Appeals Court issues ruling on Horry County, Myrtle Beach tax collection feud

The South Carolina Appeals Court is not going to allow Horry County to resume collecting the hospitality tax in Myrtle Beach and other municipalities for the duration of the appeal process.

Last month, Horry County filed an appeal asking a high court to overrule an order from Judge William Seals Jr. that barred the county from collecting a 1.5 percent tax on hospitality services until the trial is over. Myrtle Beach sued the county over the collection back in March.

Seals also mandated the municipalities not to spend the revenue from the tax and keep it in a third-party trust.

On Wednesday, the appeals court said Seals’ order will stand during the appeals process, but the appeals court can still overturn the ruling in a final decision.

Currently, Myrtle Beach and Horry County are preparing for day two of pre-trial mediation on Aug. 10. The first day went 13 hours with no resolution.

If mediation proves unsuccessful, next up will be settling Horry County’s appeal, which Seals said must be resolved before the main lawsuit can continue.

How we got here?

Horry County’s collection of 1.5 percent of the hospitality tax stemmed from a 1996 vote to help short-and long-term transportation needs. As part of the program, the tax called a hospitality fee would apply to Horry County municipalities.

The money funded a road-improvement program throughout the county. With the program originally set to expire in 2017, it was extended in perpetuity by Horry County Council that same year without Myrtle Beach’s renewed consent.

In 2018, county officials voted to dedicate the hospitality funds toward public safety and building I-73. Council’s decision resulted in Myrtle Beach, North Myrtle Beach and Surfside Beach all passing ordinances earlier this year allowing them to collect the tax and barring the county from collecting any hospitality taxes the municipalities collect within their borders starting July 1.

In March, Myrtle Beach, on behalf of itself and the other municipalities, sued Horry County over its collection of the hospitality tax, a uniform tax imposed on sectors of the hospitality industry, including prepared meals, food and beverages sold in or by establishments.

As part of the suit, the city claimed the county needed consent from municipal leaders to continue to collect the tax within city limits after the program expired. Myrtle Beach asked the judge to prevent the county from collecting the tax as the lawsuit was heard.

While county officials argued Myrtle Beach was going to destroy any plans to construct I-73, municipal leaders in a May news conference said the purpose of the lawsuit was about home rule and protecting taxpayers, not an attempt to kill I-73.

Since then, both Horry County and Myrtle Beach have continued to file motions to take control of the tax.

In June, Seals ordered Horry County to cease collecting the fee in the municipalities. He allowed the municipalities to collect the fee, but they must keep the revenue in a third-party trust.

Horry County then appealed that decision soon after.

Check myrtlebeachonline.com for ongoing coverage of the hospitality fee dispute.

This story was originally published August 7, 2019 at 4:35 PM.