COLUMBIA, SC — Richland County has agreed to no longer collect the hospitality tax from private clubs, after settling a lawsuit last week.
The owner of Darrell’s Place, the late Darrell Holmes, ignored county notices and owed $74,000 in back taxes by the time he filed suit against the county in October 2008.
Holmes maintained he should not have to pay the taxes because he didn’t have a kitchen and didn’t serve prepared foods. Besides, the only patrons of private clubs are members, said Hank Wall, the lawyer for Darrell’s Place.
“The logic of the hospitality tax is to tax the tourist so we can create more tourist-funded attractions,” Wall said. “There are no tourists coming into these private clubs.”
The settlement was finalized last week in the Richland County Court of Common Pleas. It extends to all non-profit, private clubs in Richland County that are not licensed to prepare food, Wall said.
Pam Davis, director of Richland County’s business service center, said in an email that about 15 private clubs paid about $19,000 in hospitality taxes to Richland County last year.
Hospitality taxes are collected on restaurant meals but also commonly on ready-to-eat or prepared foods like those available in the deli section of grocery stores.
At Darrell’s Place, about the only food served was pickled eggs, nuts and potato chips.
Originally, the Darrell’s case was a broad attempt to define “prepared foods,” a court determination that could have had statewide importance. But Wall said since Darrell’s didn’t serve meals, his client did not have the legal standing to argue the point.
“We feel like we got a just result and a fair settlement from the county,” Wall said.
According to the settlement, the county agreed to pay legal fees of $28,500 and Darrell’s Place would not be liable for the hospitality taxes, penalties and interest Holmes had refused to pay.
He passed away in 2011.
Reach Hinshaw at (803) 771-8641.