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24810 - TNS Mills, Inc. v. S.C. Department of Revenue

Davis Adv. Sh. No. 25
S.E. 2d

THE STATE OF SOUTH CAROLINA

In The Supreme Court





TNS Mills, Inc., Respondent,

v.

South Carolina

Department of Revenue, Appellant/Respondent,

and

County of Cherokee,

Cherokee County School

District No. 1, and

Cherokee County

Council, Appellants.













Appeal From Richland County

William P. Keesley, Judge





Opinion No. 24810

Heard December 4, 1997 - Filed July 13, 1998





REVERSED





Frank W. Cureton and Margaret C. Pope, of Sinkler

& Boyd, P.A., of Columbia, for appellants,





General Counsel Harry T. Cooper, Jr., Chief Counsel

for Revenue Litigation Ronald W. Urban, and Counsel

for Revenue Litigation Sarah G. Major, all of the

South Carolina Department of Revenue, of Columbia,

for appellant/respondent.

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TNS MILLS, INC. v. SC DEPT. OF REVENUE, et al.





Moffatt G. McDonald, of Haynsworth, Marion, McKay

& Guérard, L.L.P., of Greenville, for respondent.





WALLER, A.J.: In 1992, respondent TNS Mills, Inc. filed

amended tax returns for tax years 1985 through 1991 asking for exemptions

for its pollution control equipment. After a hearing, the Commission of the

Department of Revenue1 refused TNS's request. The circuit court reversed

the Commission's decision. This appeal is from the order of the circuit court,

We reverse.





FACTS

TNS operates greige mills in Spartanburg and Cherokee Counties. TNS

was entitled to an exemption for pollution control equipment for the tax years

1986 through 1991 pursuant to S.C. Code Ann. § 12-37-220(A)(8) (Supp. 1980-

1992). Property tax returns have a line on which taxpayers report certain

pollution control equipment in order to have that amount exempted from the

assessed value of their property. On its tax returns for 1986 through 1991,

TNS left these lines blank.





Pollution control equipment typically forms an integral part of the

production process in a greige mill; therefore, assigning a separate value to

a greige mill's pollution control equipment is difficult. To remedy this

problem, the South Carolina Textile Manufacturer's Association (SCTMA) and

the Department negotiated and agreed in the mid-1980s that the Department

would reduce the assessed value of greige mills by 20%. TNS was not a

member of the SCTMA, and the Department reproachably did not publish the

policy, so TNS was unaware of the 20% compromise. The Department

assessed TNS's greige mills at 100% of their value throughout the late 1980s.





In 1992, TNS filed amended property tax returns with the Department

claiming a property tax exemption for pollution control equipment for tax


1 Until its name was changed in 1993, the Department was known as

the South Carolina Tax Commission. In 1993, it became the South Carolina

Department of Revenue and Taxation, and in 1996, its name was shortened

to the South Carolina Department of Revenue. Until February 1, 1995, the

Department was governed by three Commissioners. To avoid confusion, this

opinion will refer to the agency as the Department and the three men who

initially heard the case as the Commission.

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years 1986 through 1991. The Property Division of the Department (Property

Division) granted the exemptions and mailed amended assessment notices to

Spartanburg and Cherokee Counties, thereby reducing the assessed value of

TNS's mills and entitling TNS to a refund. Spartanburg County issued TNS

a refund in excess of $400,000. Cherokee County (County) and Cherokee

County School District Number I (School District) opposed the granting of the

exemptions and appealed to the Commission. After a hearing, the

Commission determined TNS was not entitled to the retroactive property tax

exemptions it was trying to claim. On appeal, the circuit court reversed the

decision of the Commission. County, School District, and Department,

referred to collectively hereafter as appellants, are appealing this decision.2





ISSUES

I. Did TNS fulfill the statutory requirements for applying for the pollution

control exemption when it filed its original tax returns?



II. Did the Department have the authority under section 12-4-730 of the

South Carolina Code to grant TNS a retroactive exemption?





