Because property valuations change over time, South Carolina has adopted an extensive set of rules dealing with the valuation of real property.

The South Carolina Constitution mandates that “the assessment of all property shall be equal and uniform.” This requirement is further codified in SC Code Ann. §12-43-210 which provides: (i) that all property must be assessed uniformly and equitably throughout the state; and (ii) that no assessment program may be implemented in a county unless all real property in the county, including real property classified as manufacturing property, is reassessed in the same year. To accomplish this goal, South Carolina has adopted a Quadrennial reassessment program which requires each County or the State to appraise and equalize those properties under its jurisdiction. (Manufacturing real property is appraised by the Department of Revenue and all other real property is appraised by the County Assessor). The appraisal is required to be done by the end of December of the fourth (4th) year (with notice being sent to taxpayers of any increase in value over $1,000) with the reappraised values used in the fifth (5th) year.

The County may postpone the implementation of revised values resulting from the equalization program for one (1) year.

Much confusion abounds about the value established in the County wide Quadrennial reassessment program. As noted earlier, the County wide reassessment program is to be done every five (5) years. Some counties defer the reassessment and that deferral, as well as the December 31, 2006 BaseYear value, causes confusion. For example, if prior to December 31, 2006 the last County widereassessment program was implemented in 2004, the December 31, 2006 Base Year value was theDecember 31, 2003 County wide reassessment value. Since property must be reassessed every five (5)years, the next reassessment value would be the December 31, 2008 value even if the county deferredreassessment until 2010. This year’s countywide reassessment uses December 31, 2013 values eventhough the reassessment is being done in 2015.

Additional confusion arises if a taxpayer wished to challenge the appraised value of his property in a countywide reassessment year. In reviewing the value, both the taxpayer and Assessor are required to value the property not at the current value (the fair market value of the property in the year the appeal takes place), but at the value of the property as of December 31, 2013.

As noted earlier, Quadrennial reassessments are mandatory. Prior to the enactment of the South Carolina Real Property Valuation Reform Act, South Carolina property owners were faced with increasingly higher property tax bills following reassessments. To slow the ever-increasing property tax burden, a fifteen percent (15%) cap was placed on any increase in value attributable to the Quadrennial County wide reassessment. Over time, the fifteen percent (15%) cap will potentially significantly depress the assessed value of real property. If the fifteen percent (15%) cap is triggered, it will be shown on the Reassessment Notice.

As noted above, both the Constitution and the South Carolina Code require that “[a]ll property must be assessed uniformly and equitably throughout the State.” Each County Assessor is charged with the responsibility to assess all assessable property in the County, other than property of manufacturers

(which is assessed by the South Carolina Department of Revenue and property exempt from ad valorem taxation).

Real property is generally valued using three commonly accepted methods:

1) The Income Capitalization Approach;2) The Sales Comparison Approach; and3) The Cost Approach.

The Income Capitalization Approach is in the last analysis, a process whereby the appraiser assumes that a purchaser of, or investor in, commercial real estate buys the real estate with the expectation of earning an annual percentage of the purchase price (capital investment) of the commercial [income producing] property. If the property is commercial and under long-term lease, the net annual rental (assuming a depreciation factor consistent with replacement of the property at the end of the lease or the retained value thereof), is divided by the desired yield on the capital investment. The formula is: net annual rental/required yield (such as 12%) = the purchase price.

The Sales Comparison Approach is a valuation method that looks at the resale value of the individual parcel alone to determine its fair market value. A subset of this approach is Mass Appraisal Method (also called the CAMA or Computer Assisted Mass Appraisal) utilized in a countywide reassessment. The resale value of an individual parcel is determined by making adjustments to the value of the comparable properties to approximate the value of the property appraised. The Mass Appraisal Method looks at the sales from a region to determine the value per square foot of property sold and applies that value to the square footage of the assessed property.

The Cost Approach utilizes the cost of real property to establish its value. (“Evidence of the purchase price of the assessed property while not conclusive is to be accorded substantial weight on the issue of fair market value”. 84 C.J.S, Taxation §576c)

Each approach can lead to a different valuation and variations within each approach can lead to different valuations.

Taxpayers often disagree with the county tax assessor on valuation. The South Carolina Revenue Procedures Act, SC Code Ann. §12-60-1730, et seq. sets for the appeal procedure which needs to be followed in the appeal of any property tax assessment or denial of an exemption.

