Overview

Some property owners in Lexington School Districts One and Four will receive a one-time reimbursement on their 2011 property tax notices. The purpose is to return overpayments for school lease purchase agreements that occurred as the result of a ruling made by the SC Supreme Court. Lexington County’s  House and Senate Delegations, at the request of both school districts, enacted a joint resolution,  Act 87 of 2011(PDF) as  the sole remedy for providing  the reimbursements to  property within these two school districts that had the 4% owner occupied (legal residence)  tax rate during tax years 2007 and 2008. 

Act 388 of 2006 was passed by the SC General Assembly to provide property tax relief for home owners.  Among other things, it exempts real property with the 4% legal residence tax rate from property taxes for school operation purposes.  In substitution, the State of South Carolina provides school districts with the proceeds of a one cent statewide sales tax.

In response the SC Department of Revenue issued an opinion stating their interpretation of Act 388. It took the position that any lease purchase agreements, for construction projects, included as part of school districts operating accounts, would not be eligible for the new one cent statewide sales tax. Several school districts across the state challenged the opinion with a lawsuit because they had included lease purchase agreements as part of their operations.

Lexington County School District One and Four had actually complied with the Department’s opinion and continued to levy and collect property taxes for lease purchase agreements separate from school operations.  However, in an effort to determine whether or not the Department of Revenue opinion was correct the two Lexington school districts decided to join the lawsuit.

In 2009, the SC Supreme Court ruled in favor of the school districts in the case Berkley County School District et al v. South Carolina Department of Revenue(PDF).  This required that all lease purchase agreements, including those entered into for the purpose of construction projects, be reimbursed by the SC Department of Revenue with the statewide sales tax created by Act 388. 
 

In 2010, The SC Department of Revenue reimbursed all plaintiff school districts for their lease purchase agreements which should have been paid for by the statewide sales tax during tax years 2007 and 2008. At that time there was no effective means under the law whereby the homeowners living in the two Lexington school districts could legally be reimbursed for these two years.  Both school districts wanted to ensure that their citizens were treated fairly so they requested local legislators to enact a legal means that would allow for reimbursements. 

Lexington County’s House and Senate Delegations worked with both school districts and county officials to find the most economical and efficient method whereby citizens could be reimbursed. Property ownership is continuously changing and the county’s tax billing system only maintains information on a property’s current owner according to the property tax map number (TMS). As a result, the cost involved to research, locate and issue a refund check to the owners and prior owners of every eligible property was deemed impractical. 

All reimbursements will be applied as a credit to the 2011 property tax notices according to the eligible property’s tax map number (TMS).  Property tax notices with amounts due that are less than the credit amount can apply for a refund check of the difference with the Lexington County Treasurer’s Office. The Lease Purchase Refund Application (PDF).  Please be sure to read the application instructions very carefully.   All applications require a signature and must be received by November 30, 2012.  All credits and refunds are calculated and applied with interest. 

A list of available Lease Purchase refunds (PDF).