III. Does section 12-37-975 of the Code give the Department the authority

to grant a retroactive exemption?



IV. Does section 12-47-420 of the Code allow a refund?



V. Did the Commission's decision violate equal protection?



VI. Did the Commission err when it refused to let James Brodie testify?



VII. Was the 20% policy a valid exercise of the Department's authority?

DISCUSSION



I Original tax returns

The circuit court found TNS did in fact timely apply for the exemptions

for pollution control equipment by merely signing its tax returns for the years

in question. Appellants argue this was error. We agree.


2The only issue about which appellants and appellant/respondent

disagree is whether the 20% policy was a valid exercise of the Department's

authority. With regard to this issue, the Department is a respondent.



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Initially, this issue should not have been addressed by the circuit court

because TNS admitted in its brief to the Commission that it filed its tax

returns for the years in question without claiming an exemption for pollution

control equipment. An issue conceded in a lower court may not be argued

on appeal. Ex parte McMillan, 319 S.C. 331, 461 S.E.2d 43 (1995).

Accordingly, the circuit court erred when it considered this issue.





If the issue had been disputed, the findings of the circuit court would

be erroneous. The General Assembly has the power to provide for methods

and procedures in applying for exemptions for the purpose of property taxes,

S.C. Const. Art. X, § 3. According to the General Assembly, a taxpayer does

not automatically get an exemption for pollution control equipment, but must

apply for it. During the tax years in question and at the time TNS filed its

amended returns, a taxpayer was required to file an application before the

sixteenth day of the fourth month after the close of the accounting period

regularly employed by the taxpayer for income tax purposes to claim an

exemption for pollution control equipment. S.C. Code Ann. § 12-4-720 (Supp.

1991-1992) (amended in 1994 and 1995); S.C. Code Ann. § 12-3-145(B) (Supp,

1985-1990) (repealed 1991). The Department was required to determine

annually which exemptions it would grant and notify the appropriate county

officials by June first of each year. S.C. Code Ann. § 12-4-710 (Supp. 1991-

1992); S.C. Code Ann. § 12-3-145(A) (Supp. 1985-1990) (repealed 1991).





The burden is on claimants to prove their rights to an exemption by

bringing themselves clearly within the conditions imposed by the statute.

York County Fair Assoc. v. South Carolina Tax Comm'n, 249 S.C. 337, 341,

154 S.E.2d 361, 363 (1967); see also Asmer v. Livingston, 225 S.C. 341, 82

S.E.2d 465, 466 (1954)(a refund of taxes is solely a matter of governmental

grace, and taxpayers seeking such relief must bring themselves clearly within

the terms of the statute authorizing a refund). One is estopped to claim an

exemption with respect to property included in the list of taxable properties

and for which no exemption has been claimed before the taxing officers. 84

C.J.S. Taxation § 226 (1954).





TNS did not clearly comply with the requirements for applying for an

exemption. Taxpayers may apply for exemptions separately from their tax

returns, thereby filing two forms instead of one. Or, as most taxpayers do,

they may apply for an exemption on their tax returns. TNS did not file a

separate application, nor did it apply on its tax returns. As noted above,

Schedule 55, Gross Plant Account Summary, appears on TNS's filed tax

forms. This schedule instructs the taxpayer to list gross capitalized cost of

seven different items in order to have their value exempted from the

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TNS MILLS, INC. v. SC DEPT. OF REVENUE, et al.



taxpayer's taxable property. Item number six is "Water & Air Pollution

Equip." In order to claim an exemption for this type of equipment, a

taxpayer must indicate the value of the equipment on line six and attach a

list of this type of equipment. On all of its returns, TNS left item number

six blank and did not attach a list, thereby including its pollution control

equipment in its taxable properties. Clearly, TNS did not intend to apply for

this exemption when it filed its tax returns.





The tax forms filed by TNS had the following preprinted language

above the preparer's signature line: "By filing this return within the time

prescribed by law, I hereby make application for exemption from county taxes

in accordance with the provisions of Section 12-37-220(A)(7)(8) Code of Laws

of South Carolina." Relying on the presence of preprinted language, the

circuit court found, "TNS made a request for all exemptions for pollution

control devices by executing this pre-printed form." Appellants argue this

finding is erroneous. We agree.



