Opinion
Opinion By: Jack Conway, Attorney General; Michelle D. Harrison, Assistant Attorney General
Open Records Decision
At issue in this appeal is whether the Kentucky Department of Revenue violated the Kentucky Open Records Act in denying Frank A. Wichmann's request for "a copy of each non-exempt document in [the Department's] entire file in regard to the property tax exemption of Tri-State Healthcare Laundry, Inc. identified in the enclosed letter of 12-21-1998 to Timothy Eifler." Although the Department initially failed to provide a brief explanation of how the cited statutory exceptions apply to any such records in violation of KRS 61.880(1), the Department minimally satisfied its burden of proof relative to KRS 131.190(1) and 131.081(15), incorporated into the Open Records Act by operation of KRS 61.878(1)(l), in subsequent correspondence; accordingly, this office does not reach the question of whether any of the records were properly withheld pursuant to KRS 61.878(1)(a), (i), or (j), or KRE 503. Consistent with prior decisions applying KRS 131.190(1) and 131.080(1), this office defers to the Department with regard to interpretation of confidentiality provisions binding on that agency in the absence of authority to the contrary.
By letter dated February 11, 2008, Thomas S. Crawford, Policy Advisor advised Mr. Wichmann of the Office of Property Valuation's position "that all documents in this file would be exempt from disclosure under the Open Records Act on the grounds that it constitutes confidential taxpayer information (KRS 131.190; 131.990(2); 133.047; 61.878(1)(a), (k) and (l))[,] correspondence with private individuals and preliminary memoranda (KRS 61.878(1)(i) and (j))." Citing KRS 61.880(1), requiring a "brief explanation of how the exception applies to the record withheld, " Mr. Wichmann subsequently argued that some of the documents in the requested file may fall within the parameters of KRS 61.878(1), but others, including the following do not: (a) the application for exemption; (b) correspondence between the Cabinet and the applicant; (c) "evidence and arguments" to the Division of Local Valuation, Department of Property Valuation for and against the application; (d) the decision granting tax exempt status to the applicant; (e) the appellate arguments for and against the decision granting tax exempt status; and (f) correspondence between the Department and others in addition to the applicant. In conclusion, Mr. Wichmann asked Mr. Crawford to comply with KRS 61.872(3)(b) "by providing me with copies of all documents in the referenced file other than those that you can separately identify with both: (1) a reference to the subsection of KRS 61.878 by which that document is exempted; and (2) a brief explanation of how the exception applies to that record."
By letter dated February 25, 2008, Douglas M. Dowell, Attorney Manager, Office of Legal Services, responded to Mr. Wichmann's letter, noting that upon further review the Department located two letters from and to him dated February 22, 1999, and January 25, 1999, respectively that were not exempt, copies of which he enclosed. In relevant part, Mr. Dowell explained:
The other documents would consist of a property tax exemption application and supporting information; related correspondence with the taxpayer or its representative; memoranda and similar documents containing legal analysis and advice by the then Revenue Cabinet's attorney; and correspondence to or from attorneys of other taxing jurisdictions concerning the matter.
There is also a document attached to the February 22, 1999, letter to you that appears to be an appeal to the Kentucky Board of Tax Appeals ("KBTA") concerning the Revenue Cabinet's decision to grant Tri-State Healthcare Laundry, Inc. an exemption from ad valorem taxation. This document did not purport to make the Cabinet a party. I believe I called the KBTA at one point and it appeared that this document was not filed. You may confirm whether this was the case by contacting the KBTA. [Contact information provided] 1 Neither the Department of Revenue nor its predecessor, the Revenue Cabinet, was or is the custodian of records relating to proceedings before the KBTA.
. . .
The ad valorem tax applications and supporting documentation and related correspondence would constitute taxpayer information plainly exempt from the Open Records Act under KRS 61.878(1)(l) in conjunction with KRS 131.190, 131.081(15), 133.047 and 131.990(2). It would also constitute information that is personal and private and likewise exempt from the Open Records Act's coverage. KRS 61.878(1)(a); KRS 131.081(15). . . .
Reiterating his argument relative to KRS 61.880(1) and the specificity of the Department's request, Mr. Wichmann initiated this appeal by letter dated March 20, 2008.
