THE STATE OF SOUTH CAROLINA
In The Supreme Court
Fraternal Order of Police, Charleston Lodge #3, Pet
Helpers, Inc., d/b/a Shipwatch Bingo, Am-iy Navy Union
Garrison #2020, Faith Temple Full Gospel Fellowship
Church, A Terre Des Hommes USA, Inc., Cherokee
Suicide Intervention Center, Inc., Army Navy Garrison
#2165, Lexington Voiture 1211 La Societe Des 40 & 8
d/b/a Sunset Bingo, United Veteran Association, Inc.
Roadrunners Softball Association, Inc., United Society
of the Blind of Greenwood, The Good Samaritan
Mission Center d/b/a Beacon Bingo, Fraternal Order of
the Elks (BPOE), Greenville Lodge No. 858, Piedmont
Historical Society d/b/a Great American Bingo, Pilgrim's
Inn, Inc., West Main Community Club, Ms. Wheelchair
South Carolina, Inc., Citizens for Advancement of the
Physically Handicapped, Post 174 American Legion -
Ladies Auxiliary, HF Help Corporation, Army Navy
Garrison #2156, Cherokee Gaffney Sertoma Club 10752,
South Carolina Dairy Goat Association, Grand Strand
Optimist Club d/b/a Galaxy Bingo, Miss Dillon County
Beauty Pageant, Inc., Church in the Lord Jesus Christ
of The Apostolic Faith, Inc. - Chesterfield Church in the
Lord Jesus Christ of the Apostolic Faith, Inc. - Lake
City, Church in the Lord Jesus Christ of the Apostolic
Faith, Inc. - Darlington, Church of the Lord Jesus
Christ of the Apostolic Faith, Inc. - Lynchburg,
Dovesville Rural Fire Department, Union Baptist
Church, VFW #3181,
South Carolina Department of Revenue,
AFFIRMED IN PART; REVERSED IN PART;
Appeal From Richland County
Marc H. Westbrook, Judge
Opinion No. 24838
heard February 18, 1998 - Filed September 14, 199E
Joseph Alton Bivens and Gerald M. Finkel, both of
Finkel & Altman, L.L.C., of Columbia; and Mark A.
Mason, of Mason Law Firm, P.A. of Mt. Pleasant, for
Ronald W. Urban, Harry T. Cooper, Jr., and Jeffrey
M. Nelson, all of the South Carolina Department of
Revenue, of Columbia, for respondent.
FINNEY, C.J.: This is a tax refund case brought by bingo
operators. The Department denied the refund, and that ruling was
affirmed by the administrative law judge and the circuit court. We affirm
in part and reverse in part.
This appeal requires the Court to construe several statutes
which were repealed effective October 1, 1997. The parties have stipulated,
however, that our decision will govern liability and refunds for the period
July 1, 1992 to September 30, 1997.
The first issue is whether bingo taxes collected pursuant to S.C.
Code Ann. §§ 12-21-3440(B) and 12-21-3441 (Supp. 1997) are included in
gross proceeds so as to be subject to the sales and use tax imposed by S.C.
Code Ann. § 12-21-3610 (Supp. 1997). The Department, the administrative
law judge, and the circuit court judge held the bingo tax was a component
of gross proceeds and thus subject to the sales tax. We disagree, and
The Bingo Act's definitional statute defined "gross proceeds" as
"the total amount received from the sale of bingo cards and entrance fees
charged at locations in which the bingo is conducted." S.C. Code Ann. §
12-21-3320(8) (Supp. 1997). Statutory language is to be given its plain and
ordinary meaning. McClain v. South Carolina Dep't of Educ., 323 S.C. 132,
473 S.E.2d 799 (1996). Under the primary bingo tax statute, Class AA and
B license holders collect a "per player" bingo tax while Class D and E
holders remit a bingo tax calculated as a percentage of gross proceeds.
Compare § 12-21-3440(B)(1) and (2) with § 12-21-3440(B)(4) and (5).
Statutes should not be construed so as to lead to an absurd result.
Carolina Power & Light v. Town of Pageland, 321 S.C. 538, 471 S.E.2d 137
(1996). As noted above, for Class D and E holders, bingo tax liability is
based on a percentage of their gross proceeds. To hold then, that the bingo
taxes are a component of gross proceeds demonstrates the reductio ad
absurdum of the Department's position. The bingo tax is not a component
of gross proceeds, and accordingly is not subject to the sales and use tax.1
The next issue is whether gross proceeds includes the monies
bingo operators are statutorily required to pay out as prize money under
§ 12-21-3420(12) (Supp. 1997). The circuit court held these funds are part
of the taxable gross proceeds, and that to adopt the operators' argument
that these funds are excluded would be to rewrite "gross proceeds" as "net
proceeds." We agree. The statute defines gross proceeds as "the total
amount received from the sale of bingo cards and entrance fees. . . .", and
provides no deduction for prize money or any other expense. The statutory
language is clear and unambiguous. McClain v. South Carolina Dep't of
Educ., supra. We affirm the circuit court order including prize money as
gross proceeds subject to the sales and use tax.
The third issue is whether the operators are entitled to a
refund of the sales taxes they paid on their retail purchases of bingo cards,
which they then resold to the players. The circuit court upheld the denial
of this refund request, holding (1) the resale of bingo cards is incidental to
the transaction2 between the operator and the player, which is the wager;
compelled to find the imposition of the sales tax upon the bingo tax an
improper "tax upon a tax." There is a strong presumption against such
double taxation, and statutes will be construed so as to permit it only
where legislative intent to do so is clear. Wingfield v. South Carolina Tax
Comm'n, 147 S.C. 116, 144 S.E. 846 (1928); Greystone Catering Co. v.
South Carolina Dep't of Rev., 326 S.C. 551, 486 S.E.2d 7 (Ct. App. 1997).
No clear intention sufficient to overcome the strong presumption exists
2 According to the "true object test", sales which are merely
incidental to the transaction and not its true object are not exempt from
the retail sales tax. See Journal of Multistate Taxation, vol. 5, No. 6, pp.
and (2) that the operators lack standing to pursue the refund of a retail
tax they paid. Operators first argue that while this standing holding is
technically correct, they are classified as retailers in this transaction only
because they have erroneously been denied a wholesaler exemption. We
find this argument is not preserved because although the operators raised
it to the circuit court, that court failed to rule on the issue and operators
failed to call this omission to the circuit court's attention in a Rule 59(e),
SCRCP, motion. Talley v. South Carolina Higher Educ. Tuition Grants
Comm., 298 S.C. 483, 347 S.E.2d 99 (1986). Were we to reach the merits
of this claim, however, we would agree the sale of the bingo cards is
merely incidental to the true object of the transaction between the
operators and the players. We therefore affirm the denial of this refund
For the reasons given above, the order of the circuit court is
affirmed in part and reversed in part, and the matter remanded to the
Department of Revenue for appropriate action.
AFFIRMED IN PART; REVERSED IN PART; AND
TOAL, MOORE, WALLER, and BURNETT, JJ., concur.
apply this analysis in this appeal.