The preprinted language has effect only if the taxpayer acts as the form

requires by claiming an amount of exempted property on Schedule 55 and

separately listing property. The presence of this language without the

required information does not comprise an application for an exemption.

Furthermore, testimony at the hearing revealed the purpose of the preprinted

language was not to give the exemption to every taxpayer who signed a

return, but to enable a taxpayer to apply for an exemption and file tax

returns with the same form.





Accordingly, the lower court should not have decided this issue, and its

finding that TNS timely filed exemption applications for tax years 1986

through 1991 was erroneous because TNS's tax filings were too incomplete

to clearly satisfy the requirements of the code.





II. Authority to grant retroactive exemptions

The circuit court found the plain language and the history of S.C. Code

Ann. § 12-4-730 (Supp. 1992) gave the Department the authority to grant

retroactive exemptions. Appellants argue this was error. We agree.





A. Plain Language

Section 12-4-730 states,

The [Department], upon receipt of an application and upon proper

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TNS MILLS, INC. v. SC DEPT. OF REVENUE, et al.



investigation, may declare the real and personal property of a

property owner qualifying for an exemption from ad valorem

taxation identified in this chapter as exempt and shall certify the

exemption to the auditor's office in the county in which the

property is located. Upon certification by the [Department], the

auditor shall void any tax notice applicable to the property.





S.C. Code Ann. 12-4-730 (Supp. 1992). In construing statutory language, the

statute must be read as a whole, and sections which are part of the same

general statutory law must be construed together and each one given effect.

Higgins v. State, 307 S.C. 446, 415 S.E.2d 799 (1992). The Court must

presume the legislature did not intend a futile act, but rather intended its

statutes to accomplish something. State ex rel. McLeod v. Montgomery, 244

S.C. 308, 136 S.E.2d 778 (1964). The language of a tax exemption statute

must be given its plain, ordinary meaning and must be strictly construed

against the claimed exemption. John D. Hollingsworth On Wheels, Inc. v.

Greenville County Treasurer, 276 S.C. 314, 278 S.E.2d 340 (1981).



TNS asserts the lack of deadline in section 12-4-730 means the

Department can grant retroactive exemptions. However, this section must

be read together with the other sections in Article 7, and nothing in this

section modifies section 12-4-720(A)(2)'s mandatory deadline for applying for

an exemption.3 In fact, if 12-4-730 is interpreted as allowing retroactive

exemptions, the mandatory deadlines set by the General Assembly are

rendered meaningless. As the Commission noted, "[T]here would be no

purpose in establishing deadlines if failure to meet them was of no

consequence."



Furthermore, an interpretation allowing retroactive exemptions would

not fit with the procedural scheme set out by the General Assembly. The

Code requires the Department to make annual determinations concerning

exemptions and to notify the appropriate county officials of what property


3Section 12-4-720(A)(2) (Supp. 1991-1992) states, "Owners of property

exempt under [the pollution control exemption] shall file an application

before the sixteenth day of the fourth month after the close of the accounting

period regularly employed by the taxpayer for income tax purposes. . . ."

(emphasis added). Ordinarily, the use of the word "shall" in a statute means

that the action referred to is mandatory. South Carolina Dep't of Highways

and Pub. Transp. v. Dickinson, 288 S.C. 189, 191, 341 S.E.2d 134, 135 (1986).

The plain language is clear; a taxpayer is required to apply for the exemption

by the stated deadline.

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TNS MILLS, INC. v. SC DEPT. OF REVENUE, et al.



was exempted from taxation by June first. S.C. Code Ann. § 12-4-710 (Supp.

1992). The interpretation advanced by TNS would negate the purpose of

notifying county officials by June first because the information given them

would be worthless; the amount of exempted property, would change every

time the Department granted a retroactive exemption.



