To ensure property owners are paying their property tax at the correct rate, Dorchester County will begin a, year-long, legal residence audit on February 2, 2018.
The goal of the program is to recover lost property tax revenue, owed to the County and school districts, by discovering and collecting on improperly claimed exemptions.
In South Carolina, taxpayers are eligible for a four percent legal residence assessment and an exemption from property taxes levied for school operations, on their primary owner-occupied residence. Occasionally, however, taxpayers claim exemptions on properties that do not qualify, including:
- Vacation Homes
- Multiple Homes
- Rental Properties
- Other properties in which the owner does not primarily live
Basis for the Audit
South Carolina Code of Laws Section 12-43-220 (vii)(A)If a person signs the certification, obtains the four percent assessment ratio, and is thereafter found not eligible, or thereafter loses eligibility and fails to notify the Assessor within six months, a penalty is imposed equal to one hundred percent of the tax paid at the four percent rate, plus interest on that amount at the rate of one half of one percent a month, but in no case less than thirty dollars nor more than the current year’s taxes. This penalty and any interest are considered ad valorem taxes due on the property for purposes of collection and enforcement.
If a taxpayer wishes to voluntarily report a misfiled legal residence assessment, they may do so with the Assessor’s Office and will only have to pay the difference in taxes with no penalty for applicable years.
Once the audit begins on February 2, 2018, there will be no method to relieve a taxpayer of their obligation to forfeit taxes paid and pay the taxes at 6% for those years considered.
How will the Audit be conducted?
A temporary, full-time Legal Residence Audit Coordinator has been hired as approved by County Council in the FY 2018 Budget.
The County will use data received via TransUnion research tools to identify violations of the 4% Legal Residence Assessment Ratio.
Data will consider various points, including, but not limited to:
- A residence owned in another jurisdiction receiving the exemption
- Trusts with multiple properties receiving the exemption
- Certificates of death
- Changes in marital status
- Location of registered vehicles
Owner Notifications and Penalty
Owners will be notified once a violation is confirmed and will be required to pay the taxes due at the 6% assessment ratio. The taxes paid, previously, at the 4% assessment ratio are forfeited, plus interest, as the penalty.
Each taxing entity (municipalities, County, school districts etc.) will receive their allocation of the taxes at 6% and the County will retain the penalty portion to offset the administrative costs of completing the audit in-house.
The audit will consider three tax years; the current and two previous years. If activity is fraudulent (i.e. violation addressed in previous audit), there is no limitation in the law as to how far the County can look back.