Hilton Head Island Packet Logo

Close the gap between law's intent, enforcement | Hilton Head Island Packet

×
  • E-edition
  • Home
    • Customer Service
    • Mobile & Apps
    • Archives
    • Contact Us
    • eEdition
    • Newsletters
    • Subscribe
    • Contests
    • About Us
    • Sponsorships
    • News
    • Beaufort Gazette
    • Bluffton Packet
    • Special Reports
    • Databases
    • Local
    • South Carolina
    • Traffic
    • Crime & Public Safety
    • Business
    • Politics & Elections
    • Military
    • Nation & World
    • Professional Opinion
    • Lottery Results
    • Blog: Untamed Lowcountry
    • Sports
    • College
    • Golf
    • RBC Heritage
    • Recreation
    • High School
    • MLB
    • NFL
    • NBA
    • Outdoors
    • Columnists
    • Jeff Shain
    • Cast & Blast
    • Politics
    • Elections
    • Business
    • Real Estate
    • Technology
    • Full Stock Listings
    • Market Summaries
    • Mutual Funds
    • Treasury Rates
    • New Employee/Promotion Form
    • New Business Owner Form
    • Living
    • Celebrations
    • Religion
    • Food & Drink
    • Family
    • Outdoors
    • Holidays
    • Columnists
    • Lowcountry Gardening
    • Made With Love
    • Faith in Action
    • Entertainment
    • Arts & Culture
    • Local Events
    • Holidays & Seasonal
    • Horoscopes
    • Comics
    • Puzzles & Games
    • Columnists
    • Mindy Lucas
    • Opinion
    • Editorials
    • Other Views
    • Readers Opinion
    • Letters to the Editor
    • Submit a Letter
    • National Voices
    • Editorial Cartoons
    • Columnists
    • David Lauderdale
    • Liz Farrell
  • Obituaries

    • Classifieds
    • Legal Notices
  • Special Sections
  • Jobs
  • Moonlighting
  • Cars
  • Homes
  • Place An Ad
  • Mobile & Apps

Editorials

Close the gap between law's intent, enforcement

    ORDER REPRINT →

October 20, 2010 12:01 AM

It's disturbing to see the gap that sometimes emerges between what state lawmakers say they intended to do and the actual application of a new law.

The latest example is the state Department of Revenue's relatively recent enforcement of a 5-year-old change to the tax code dealing with charging sales tax on service contracts.

State lawmakers say their intent was to charge sales tax on extended-warranty contracts that retailers sell on large items, such as refrigerators, laptops and washing machines. Specifically, the tax was to apply to "service maintenance contracts."

The Department of Revenue interpreted the change to mean any service contract, including those of a company providing a plant-care service for hotels, hospitals and offices. In July, an administrative law judge agreed with the department's interpretation when that company challenged a $41,000 bill for back taxes owed.

SIGN UP

Sign Up and Save

Get six months of free digital access to The Island Packet

SUBSCRIBE WITH GOOGLE

#ReadLocal

The ensuing hullabaloo over this and other audits that resulted in tax bills that totaled thousands of dollars prompted the Revenue Department last week to halt audits of businesses affected by the provision.

State Sens. Glenn McConnell and Larry Grooms say they will file legislation to clarify the tax code.

Agency officials say they stand by their interpretation, and they are supported by the Administrative Law Court ruling. All the more reason to clarify the law if that wasn't what it was intended to do.

This isn't the first time an agency has enforced a law in a far different way than lawmakers intended. Last year, the legislature had to rework a law on what information could be released about emergency medical services after the original law resulted in the release of no information at all on this critical public service.

State Sen. Harvey Peeler, the chief sponsor of the 2004 law, said it was intended to bring the state into compliance with federal patient privacy law, not to keep from the public important statistical data on emergency medical services.

Also disturbing about the sales tax on service contracts is that business owners apparently weren't notified in 2005 of such a substantive change in how they should operate. Somehow they were expected to know that they should be charging a sales tax on a service they had been providing without such a tax.