The plain language of these Code sections, when read together, show

the legislature intended to set clear deadlines for applying for exemptions as

part of an overall plan to enable counties and school districts to plan budgets

for each fiscal year. Any interpretation allowing the Department to grant

exemptions after the deadline would negate the benefit of this plan.



B. Statutory History



1. Brodie's Interpretation

In support of its construction of the statute, TNS points to the

interpretation James Brodie, the Director of the Property Division, gave to

section 12-4-730's predecessor, section 12-3-145(B). According to Brodie's July

3, 1990 memo which was sent to all assessors, auditor, treasurers, and tax

collectors, the new amendments4 to this section gave the Department the

authority to accept applications for exemptions at any time. This amendment

did not give the Department the authority to accept late applications, but

merely clarified that it had the authority to decide whether any property, not

just that of churches, parsonages, and burying grounds, met the requirements

for exemptions.





Although Brodie believed the Department had the authority to grant

retroactive exemptions, and exemptions may have been granted under this

erroneous view, neither the Commission nor the courts are bound by his

erroneous interpretation. Fennell v. South Carolina Tax Comm'n, 233 S.C.

43, 48, 103 S.E.2d 424, 427 (1958); Colonial Life & Accident Ins. Co. v. South

Carolina Tax Comm'n, 233 S.C. 129, 151, 103 S.E.2d 908, 919 (1958).



2. Other Statutory History


4TNS incorrectly argues Brodie's memo referred to the 1991 revision

which moved the procedure for applying for exemptions from section 12-3-145

to sections 12-4-710 through -760. However, Brodie's memo was written in

1990; the amendments he was addressing in his memo could not have been

the 1991 revisions which were not effective until July 1, 1991.

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TNS MILLS, INC. v. SC DEPT. OF REVENUE, et al.



According to the circuit court, "[t]he history of this statute demonstrates

that, at one time, almost all manufacturers were late in filing their

applications and that this statute was designed and amended to give [the

Department] the authority to accept late applications." We disagree.



As noted earlier, during the tax years in question, a taxpayer who

wished to file an application to exempt pollution control equipment had to do

so by the sixteenth day of the fourth month after the close of the accounting

period regularly employed by the taxpayer for income tax purposes.5 S.C.

Code Ann. § 12-3-145(B) (Supp. 1985-1990) (repealed 1991). The Department

was required to determine annually which exemptions it would grant and

notify the appropriate county officials by June first of each year. S.C. Code

Ann. § 12-3-145(A) (Supp. 1985-1990) (repealed 1991). For good cause shown,

the Department could waive the required deadline for applying for

exemptions, but it could not extend the deadline beyond the penalty date for

taxes due, and the late taxpayer was penalized. S.C. Code Ann. § 12-3-

145(F) (Supp. 1985-1990).





In 1985, the legislature added language to section 12-3-145(B) which

allowed the Department to declare churches, parsonages, and burying

grounds exempt. Act No. 3, 1985 S.C. Acts 5 (effective March 1, 1985). Two

months later, the legislature added a provision allowing churches and

parsonages to file an application for an exemption at any time. Act No. 53,

1985 S.C. Acts 95 (effective April 29, 1995, codified at S.C. Code Ann. §12-3-

146 (Supp. 1985)).





Testimony at the hearing revealed the procedure for applying for

exemptions outlined in section 12-3-145 created an administrative problem

because the deadline for applying for an exemption was two weeks earlier

than the deadline for filing returns. Since as a practical matter, most

taxpayers requested their exemptions with their returns, the Department

would have to deny exemptions for being late. Then the General Assembly

would grant extensions, and the Department would then grant the

exemptions it had previously denied.





In 1985, the General Assembly extended the deadline for filing

exemption applications for the 1981, 1982, 1983, 1984, and 1985 tax years

until July 1, 1985. Act No. 3, 1985 S.C. Acts 5. In 1987, the deadline for

applying for exemptions for the 1985, 1986, and 1987 tax years was extended




5For calendar year taxpayers like TNS, the deadline for applying for an

exemption would be April 15.

