October 22, 1987

Mr. John R. Steele 
Aurora County State's Attorney 
Plankinton, South Dakota 57368

OFFICIAL OPINION 87-38  

Penalty for late payment of rural electric company tax

Dear Mr. Steele:

You have requested an official opinion on the following factual situation: 

A rural electric company subject to the tax imposed by SDCL 10-36 operates in Aurora County.  SDCL 10-36-8 provides that the tax so levied is due and payable on September 1st.  SDCL 10-36-9 provides for a penalty  of 5% per month for any delinquency. 

The Aurora County Treasurer has received payment of the tax in question.  Payment was received through the United States mail.  The payment was actually received by the county treasurer on September 3, 1987.  The envelope in which the payment was received was postmarked September 3, 1987.  The check in payment of the tax was dated August 31, 1987.

Based upon the above facts, you have asked the following questions:

QUESTIONS: 

1.   Is the penalty provided for by SDCL 10-36-9 mandatory or may it be waived at the discretion of the county treasurer? 

2.   If the penalty is mandatory and a county treasurer fails to collect it, what liability does the county treasurer have? 

3.   Is the penalty of 5% for a month or any fraction of a month, or should it be prorated for the proportion of the month that the payment is late? 

4.   If the penalty is assessed by the county treasurer, whether or not it is mandatory that the treasurer assess it, does the board of county commissioners have the authority to abate or waive such a penalty if, in the opinion of the county commission, it would be unjust to assess it?

You have also stated that the circumstances put forth by the rural electric  company in support of the proposition that the assessment of penalty would be unfair include the following: 

1.   The late payment was a result of an innocent and inadvertent mistake made by a new person who was responsible for paying the tax and not realizing there was a deadline for payment;  and 

2.   That other counties served by the same REA were paid at the same time and have accepted the payment without assessing the penalty.

BACKGROUND:

The statute in question, SDCL 10-36-8, states that the tax becomes due and payable to the county treasurer on September 1st of each year following the reported gross receipts.  If the tax is not paid on the due date a penalty of 5% of the amount of the tax shall be imposed for each month of such delinquency.  (SDCL 10-36-9.)  The statute is plain and admits of no variance in carrying it out i.e., the tax must be paid on September 1st and thereafter a penalty of 5% is due.  This Office has held that such payment, when required by statute, is mandatory and may not be abated.  1955-56 AGR 326.

This Office has also previously held that the county commissioners may not abate penalty and interest on taxes and the failure of the county treasurer to pay over the correct amount of money shall necessitate a suit to be instituted  against the county treasurer and sureties in the circuit court of the county. 1955-56 AGR 402 and SDCL 7-11-18.

IN RE QUESTION NO. 1:

The penalty provided by SDCL 10-36-9 is mandatory and may not be waived by either the county treasurer or the board of county commissioners.

IN RE QUESTION NO. 2:

If the county treasurer fails to collect the appropriate penalty, the county treasurer and his bond are jointly and separately liable for the amount of loss to the county.

IN RE QUESTION NO. 3:

The statute states that the penalty is 5% per month which means that at the end of the month the penalty would be assessed for the month or if paid during the interim, a prorata share of 5% for the number of days in the month prior to payment.

I base this conclusion upon the difference in language used by the  legislature in imposing interest and penalty provisions on ordinary real estate taxes as provided in SDCL 10-21-23.  There it provides that on the first day of May and on the first day of each and every month thereafter there shall be added the specific amount of penalty and interest.

IN RE QUESTION NO. 4: 

See the answer to Question No. 2.

Respectfully submitted,

Roger A. Tellinghuisen
Attorney General