How did RR 95-18 treat current-year property taxes in a South Carolina delinquent-tax sale and redemption?

Plain-English summary

South Carolina Revenue Ruling 95-18 explained how to include the current year's property tax in a delinquent-property tax sale and later redemption.

The forfeited land commission's bid had to cover all unpaid taxes, penalties, and costs, including taxes levied for the year in which the redemption period began. If the county had not yet set millage and could not calculate those current taxes, the tax sale had to be delayed.

The delinquency notice and sale advertisement did not independently have to state current taxes or a minimum bid. But if either document stated the minimum bid, it had to include current taxes or clearly say they would be added after determination.

The successful bidder's amount attributable to current taxes was held during redemption. If the property was not redeemed, those funds were applied to the current taxes at the end of the period. If the property was redeemed, the bidder received the funds back with the redemption interest.

Under the historical rule, a person redeeming within 12 months paid 8% interest on the entire bid, including the current-tax portion. The defaulting taxpayer remained liable for current taxes and late-payment penalties during redemption because the bidder's held funds paid those taxes only if the property was not redeemed.

Common questions

Q: Could the county hold the sale before current-year millage was set? No. The ruling required delay until current taxes could be computed.

Q: Did the sale advertisement have to list current taxes? Only if it stated a minimum bid; then it had to include them or say they would be added later.

Q: Was redemption interest calculated on current taxes too? Yes. RR 95-18 applied 8% to the entire bid.

Q: Did the bidder's payment stop penalties from accruing against the defaulting owner? No. The ruling said the defaulting taxpayer remained liable for current-tax penalties upon redemption.

Q: Are the 12-month period and 8% rate current? This page establishes only the 1995 rules. Current law and county practice should be checked.

Citations and references

• S.C. Code Ann. §§ 12-51-40 and 12-51-55 (notice and commission bid)
• S.C. Code Ann. §§ 12-51-60, 12-51-80, and 12-51-90 (sale proceeds and redemption)
• S.C. Code Ann. §§ 12-37-610 and 12-51-130 (owner liability and possession during redemption)
• S.C. Code Ann. § 12-45-180 (historical late-payment penalties)
• Act No. 90, Section 3 (enactment identified in the ruling)

Subject

Redemption of Property

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR95-18.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214

SC REVENUE RULING #95-18 (TAX)

SUBJECT:

Redemption of Property
(Property Tax)

EFFECTIVE DATE:

June 7, 1995

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCES:

Act No. 90, Section 3
SC Code Section 12-51-40 (Supp. 1994)

AUTHORITY:

SC Code Ann. Section 12-4-320 (Supp. 1994)
SC Revenue Procedure #94-1

SCOPE:

A Revenue Ruling is the Department of Revenue's official advisory
opinion of how laws administered by the Department are to be applied
to a specific issue or a specific set of facts, and is provided as guidance
for all persons or a particular group. It is valid and remains in effect
until superseded or modified by a change in the statute or regulations
or a subsequent court decision, Revenue Ruling or Revenue Procedure.

On June 7, 1995, the governor signed into effect Act No. 90 which contains a section adding
Section 12-51-55 to the South Carolina Code of Laws. This section provides:
The officer charged with the duty to sell real property and mobile or manufactured
housing for nonpayment of ad valorem property taxes shall submit a bid on behalf of the
forfeited land commission equal to the amount of all unpaid property taxes, penalties, and
costs including taxes levied for the year in which the redemption period begins. If the
property is not redeemed, the excess above the amount of taxes, penalties, and costs for
the year in which the property was sold must first be applied to the taxes becoming due
during the redemption period.
Several questions have arisen concerning the implications of this law. This ruling will address
these questions and provide guidance as to how this statute is to be implemented. For simplicity,
"taxes becoming due during the redemption period" are referred to in this ruling as "current taxes".

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1.Q.

This legislation provides that a bid on behalf of the forfeited land commission must include
taxes levied for the year in which the redemption period begins. Notifications are required
to be sent to the defaulting taxpayer (Section 12-51-40) which in some cases may be sent
before the county sets its tax levy on the property for the current year. Must the "current
taxes" be included in this notification?

A. Section 12-51-40 contains the specifications for the notices required for levying against
property for delinquent taxes. Paragraph (a) of this section states that the officer who is
executing the levy against the defaulting taxpayer shall:
. . . mail a notice of delinquent property taxes, penalties, assessments, and costs to
the owner of record . . . . The notice must specify that if the taxes, penalties,
assessments, and costs are not paid, the property must be advertised and sold to
satisfy the delinquency.
This section states that the notice sent to the defaulting taxpayer should include the
amount of delinquent taxes but makes no mention of the taxes which will become due on
the property. Hence, the notice requirements of Section 12-51-40 do not mandate the
inclusion of the amount of the taxes levied for the year in which the redemption period
begins. However, if the notice informs the defaulting taxpayer of the minimum bid
required to purchase the property, it must include the "current taxes", or a statement
making it clear that it will include the current taxes when they are determined.
2.Q.

