South Carolina Tax Appeal Dismissed Over Bond Error
The court ruled that failing to meet formal bond requirements for tax disputes can result in the loss of an appeal.
Updated on Sept. 29, 2026 in Taxes
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The South Carolina Court of Appeals dismissed a tax appeal filed by Watertoys LLC, which sought to challenge admissions taxes on parasailing operations. The court found the taxpayer failed to properly satisfy state statutory bond requirements before filing the appeal.
Why it matters
This ruling clarifies that tax appeal procedures strictly require payment to the Department of Revenue or a formal bond. Utilizing an attorney's IOLTA account for disputed tax funds does not meet these statutory jurisdictional requirements for challenging an assessment.
The 5-page ruling underscores that state tax appeals must adhere to strict payment or bonding procedures outlined in South Carolina Code Section 12-60-3370. Failing to properly escrow funds with the Department of Revenue can result in the dismissal of a case.
The players
South Carolina Court of Appeals
The intermediate appellate court that enforces state procedural rules for tax disputes and civil litigation.
Watertoys LLC
A business entity that contested state admissions tax assessments related to its parasailing operations.
The details
The taxpayer attempted to secure their appeal by depositing disputed tax funds into an attorney's Interest on Lawyer Trust Account rather than following the formal statutory process. The court determined this approach was insufficient because interest on IOLTA accounts is directed to the South Carolina Bar Foundation, making the funds unavailable as the required security for the state. Consequently, the court held that the appeal was not properly perfected and could not proceed.
Timeline
September 29, 2026: The South Carolina Court of Appeals published the dismissal ruling.
Money Landscape
Taxpayers operating in South Carolina must navigate strict jurisdictional hurdles when seeking to contest state tax assessments. This ruling reaffirms the necessity of complying with established statutory bond procedures to avoid procedural dismissal of financial appeals.
If you are considering challenging a state tax assessment, ensure you verify the specific payment or bonding requirements with the Department of Revenue before moving forward. Consult with a qualified tax professional to confirm that any held funds satisfy legal escrow standards.
The takeaway
Procedural compliance is a prerequisite to having a tax appeal heard in court. Always verify that any funds set aside for a potential legal challenge meet the exact statutory requirements defined for your specific tax jurisdiction.
Further reading
For more on managing state-level financial obligations, review our guide to Taxes.
Source note: This article includes information reported by South Carolina Lawyers Weekly.
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