Municipalities and counties across South Carolina are now in their third license year under the South Carolina Business License Tax Standardization Act, or Act 176.
After the law’s passage in 2020, the initial efforts of local governments focused on conforming their business licensing practices to the law’s requirements. With those initial hurdles cleared, many are now focusing on specific areas of application and enforcement, such as assessments, denials, suspensions and revocations. This shift highlights the need for municipalities to develop comprehensive rules of procedure and evidence for handling business license appeals.
Both Act 176 and the model business license ordinance created by the Municipal Association of SC require appeal hearings in certain circumstances, but neither source sets procedures or evidentiary rules for the conduct of the hearing. Act 176 does specify the process for assessments, which can guide other appeal proceedings. This process does not control other enforcement areas, however. Local governments should develop and adopt procedures and rules of evidence for the administration of appeals hearings.
Hearings on business license appeals
For assessment appeal hearings, Act 176 mandates the right to representation by counsel, presentation of testimony and evidence, and cross-examination of witnesses. To make sure that the local government provides due process to all taxpayers, it should incorporate these rights into all procedures and rules of evidence that it adopts.
Here are some other aspects that should be addressed:
- Notice requirements – Provide clear guidelines on how to serve notices of denial, suspension or revocation, which can make sure all parties receive timely and adequate notifications. Local governments should rely on a method that provides proof of service.
- Hearing officers – Designate the individual or the body to oversee the general adjudication of the hearing. The city or town council may serve in this role, but in smaller municipalities issues may arise where hearing officers are required to provide testimony based on their role in administering the business license program.
- Admissible evidence – Specify the types of evidence that can be presented in a hearing. To make sure that taxpayers receive due process, local governments should err on the side of including evidence. Though general objections for relevancy may be appropriate, it is typically advisable to not require strict compliance with the South Carolina Rules of Evidence. Any contested question of relevancy should be construed in favor of the taxpayer.
- Hearing procedures – Outline the hearing’s format, including the order of presentations, time limits and opportunities for cross-examination. Note that all deliberation should occur in open session, so long as the confidentiality of protected information shall be maintained.
- Decision-making process – Establish how the hearing body will reach its decision and how that decision will be communicated to the parties. The local government should also make provisions for the drafting and delivery of a final written order.
Standardized rules of procedure and evidence
By proactively developing and adopting clear rules of procedure and evidence, local governments can navigate the complexities of business license appeals effectively and provide due process for all parties involved. This approach ultimately fosters transparency, consistency and equity, benefiting both the local government and taxpayers.
The Municipal Association has drafted standardized rules of procedure and evidence for appeals. Copies are available upon request from either the Association’s General Counsel Eric Shytle at eshytle@masc.sc, or Associate General Counsel Sara Weathers a sweathers@masc.sc.
Find the SC Business License Handbook online.