It was only after the Department of Revenue began a more aggressive tax collection effort that audited businesses were told they owed the tax.

State officials should notify businesses of such a substantive change in the law. It doesn't seem fair to collect back taxes and penalties for a change in the law that wasn't actively enforced for three years and today is being enforced through selective audits.

The agency won't say how much money it collected on the service contract clause or how many businesses are paying service-related taxes, The (Charleston) Post and Courier reports.

Surely, some mechanism for proactively notifying businesses on tax law changes affecting their operations exists, and if it doesn't, it should be put in place.

As the Post and Courier points out in its reporting, the law could trigger tax bills for thousands of unwitting service businesses across the state.

"If you never sell anything, it never dawns on you to pay sales tax," said Burnie Maybank, Columbia tax attorney and former chief of the Revenue Department.

Seemingly minor changes in the law should not turn into a big tax bill for unsuspecting businesses.

  Comments  

Videos

Mark Kingston on South Carolina baseball’s ‘big’ season-opening series win

Duke’s RJ Barrett talks triple-double against NC State

View More Video

Trending Stories

Update: 1 dead, 2 injured after crash involving tractor-trailer on SC 170, police say

February 16, 2019 10:32 AM

Beaufort man charged in 2017 murders of St. Helena man and his nephew, official says

February 16, 2019 12:27 PM

Payless ShoeSource stores are closing in US. What’s that mean for Bluffton location?

February 16, 2019 04:27 PM

Beaufort County teen’s funeral transforms grief into a celebration of God and hope

February 16, 2019 06:14 PM

Hilton Head man survives after being struck by tractor-trailer on US 278, report says

February 16, 2019 03:52 PM

Read Next

Principal sex-in-school case demands Beaufort County School District to come clean, now

Editorials

Principal sex-in-school case demands Beaufort County School District to come clean, now

The Island Packet and Beaufort Gazette Editorial Board

    ORDER REPRINT →

February 06, 2019 01:40 PM

Public trust in Beaufort County School District and the school board is the key issue in the case of Hilton Head high school principal accused of having sex in the building with on-duty sheriff’s officer. The school district needs to come clean.

KEEP READING

Sign Up and Save

#ReadLocal

Get six months of free digital access to The Island Packet

SUBSCRIBE WITH GOOGLE

MORE EDITORIALS

Hilton Head principal sex-in-the-school case demands clarity from superintendent

Editorials

Hilton Head principal sex-in-the-school case demands clarity from superintendent

January 13, 2019 08:06 AM
Reopen investigation of Hilton Head Island High principal on sex in the school

Editorials

Reopen investigation of Hilton Head Island High principal on sex in the school

January 07, 2019 05:43 PM
Keep saying no: Beaufort County school board right to deny money for Moss in FBI probe

Editorials

Keep saying no: Beaufort County school board right to deny money for Moss in FBI probe

December 11, 2018 07:39 AM
Beaufort County Sheriff vs. Town of Hilton Head Island: A fight we should not be having

Editorials

Beaufort County Sheriff vs. Town of Hilton Head Island: A fight we should not be having

November 10, 2018 07:22 AM
5 things we learned from Tuesday election results in Beaufort County

Elections

5 things we learned from Tuesday election results in Beaufort County

November 07, 2018 10:01 AM
Hilton Head Island mayoral race: Style, substance and the peoples’ right to know

Editorials

Hilton Head Island mayoral race: Style, substance and the peoples’ right to know

November 02, 2018 09:22 AM
Take Us With You

Real-time updates and all local stories you want right in the palm of your hand.

Icon for mobile apps

Hilton Head Island Packet App

View Newsletters

Subscriptions
  • Start a Subscription
  • Customer Service
  • eEdition
  • Vacation Hold
  • Pay Your Bill
  • Rewards
Learn More
  • About Us
  • Contact Us
  • Newsletters
  • News in Education
  • Photo Store
  • Archives
Advertising
  • Information
  • Place a Classified
  • Local Deals
  • Special Sections
  • Place an Obituary
  • Today's Circulars
Copyright
Privacy Policy
Terms of Service


Back to Story