Must the advertisement required by Section 12-51-40(d) include the "current taxes" on
the property?

A. Code Section 12-51-40(d) requires that the property levied upon be advertised for sale at
public auction. The advertisement must include the delinquent taxpayer's name and a
description of the property. There is no statutory requirement that a minimum bid amount
be included in the advertisement; however, if the minimum bid amount is included in the
advertisement, it must include the "current taxes", or a statement making it clear that it
will include the "current taxes" when they are determined.
3.Q.

If the county is late in establishing its millage for the tax year, should the tax sale be
delayed until the amount of the property taxes for that year are determined?

A. As quoted above, Section 12-51-55 requires that the bid for the property levied upon
must include taxes levied for the year in which the redemption period begins. Therefore,
the tax sale must be delayed until the millage is decided upon and the taxes on the
property can be computed.

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4.Q.

When a bid is accepted, how is the amount attributable to the "current taxes" treated?

A. Code Section 12-51-60 requires the person officially charged with the collection of
delinquent taxes to turn over the proceeds collected from the successful bidder to the
treasurer after deducting expenses of the sale. The treasurer will then distribute the funds
to the entities who are owed the taxes, penalties, and interest (Code Section 12-51-80).
However, Section 12-51-55 states that "[i]f the property is not redeemed, the excess
above the amount of taxes, penalties, and costs for the year in which the property was
sold must first be applied to the taxes becoming due during the redemption period".
Hence, at the end of the redemption period, if the property is not redeemed, the excess
funds held by the treasurer would then be applied to the "current taxes" and distributed
accordingly. Also, the taxes owed on the unredeemed property would not go into
execution nor would such taxes include penalties because the acceptance of the bid
presumes payment of the taxes from the bid if the property is not redeemed.
5.Q.

Must the person redeeming the property pay eight percent interest on the entire bid
amount, including the amount attributable to the "current taxes"?

A. Code Section 12-51-90 provides that a person may redeem property within 12 months
from the date of the delinquent tax sale "by paying to the person officially charged with
collecting delinquent taxes, assessments, penalties, and costs, together with eight percent
interest on the whole amount of the delinquent tax sale bid". Therefore, the person
redeeming the property must pay eight percent of the entire bid amount, including the
amount attributable to "current taxes".
6.Q.

If the defaulting taxpayer pays the "current taxes" after the penalty date, is the penalty
due even though the county holds the bidder's payment of an amount equal to these
taxes?

A. Code Section 12-45-180 provides penalties for the late payment of property taxes,
requiring an additional 3% if payment is not made before January 16th, an additional 7%
if payment is not made before February 2nd, and an additional 5% if payment is not made
by March 17th. This section further states:
If the taxes, assessments, and penalties are not paid before the seventeenth day of
the next March, the county treasurer shall issue his tax execution to the officer
authorized and directed to collect delinquent taxes, assessments, penalties and
costs for their collection as provided in Chapter 51 of this title and they must be
collected as required by that chapter.
However, as stated above, an amount equal to the "current taxes" has been collected from
the successful bidder on the property and is held by the treasurer for distribution to the
taxing entities to which it is due. Hence, the question becomes have the taxes been paid
when the treasurer is holding the funds from the successful bidder for future distribution.

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Code Section 12-37-610 states that the owner of real property is liable to pay taxes and
assessments on his property. Section 12-51-130 further states that the defaulting taxpayer
is not dispossessed of the property until expiration of the redemption period provided in
Section 12-51-90. In Opinion of the Attorney General, No. 84-27, p.67 (1984), the issue
of redemption of property sold for nonpayment of property taxes was considered. The
Opinion concluded that when property is sold for nonpayment of property taxes, the taxes
accruing during the redemption period are the liability of the defaulting taxpayer. Finally,
the funds the treasurer holds equal to the "current taxes" are only applied to taxes if the
property is not redeemed. They are paid by the bidder and used to pay taxes on the
(bidder's) property if the property is not redeemed. If the property is redeemed, the funds
are refunded to the bidder along with 8% interest. Hence, the penalty due on the "current
taxes" during the redemption period are the liability of the defaulting taxpayer and must
be paid upon redemption.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank, III, Director
Columbia, South Carolina
December 21
, 1995

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