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TNS MILLS, INC. v. SC DEPT. OF REVENUE, et al.





until July 1, 1987. Act No. 64, 1987 S.C. Acts 126. In 1988, the deadline for

the 1985, 1986, 1987, and 1988 tax years was extended until July 1, 1988.

Finally, in 1990, the General Assembly granted its last extension, postponing

the deadline for exemption applications for the tax years 1988 and 1989 until

July 1, 1990.





In 1991, the legislature revised and recodified the procedure for

applying for property tax exemptions. Act No. 50, 1991 S.C. Acts 152

(codified at S.C. Code Ann. §§ 12-4-710 to 760 (Supp. 1991)). Substantively,

the requirements remained the same. However, section 12-3-146, which

allowed churches and parsonages to apply for an exemption at any time, was

omitted. Section F, which gave the Department the discretion to accept late

applications for exemptions before the penalty date for paying taxes, was also

omitted. After the 1991 revision, the legislature has not again extended the

deadline for applying for exemptions.





Contrary to the lower court's holding, the legislative history of these

statutes does not show the Department has the authority to accept late

applications; in fact, the only inference arising from the legislative history is

that only the General Assembly may extend the application deadline. The

legislative history indicates the General Assembly did not want the deadline

for applying for extensions to be discretionary, so it took away the

Department's authority to grant even short term extensions. Furthermore,

since the General Assembly has not granted another extension since before

the 1991 revision, we can infer it intended for the revision to end the practice

of granting extensions.



Since nothing in the plain language or the history of these procedural

statutes gives the Department the authority to grant retroactive exemptions,

the lower court erred in finding the Department could do so.



III. Section 12-37-975

The circuit court found that S.C. Code Ann. § 12-37-975 (Supp. 1992)

gave the Department the discretion to accept amended returns filed after the

date they were due and that the Department properly exercised its discretion

here. Appellants argue the court should not have reached this issue because

it was not raised to the Commission. We agree. This issue was neither

raised to nor ruled on by the Commission; therefore, the circuit court erred

in addressing it. Kiawah Resort Assocs. v. South Carolina Tax Comm'n, 318

S.C. 502, 458 S.E.2d 542 (1995) (the circuit court ordinarily may not consider

issues that were not raised to and ruled on by the administrative agency).

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If the issue had been raised, this section does not provide authority for

granting the relief requested by TNS. Section 12-37-975 provides:



The Department of Revenue may permit any person to substitute

an amended return for the original return up to the last day

prescribed for filing the return, including any extension of time

granted by the department. The department in its discretion

may accept or reject an amended return filed after the time

prescribed for filing the return.





S.C. Code Ann. § 12-37-975 (Supp. 1992). Statutes, as a whole, must receive

practical, reasonable, and fair interpretation, consonant with the purpose,

design, and policy of lawmakers. Whiteside v. Cherokee County Sch. Dist.

No. 1, 311 S.C. 335, 428 S.E.2d 886 (1993). Subtle or forced construction of

statutory words for the purpose of expanding a statute's operation is

prohibited. Walton v. Walton, 282 S.C. 165, 318 S.E.2d 14 (1984).



The circuit court failed to recognize the distinction between amended

returns and applications for exemptions. This section may allow the

Department to accept an amended tax return, but to interpret it to allow

them to grant a retroactive exemption effectively writes the deadlines for

applying for an exemption out of the Code. Furthermore, the circuit court's

interpretation creates an absurd distinction; the deadlines for applying for

exemptions would apply to taxpayers who applied on separate forms, but the

deadlines would not apply to taxpayers who applied on their tax returns.

Consequently, if the issue had been preserved, the circuit court wrongly gave

a forced interpretation to this section, thereby expanding its operation to

allow TNS the relief it requested.





IV. Section 12-47-420

The circuit court relied on S.C. Code Ann. § 12-47-420 (Supp. 1992)

(repealed by Act No. 60, 1995 S.C. Acts 405) when it found in favor of TNS.

