, 280
S.E.2d 57 (1981):
As a general rule, tax exemption statutes are strictly construed against the taxpayer. This rule of construction simply means
that constitutional and statutory language will not be strained or liberally construed in the taxpayer's favor. It does not
mean that we will search for an interpretation in the [tax collector's] favor where the plain and unambiguous language
leaves no room for construction. Only when the literal application of a statute produces an absurd result will we consider a
Id. at 489-90, 280 S.E.2d at 58 (citations omitted). It is clear, then, that if Taxpayer is to avail itself of the residential tax
exemption it claims, Taxpayer must establish that the subject property is held in trust and that the income beneficiary of the
trust occupies the property as a residence.
In the instant case, the record is devoid of sufficient proof to establish that the property in question is held in trust so as to
qualify for the legal residence assessment ratio under Section 12-43-220(c)(1). Taxpayer has presented evidence to
establish the existence of the C&K Head Family Trust; portions of the trust agreement have been introduced into evidence.
The settlor, trustee, beneficiaries, purpose, and other terms of the C&K Head Family Trust are clearly set forth in that
agreement. However, Taxpayer has not presented any reliable evidence to establish the existence and nature of Edgefield,
LLC. Neither the foundational documents of the LLC (i.e., its articles of incorporation and its operating agreement) nor any
other reliable evidence regarding the nature of Edgefield, LLC was put before this tribunal. Nor was any such evidence put
before the Assessor or the Edgefield County Board of Assessment Appeals. The legal nature of Edgefield, LLC, its
membership, its officers, and its purpose remain mysteries to this tribunal. Further, Taxpayer has not presented any reliable
evidence as to the legal connection between Edgefield, LLC and the C&K Head Family Trust. Nor has it even made clear
just what it alleges that legal connection to be. (1) There is simply no reliable evidence in the record to establish that
Edgefield, LLC is holding the property in question in trust for the benefit of the occupant, Ms. Pruitt.
Here, Taxpayer asserts the affirmative on the issue of its entitlement to the legal residence assessment ratio and must,
therefore, bear the burden of establishing its claim. See S.C. Code Ann. § 12-43-220(c)(2)(iv) (placing burden of proving
eligibility for the legal residence assessment ratio on taxpayer); see also 2 Am. Jur. 2d Administrative Law § 360 (1994)
("Generally, the burden of
proof is on the party asserting the affirmative issue in an adjudicatory administrative proceeding."); cf. Cloyd v. Mabry, 295
S.C. 86, 88-89, 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."). To meet this burden, Taxpayer must prove its entitlement by the
preponderance of the evidence. See 2 Am. Jur. 2d § 363 (1994) ("[T]he standard of proof in administrative hearings is
generally a preponderance of the evidence."). (2) In the instant case, Taxpayer has not met its burden. It has not produced
evidence sufficient to establish that the property in question is held in trust so as to qualify for the special assessment ratio.
Therefore, Taxpayer's claim must fail.
As Taxpayer is unable to establish its eligibility for the 4% legal residence tax assessment ratio under S.C. Code Ann. § 12-43-220(c) (2000),
IT IS THEREFORE ORDERED that the decision of the Edgefield County Board of Assessment Appeals denying the 4%
legal residence tax assessment ratio for tax years 1999, 2000, and 2001 on the property owned by Edgefield, LLC at 995
Highway 25 North, Edgefield, South Carolina is SUSTAINED.
AND IT IS SO ORDERED.
JOHN D. GEATHERS
Administrative Law Judge
November 9, 2001
Columbia, South Carolina
1. Taxpayer's contention that it is a "trust" is unclear. Taxpayer could be claiming (1) that its LLC operating agreement is
somehow a trust agreement independent of the C&K Head Family Trust, (2) that it and the property it owns are simply
assets held under the C&K Head Family Trust, or (3) that it holds the property in question as a trustee under some other
trust agreement. However, it is not necessary to analyze the legal consequences of these three possible interpretations of
Taxpayer's assertion, as Taxpayer has failed to present sufficient evidence for this tribunal to determine either the true
nature of Edgefield, LLC or its relationship with the C&K Head Family Trust.
Further, this tribunal cannot simply ignore Edgefield, LLC in favor of the C&K Head Family Trust pursuant to S.C. Code
Ann. § 12-2-25(B) (2000), which provides that "[s]ingle-member limited liability companies which are not taxed for South
Carolina income tax purposes as a corporation . . . will be ignored for all South Carolina tax purposes." As noted above,
this tribunal has no evidence from which to conclude that Edgefield, LLC is a single-member LLC, no evidence from which
to determine the tax status of Edgefield, LLC, and no evidence from which to ascertain the relationship between Edgefield,
LLC and the C&K Head Family Trust.
2. The preponderance of the evidence is "[t]he greater weight of the evidence; superior evidentiary weight that, though not
sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side
of the issue rather than the other." Black's Law Dictionary 1201 (7th ed. 1999). "The preponderance of the evidence
means such evidence as, when considered and compared with that opposed to it, has more convincing force and produces in
the mind the belief that what is sought to be proved is more likely true than not true." Alex Sanders & John S. Nichols,
Trial Handbook for South Carolina Lawyers § 9.5, at 371 (2d ed. 2001) (citing Frazier v. Frazier, 228 S.C. 149, 89 S.E.2d