Supreme Court sides with Town of Hilton Head in Kigre suit

rlurye@islandpacket.comJune 4, 2014 

KIGRE.COM

The S.C. Supreme Court has upheld Hilton Head Island's business-license fee in an eight-year legal dispute between the town and a manufacturer of laser components.

The court ruled the town does not violate the U.S. Constitution's interstate commerce clause by charging Kigre Inc. a fee based upon its gross income. Kigre had argued that since most of its income is derived from out-of-state customers, it should not have to pay the full amount.

Arguments were heard in April, and the court's order was issued Wednesday. For the years 2007 to 2012, Kigre owes $21,000 in fees, according to documents filed with the state Supreme Court.

Kigre has argued it should pay only the minimum business-license fee of $62.50 per year.

The town sued the company in 2006, arguing that Kigre's income from sales outside South Carolina is not exempt because the company does not pay a business license fee anywhere else. The Supreme Court agreed, stating the "fee is a tax on the privilege of doing business within the Town."

Gregory Alford, attorney for the town, said he was pleased the Supreme Court reaffirmed the town's right to charge the fees, which he said help pay for parks, bike paths and other island amenities.

"We think it's appropriate, and it's a modest fee," Alford said. "When you consider the benefits of having a business here, for your employees and your senior executives, it's a small price to pay."

Kigre attorney Tom Taylor said the company might request a rehearing but does not want to draw out litigation.

"While Kigre is disappointed in the Supreme Court's decision, we accept it and we move forward," he said.

There is no monetary judgment associated with Wednesday's ruling, Taylor said.

Kigre would have owed about $43,000 in business license fees, penalties and insurance for the years 2001 to 2005. However, Beaufort County Master-in-Equity Marvin Dukes III ruled in February 2012 that the town waived its right to that money by denying Kigre a hearing before Town Council.

Kigre later was granted a hearing on more than $318,000 the town said the business owed between 2007 and 2012. The town refunded about $233,000 in June 2013, and Kigre sued in federal court for the remaining $85,113.58, composed of about $21,000 in fees and $52,000 in penalties. That suit has been delayed since November, pending the Supreme Court's decision. Taylor said he expects U.S. District Judge Sol Blatt Jr. of Charleston to resume the case in the next 45 days.

The town has not taken any legal action against Kigre for business license fees for 2013 or 2014, Taylor said.

Taylor said he did not know whether the company would pay the fees.

Alford declined to comment on what the town's next steps toward collection would be.

Follow reporter Rebecca Lurye at twitter.com/IPBG_Rebecca.

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