That section stated:



Whenever after due hearing the Commission by majority vote

shall determine that any tax has been paid under an erroneous,

improper or illegal assessment, the Commission shall order the

officer having custody of the tax so erroneously, improperly or

illegally paid to refund it . . . .



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Appellants argue this issue is procedurally barred and the court's reliance on

this statute was misplaced. We agree.





To the Commission, TNS argued this section supported its argument

that the plain meaning of section 12-4-720(A) gave the Commission the

authority to grant retroactive exemptions. TNS claimed that if the

Department had the authority to grant a retroactive exemption, then this

section provided for a refund. The Commission did not rule on the meaning

of this section. Then, for the first time, TNS argued to the circuit court that

this section standing alone allowed a refund based on American Hardware

Supply Co. v. Whitmire because the assessment was erroneous. 278 S.C. 607,

300 S.E.2d 289 (1983). Since this issue was not raised to and ruled on by

the Commission, it is procedurally barred. Kiawah Resort Assocs. v. South

Carolina Tax Comm'n, 318 S.C. 502, 458 S.E.2d 542 (1995).



In any event, section 12-47-420 does not authorize a refund for TNS.

The Court in American Hardware ruled a taxpayer who paid property taxes

on exempt property during tax years 1974, 1975, and 1976 was entitled to a

refund under section 12-47-420. During those years, taxpayers were not

required to file an application in order to receive an exemption; by law, the

property was automatically exempt. In that case, the assessment of

automatically exempt property was ruled to be erroneous, illegal and

improper, and the taxpayer was granted a refund. Here, TNS's property was

not automatically exempt; it was required to apply for an exemption which

it failed to do. Consequently, its property was not exempt and it did not pay

taxes on exempt property. The assessment of its property was therefore not

erroneous, illegal or improper, and this statute does not authorize a refund.



V. Equal Protection

The court below found that despite TNS's failure to meet the statutory

requirements for an exemption, it could receive a retroactive exemption

because it had been treated differently from other similarly situated

taxpayers in violation of the equal protection clauses of the federal and state

constitutions. U.S. Const. amend. XIV; S.C. Const. art. 1, § 3. Appellants

argue the lower court's ruling was erroneous because TNS's equal protection

argument was procedurally barred and because TNS cannot establish a

violation of equal protection. Even if this argument were not procedurally

barred, we agree the lower court erred in finding an equal protection

violation.

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In order to establish an equal protection violation, a party must show

that similarly situated persons received disparate treatment. Grant v. South

Carolina Coastal Council, 319 S.C. 348, 354, 461 S.E.2d 388, 391 (1995).





TNS cannot show it is similarly situated to another group of taxpayers.

The lower court believed TNS was similarly situated to two different groups

of taxpayers. The first group identified in the order are TNS's competitors

who received the benefit of the unpublished 20% policy. However, TNS is not

similarly situated to this group; the group of competitors who benefitted from

the 20% policy only received this benefit because they applied for the

pollution control exemption. As it admitted to the Commission, TNS did not

apply. If, for example, TNS had applied and been given a 10% exemption,

it could claim it was treated differently from other similarly situated

taxpayers. However, TNS did not apply, and it cannot complain of disparate

treatment.





The second group of similarly situated taxpayers identified by the

circuit court were other manufacturers who were granted exemptions in spite

of late applications. The record does not show these taxpayers and TNS were

similarly situated. As noted earlier, the Property Division failed to enforce

the deadline against taxpayers who applied for their exemptions when they

filed their returns and therefore missed the April 16 deadline by two weeks.

These taxpayers were not similarly situated to TNS who filed years, not

weeks, after the deadline. Furthermore, the record contains no evidence that

any taxpayer other than TNS received a refund as a result of the Property

Division's interpretation.





Moreover, TNS cannot establish "arbitrary and purposeful

discrimination" on the part of the Commission. As discussed earlier, the

Department does not have the authority to waive the application deadline

and annual determination requirements of Article 7. The Commission was

correcting the erroneous view of the Property Division, not singling out TNS

for unfair treatment. Neither the Commission nor the courts are bound by

the previous erroneous interpretation of the Property Division. Fennell v.