A taxpayer may appeal any property tax assessment by filing a written protest with the County Assessor. In the case of a countywide reassessment, a taxpayer meets the written notice requirement by requesting in writing to meet with the Assessor. In years in which there is a County wide reassessment, the taxpayer must give the Assessor written notice of his/her objection to the Assessor’s determination of fair market value, special use value, the assessment ratio or the property tax assessment (which would include denial of an exemption). The written notice of objection must be given to the Assessor within ninety (90) days after the Assessor mails the property tax assessment notice. For the 2015 Reassessment Year, the Notice of Objection must be filed on or before December 23, 2015. In all other years, a

taxpayer may appeal the fair market value, the special use value, the assessment ratio or the property tax assessment at any time during the year. The appeal must be submitted to the Assessor in writing. In Non-Assessment years, the appeal may be filed at any time before the first penalty date for the property tax year. This date is typically around the 15th of January. If an appeal is submitted after that date, the appeal is for the year in which the appeal is filed.

There is no form or formal language that needs to be filed to perfect an appeal. In fact, the statute simply provides: “A property taxpayer may object to a property tax assessment made by a county assessor by request in writing to meet with the Assessor within the time limits provided in SC Code Ann. §12-60-2510. This written request is a notice of objection for purposes of this subarticle.”

Once the written request is filed with the Assessor, the Assessor schedules a meeting with the taxpayer to discuss the taxpayer’s protests. If the Assessor does not agree with the taxpayer, the Assessor hands the taxpayer or his representative a form and explains to the taxpayer that he may protest the Assessor’s decision by filing the form within thirty (30) days with the Assessor. Once the form is filed, the Assessor responds in writing and advises that the taxpayer has the right to appeal the Assessor’s decision to the County Board of Assessment Appeals. It should be noted that in valuation cases, a taxpayer will experience little success if he simply tells the Assessor that he disagrees with the Assessor’s value. To prevail, the taxpayer must demonstrate to the Assessor that the market data supports the taxpayer’s indication of value or that similarly situated properties are assessed at a value similar to the value claimed by the taxpayer.

If the taxpayer wishes to appeal the Assessor’s valuation, he may do so by filing, within thirty (30) days after the date of the Assessor’s response, an appeal to the County Board of Assessment Appealswith the County Assessor. It is important to note that the appeal is filed with the County Assessor, not theCounty Appeals Board. An extension of time to file an appeal may be granted by the Assessor if therequest for an extension of time is timely filed within the thirty (30) day filing period.

The County Board of Tax Appeals may rule on “any of the elements of the property tax assessment, and claims of a legal or factual nature”. It may not rule on claims relating to property tax exemption or constitutional issues. The proceedings are informal and the Board Assessment Appeals may take evidence and hear the testimony of witnesses.

Once the appeal has been filed, the Board of Assessment Appeals notifies the taxpayer of the date of the appeals conference. At least fifteen (15) days before the appeals conference, the Assessor is required to file with the Board:

(i) A copy of the original property tax assessment;(ii) The written protest of the property taxpayer;(iii) A written response to the taxpayers protest; and(iv) Copies of documents and a brief description of evidence to be presented by him.

The Assessor must also mail copies of all documents filed with the Board to the taxpayer.

The taxpayer must submit to the Board and the Assessor fifteen (15) days before the conference:

(i) Copies of all documents to be submitted to the Board; and(ii) A brief description of the evidence to be presented.

Seven (7) days prior to the conference, the Assessor and the taxpayer may each provide the Board and the opposing party with a response to the material supplied to the Board by the taxpayer.

At the conference, the Assessor provides the Board with evidence supporting his assessment and the taxpayer provides the Board with evidence supporting his position. As noted above, the procedure is informal. Following the conference, the Board renders a written decision.

Within thirty (30) days after the date of the Board’s written decision the taxpayer or the County Assessor may appeal the decision made by the Board of Assessment Appeals to the Administrative Law Judge Division. The appeal is styled as a request for a contested case hearing and is filed along with the filing fee required by Rule 71 of the Administrative Law Judge Division Rules. The request for a Contested Case Hearing must be filed with the Administrative Law Judge Division (with a copy served on the County Assessor) and must contain:

(i) The name of the taxpayer;(ii) A caption sufficient to identify the nature of the appeal;(iii) A copy of the County Board of Assessment Appeal’s decision; and(iv) A description of the relief requested. ALJ Rule 11

The Administrative Law Judge assigned to the case will issue a Notice of Contested Case Hearing at least thirty (30) days before the hearing date. At the hearing, the administrative law judge will give an opening statement and the taxpayer and assessor will be given an opportunity to make an opening statement and present evidence. Following the hearing, the administrative law judge will issue an Order which may be appealed by the Assessor or the Taxpayer. The appeal is to the South Carolina Court of Appeals.

If an appeal is not resolved by December 31st, the property tax due for that year will be adjusted to eighty percent (80%) of the amount otherwise due. Once the appeal has finalized, a new tax bill will be issued reflecting the amount owed by the taxpayer, or if the tax has been paid and a refund is due the taxpayer, a refund will be issued to the taxpayer.