## Facts

- Charitable and fraternal organizations operated bingo in South Carolina under Class AA and Class B licenses to raise funds for charitable purposes.
- South Carolina’s statutory scheme regulated charitable bingo through licensing, operational limits, and recordkeeping requirements.
- The scheme imposed both (1) a sales tax on gross bingo proceeds and (2) separate bingo-specific taxes under the bingo statutes.
- Class AA and Class B licenses differed in permitted session frequency and prize limits, and the tax and regulatory burdens differed by class.
- The organizations sought refunds of bingo-related taxes paid from July 1, 1992, through September 30, 1997 (with statutory repeal effective October 1, 1997), asserting constitutional defects and an implied constitutional tax exemption.
- The Department of Revenue denied refunds; an administrative law judge and the circuit court affirmed the denial.
- After an earlier appeal resolved certain statutory construction matters and remanded, the remaining disputes centered on constitutional challenges and related refund claims.

## Issues

1. Whether the state constitution implicitly exempts charitable organizations conducting bingo from taxation, making the bingo taxes unconstitutional as applied.
2. Whether the statutory distinctions among bingo license classes and corresponding tax and regulatory burdens violate equal protection principles.
3. Whether the organizations were entitled to tax refunds for the 1992–1997 period based on alleged constitutional invalidity of the tax scheme.

## Decision

- The Supreme Court of South Carolina affirmed the circuit court’s rejection of the remaining constitutional challenges.
- The court held the constitution did not create an implied tax exemption for charitable bingo operators.
- The court upheld the statutory classifications and differing burdens among license classes under rational-basis review.
- Because the taxes were validly imposed on the constitutional theories asserted, the organizations were not entitled to the requested refunds for the relevant period.

## Legal Principles

- The legislature’s taxing power is broad unless the constitution expressly restricts it.
- Tax exemptions are strictly construed against the taxpayer and generally must be expressly stated; courts will not infer an exemption from constitutional authorization of an activity absent clear text.
- Economic and taxation classifications are reviewed under rational-basis standards; the legislature has wide discretion, and classifications are upheld if reasonably related to legitimate governmental purposes.
- Regulatory goals such as controlling gambling and raising revenue can supply a rational basis for differentiated licensing regimes and associated tax burdens.

## Conclusion

The court upheld South Carolina’s bingo tax and regulatory scheme as applied to charitable bingo operators, rejecting an implied constitutional exemption and finding the licensing and tax classifications rational; the taxpayers therefore were not entitled to additional refunds for the pre-repeal period.


Fraternal Ord. of Police v. S.C. Dep’t of Revenue, 352 S.C. 420, 574 S.E.2d 717 (S.C. 2002)