South Carolina Tax Commission, 233 S.C. 43, 4-8, 103 S.E.2d 424, 427 (1958);

Colonial Life & Accident Ins. Co. v. South Carolina Tax Commission, 233

S.C. 129, 151, 103 S.E.2d 908, 919 (1958).



VI. Exclusion of Witness James Brodie

During the hearing in front of the Commission, TNS offered the

testimony of James Brodie, the Chairman of the Property Division. Brodie

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authored the documents establishing the 20% standard exemption for

pollution control equipment and establishing the Department's policy

regarding retroactive tax exemptions. Brodie was also the employee who

confirmed TNS's refund. The Commission did not allow Brodie to testify.

The circuit court found "the Commission utilized an improper procedure for

disqualifying a witness that would require a remand, at the very least."

Appellants argue this finding was erroneous. We agree.





At common law, all witnesses were presumed to be competent except

very young children.6 South Carolina Dep't of Social Servs. v. Doe, 292 S.C.

211, 355 S.E.2d 543 (Ct. App. 1987). A witness has to be capable of

expressing himself and has to understand the obligation to tell the truth to

be qualified to testify. State v. Green, 267 S.C. 599, 230 S.E.2d 618 (1976);

Abbott v. Columbia Mills Co., 110 S.C. 298, 96 S.E. 556 (1918). The

determination of the competency of a witness is a matter that rests within

the discretion of the trial court, or as here, the Commission; their

determination should not be reversed absent a clear abuse of discretion. In

re Robert M., 294 S.C. 69, 362 S.E.2d 639 (1987).





At the hearing, Brodie's psychiatrist testified she did not believe Brodie

would be a reliable witness because lie was suffering from major depression

and the stress of testifying would render him unable to speak. According to

the psychiatrist, Brodie could not speak in stressful situations, and his

anxiety would cause him to "say anything just to get out of the hot seat."

She believed being forced to testify would be detrimental to his treatment.

The Commission decided to exclude Brodie.





Although it did not make these arguments to the Commission, TNS

now argues that a court cannot exclude a witness merely because of mental

illness and that the psychiatrist did not state to a reasonable degree of

medical certainty that Brodie would more likely than not lie. However, the

Commission's decision to exclude Brodie was not an abuse of its discretion

since the only testimony offered showed Brodie would have been unable to

express himself on the stand and would have possibly not told the truth.





Also, TNS cannot prove it was prejudiced by the Commission's decision.

First, it failed to make a proffer of what Brodie's testimony would have been.

See State v. Anderson, 304 S.C. 551, 406 S.E.2d 152 (1991)(where there is no

proffer of excluded testimony, the Court is unable to determine whether the


6This hearing was held on March 24, 1994, before the South Carolina

Rules of Evidence were adopted.



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complaining party was prejudiced by the refusal to admit the testimony into

evidence). Second, the record indicates TNS requested that Brodie be allowed

to testify by affidavit, answering questions submitted by the parties.

Although TNS suggested this procedure, it did not avail itself of the

opportunity to question Brodie in this manner as did appellants. Accordingly,

since the Commission's decision was supported by the evidence and TNS

cannot prove it was prejudiced, the circuit court erred when it found the

Commission had abused its discretion by excluding Brodie.





VII. 20% Policy7



Appellants County, School District, and County Council argue the 20%

policy on which TNS based its retroactive exemption is illegal. Since TNS

should not have been granted a retroactive exemption, this issue is moot and

need not be addressed.





CONCLUSION

Accordingly, the opinion of the circuit court is reversed, and the

Commission's decision that the pollution control exemptions may not be

retroactively granted to TNS is reinstated.





REVERSED.

FINNEY, C. J. , TOAL, MOORE and BURNETT, JJ. , concur .








7Again, this is the only issue raised by appellants County, School

District, and County Council with which the Department did not agree.

Therefore, the Department will be a respondent with regard to this one issue.





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