Taxes paid to wrong county

INDIAN LAND -- An error by the S.C. Department of Revenue caused 31 Indian Land businesses to incorrectly pay sales taxes to York County.

The S.C. Department of Revenue lists 29707 -- the ZIP code for the Lancaster County community of Indian Land -- as a York County ZIP code, an error that has led many of the area's businesses to pay taxes to the wrong county.

Now, they're finding out it may be tough to get that money back.

Lancaster County Administrator Steve Willis said he learned about the problem after the fire marshal noticed the wrong prefix on a retail license for Phantom Fireworks.

After further investigation, they discovered the problem was more widespread.

Willis said he contacted the Department of Revenue, which referred him to a state statute that says such errors can only be corrected for future tax payments, but not retroactively.

The error has now been corrected, according to Willis, but he said he was not able to estimate how much tax revenue should have gone to Lancaster County instead of York County.

The error applies only to the local 1-cent sales tax, so the funds would have been applied to the "Pennies for Progress" program in York County. Instead, Willis said they should have been used to roll back Lancaster County residents' property taxes via the local option sales tax.

A revenue department official said the state won't reveal how much tax money went to the wrong county.

"The way we pick up that information is off the tax return, and it is confidential information and not subject to disclosure," said Adrienne Fairwell, a spokesperson for the department.

Cases like this have happened before, Fairwell added.

"It's not a normal course of business, but it's not an unprecedented case," Fairwell said. "Usually, the counties will work it out themselves."

Fairwell said the information the state revenue department has, including ZIP code information, is supplied by individual counties and any error would have been made by the county.

However, Willis countered that he is confident no one in Lancaster County directed the department of revenue to send a portion of their taxes to York County.

"We're nice folks, but we're not that generous," Willis said.

York County Finance Director Beth Latham said Friday that she didn't immediately know how much money was incorrectly given to York County and that it will take time to determine the amount.

Returning that money to Lancaster County would require a vote by the York County Council, she said.

Latham reported the problem to York County Council Chairman Buddy Motz this week, and said she'll wait to hear from the council to determine her next step.

Meanwhile, she said she is pulling numbers to determine exactly how much revenue came from Indian Land.

When the money came in, Latham said she didn't notice the error, probably because the affected Indian Land businesses have Fort Mill addresses. Indian Land is an unincorporated area, designated as "Fort Mill" by the U.S. Post Office.

Double-checking the location of each business in the report -- which involves more than 2,000 businesses -- would be a difficult task, she said.

The 31 Indian Land companies, whose names were supplied by the Department of Revenue, range from large businesses such as Cemex Construction Materials on Shelley Mullis Road to small businesses, including Ed Shelton's home-based carpet cleaning company, Green Clean Steamer.

Shelton was surprised to hear that his taxes were among those paid to York County instead of Lancaster County. But he said his small business doesn't typically pay more than $50 a year in sales tax, which isn't a huge loss to Lancaster County, he added.

"My taxes are very small," Shelton said. "I'm not a big store with big sales. But on the other hand, it concerns me for the people running big stores. That's a lot of money going to the wrong place."

Because of the tax error, Willis said it's more important than ever to have a Lancaster County business license to help ensure that businesses pay their taxes to the correct county. Willis said he is working with the Lancaster County Chamber of Commerce to develop such an ordinance.

When the ordinance is complete, it will be presented to the council.

"This is one more reason that county business license needs to be considered in the future," Willis said in a memo to the council. "The money lost from sales as well as unreported business inventory taxes, coupled with the fees from a modest business license could (significantly) reduce property taxes within Lancaster County."