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Richland County suing state over sales tax collections

COLUMBIA, S.C. (AP) — Richland County is suing the state Department of Revenue, claiming it’s overstepping its authority by withholding sales taxes and interfering with how local authorities spend the money.

The State newspaper reports the county filed the lawsuit Friday in Richland County and hopes for a court hearing next month, before the agency’s next $16 million payment to the county is due in July.

The lawsuit is the latest move in a months-long dispute over the county’s use of penny-on-the-dollar sales tax collections intended for transportation improvements. The tax has generated more than $156 million since it took effect in May 2013 following voters’ approval in 2012.

The Department of Revenue announced last December that an audit had uncovered evidence of possible corruption, fraud and millions in wasteful spending. It turned over its findings to the State Law Enforcement Division, which continues to investigate. Last month, Revenue told the county it would withhold further payments until changes were made.

The lawsuit claims the state’s tax collection agency is trying to “usurp” the county’s authority to manage its own affairs by making “absurd” and “contradictory” interpretations of state law. It also contends the state agency’s micromanagement “will set a dangerous precedent” for any county with a penny sales tax program.

“The statute under which the penny tax was created does not give the Department of Revenue the authority to in any way interfere with the payment of that tax,” said Ned Nicholson, an attorney for the county.

Revenue spokeswoman Ashley Thomas said the agency started its investigation to “ensure transparency, accountability and appropriate expenditure of taxpayer dollars. … We remain committed to protecting the public and their tax dollars.”

The agency’s criticism include allegations the county improperly hired the program’s management team, paid exorbitantly for public relations work and paid the start-up costs for a small-business program.

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