SC Supreme Court to take up Hilton Head business-license dispute

tbarton@islandpacket.comJanuary 12, 2014 

A nearly eight-year battle over the legality of Hilton Head Island's business-license fees is heading to the S.C. Supreme Court.

The town sued laser-component maker Kigre in 2006 after the company challenged town efforts to collect business-license fees based on the company's gross receipts.

Kigre, operating on Hilton Head since 1986, had been paying the minimum fee -- about $62 per year -- and argued it was exempt from paying more, primarily because most of its sales occur outside South Carolina. Kigre said its fee should be based only on what it sells in the state.

That assertions was rejected Feb. 7, 2012, by Beaufort County Master-in-Equity Marvin Dukes III.

Town officials said the company could claim such an exemption if it pays a license fee elsewhere, but it does not.

Dukes agreed. He said the business-license ordinance is legal, and Kigre is required to pay the fees based on gross income. He also said state courts have ruled that municipalities have the right to impose license fees on companies doing business within their limits, even if a portion of that business is done or completed outside the town or city.

The company's challenge of that ruling was pending before the S.C. Court of Appeals, but the Supreme Court decided Dec. 18 to pull the case out of the appeals court and take the case. State law allows the Supreme Court to do so if an issue is "of significant public interest" or the appeal involves "a legal principle of major importance."

"It's a statewide issue, with a lot of other municipalities in the state that charge the same way Hilton Head does and do not apportion for out-of-state sales," Kigre attorney Tom Taylor said. "We're glad to see this movement from the Supreme Court and avoid an extra two years of litigation."

Attempts to reach town attorney Gregg Alford were unsuccessful.

Taylor said he expects to hear from the Supreme Court within 60 days about when the court will hear arguments in the case.

Kigre challenged the 28-year-old business-license ordinance on several fronts in its pleadings, saying it was unfair and enforced arbitrarily.

Taylor also maintains that U.S. Supreme Court rulings say the town cannot base the fee on sales from manufactured goods sold outside the state. Doing so, Taylor argues, would violate the Commerce Clause in the U.S. Constitution, which implies states, cities and towns are prohibited from passing legislation that discriminates against or excessively burdens interstate commerce.

A federal judge in November halted proceedings in a separate lawsuit filed by Kigre against the town. U.S. District Judge Sol Blatt Jr. of Charleston delayed the lawsuit until the company's state appeal is handled.

The town has spent $78,689 to date on attorney and legal fees on the Kigre suit, according to a town official.

Follow reporter Tom Barton at

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