Upon receiving notification of Mr. Wichmann's appeal from this office, Mr. Dowell supplemented his response on behalf of the Department, advising that under Kentucky law "all real property must be assessed for property or ad valorem taxation unless an exemption authorized by or set forth in the Kentucky Constitution applies. Ky. Const. §§ 3, 170, 172, 174. Most of the exemptions are provided for in Ky. Const. § 170." As further explained by Mr. Dowell, exempt property is listed with the property valuation administration "in the same manner as taxable real property. See KRS 132.220(1), (2), (3), (4) and (6); 132.230." The PVA is the official who assesses property for ad valorem tax purposes "and he acts subject to the direction, instruction and supervision of the Department. See, e.g. KRS 132.420; 132.450. By the same token, the determination of whether property is exempt from taxation is directed by the Department. See KRS 132.220(7); 133.123." Mr. Wichmann has requested records concerning "a determination made by the Department nearly ten years ago with respect [to] whether a Tri-State Healthcare Laundry, Inc. was entitled to an exemption from property tax under Ky. Const. § 170. He has a copy of the December 21, 1998, determination itself." It is attached to his appeal.
In support of the Department's position, Mr. Dowell argues:
[Mr. Wichmann] continues to seek the exemption application itself and related correspondence from Tri-State Healthcare Laundry's representative. Attached is a copy of a blank application form (62A023). See also 103 KAR 3:030 § 1 (58). As we stated in response to this request, this material is exempt from disclosure under the Open Records Act under KRS 61.878(1)(a), (i) and (l). KRS 131.190 clearly prohibits the Department of Revenue or any of its employees, among others, from divulging any information acquired by the Department of its personnel concerning the affairs of any person as well as information regarding the tax schedules, returns or reports required to be filed with the Department or other proper officer or any information produced by a hearing or investigation. The Taxpayers' Bill of Rights provides that taxpayers shall have a right to privacy with regard to information provided on their Kentucky tax returns and reports, including any attached information and documents. KRS 131.041; 131.081(15). See also KRS 133.047(4). Attached are copies of the provisions of KRS Chapter 131, 132 and 133 referred to in this response in the order in which they appear in the Kentucky Revised Statutes.
The exemption application and related material would be exempt from the Open Records Act under these statutory provisions. KRS 61.878(1)(a) and (l). See e.g., OAG 83-167; OAG 83-178. The correspondence would also constitute correspondence with private individuals exempt from disclosure under the Act. KRS 61.878(1)(i).
Mr. Wichmann's request for evidence and legal arguments seeks material that does not exist, if I understand him correctly. The determination was based upon the property tax exemption application in consultation with the Department's counsel. As indicated above, the application and related material would fall under the protection of the confidentiality laws that govern the Department. The documents reflecting the legal advice and analysis of the Department's (then Revenue Cabinet's) attorney would be exempt from disclosure under the Open Records Act as privileged material. See KRS 61.878(1)(l); 447.154; KRE 503; CR 26.02. 2
As Mr. Dowell correctly asserts, Mr. Wichmann "appears to believe there should have been some trial-type hearing on the matter. Whether that should have been the case is an issue beyond the scope of this matter." Likewise, whether the decision should have been written differently or contained more detail is beyond the scope of this matter. The only existing records which are responsive to Mr. Wichmann's request are those described above; the Department "is positively forbidden by law from divulging much of this information - i.e., the exemption application and supporting and related material. See KRS 131.990(2)." In conclusion, Mr. Dowell notes that the "correspondence with others consists of letters to and from counsel for other taxing jurisdictions affected by the Department's determination." Upon closer scrutiny, the Department provided Mr. Wichmann with copies of this correspondence, which consists of two letters, contemporaneously with its final response. 3 With the exception of a procedural violation, this office finds no error in the Department's denial of Mr. Wichmann's request.
As a public agency, the Department is obligated to comply with the procedural and substantive provisions of the Open Records Act, regardless of the requester's identity or his purpose in requesting access to the records generally speaking. More specifically, KRS 61.880(1) dictates the procedure which a public agency must follow in responding to a request submitted under the Open Records Act. In relevant part, KRS 61.880(1) provides:
An agency response denying, in whole or in part, inspection of any record shall include a statement of the specific exception authorizing the withholding of the record and a brief explanation of how the exception applies to the record withheld. The response shall be issued by the official custodian or under his authority, and it shall constitute final agency action. (Emphasis added.)
In construing the mandatory language of this provision, the Kentucky Court of Appeals observed:
The language of [KRS 61.880(1)] directing agency action is exact. It requires the custodian of records to provide detailed and particular information in response to a request for documents . . . [A] limited and perfunctory response [does not] even remotely comply with the requirements of the Act-much less amount [] to substantial compliance.
Edmondson v. Alig, Ky. App., 926 S.W.2d 856, 858 (1996).
Although the Department apparently responded to Mr. Wichmann's request in a timely manner, citing KRS 61.878(1)(a), (i), (j), (k), (l), and relevant provisions of KRS Chapter 131 as the bases of denial, noticeably absent is any explanation of how these statutory exceptions apply to the unidentified records being withheld; a "generic determination" that certain categories of records are removed from the mandatory disclosure provisions of the Open Records Act does not satisfy the requirements of that law. 07-ORD-199, pp. 10-11, citing 94-ORD-133.
In order to satisfy the burden of proof imposed on public agencies by KRS 61.880(2)(c), the Department was required to not only cite the applicable exceptions, but also provide a brief explanation of how those exceptions apply to the records, or portions thereof being withheld. 04-ORD-106, p. 6; 04-ORD-080; 01-ORD-232; 99-ORD-155. As recognized by the Attorney General in 97-ORD-41:
While neither this office nor the Kentucky courts have ever required an itemized index correlating each document withheld with a specific exemption, such as that required by the federal courts in Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973), cert. denied 415 U.S. 977 (1974), we believe that [a public agency] is obligated to provide particularized justification for the withholding of documents, or groups of documents, which are properly excludable [footnote omitted], and to release any documents which do not fall squarely within the parameters of the exception and are therefore not excludable.
Id., p. 6 (emphasis added); 04-ORD-106; 03-ORD-213. More generally, this office has consistently observed:
Although there is no clear standard of proof under the Kentucky Open Records Act, with one narrow exception [codified at KRS 61.872(6), which requires clear and convincing evidence to support denials resulting from unreasonably burdensome requests] it is clear that the burden of proof in sustaining public agency action in the event of an appeal to the Attorney General, or to the circuit court, is on the agency. KRS 61.880(2)(c); KRS 61.882(3). It is also clear that a bare assertion relative to the basis for denial . . . does not satisfy the burden of proof.
00-ORD-10, pp. 10-11, citing 95-ORD-61, p. 2 (emphasis added).
Upon receiving clarification from Mr. Wichmann regarding the exact records to which he sought access in response to its "general refusal," the Department elaborated to a limited extent regarding the content of the requested file, but again did little more than quote the language of the purportedly applicable provisions in support of its denial. On appeal, the Department provided context in which to view its role and general background regarding the overall process, emphatically asserting that Chapter 131 precludes the agency from disclosing any such records, but still neglected to offer any explanation or detailed insight as to how the relevant provisions apply to these specific records. To this extent, the responses issued by the Department are procedurally deficient. As frequently noted by the Attorney General, the procedural requirements of the Open Records Act "are not mere formalities, but are an essential part of the prompt and orderly processing of an open records request." 93-ORD-125, p. 5; 04-ORD-080; 02-ORD-187. To avoid future violations, the Department should adhere to these guidelines in responding to requests under the Open Records Act; however, the Department's response was substantively correct as to application of KRS 131.190(1) and 131.081(15), and is therefore affirmed in accordance with governing precedents. 4
Among those records which are excluded from application of the Open Records Act in the absence of a court order are those described at KRS 61.878(1)(l) as "[p]ublic records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly." Both KRS 131.190(1) and 131.081(15), the confidentiality provisions upon which the Department primarily relies, are incorporated into the Open Records Act by operation of KRS 61.878(1)(l). In relevant part, KRS 131.190(1) provides:
No present or former commissioner or employee of the Department of Revenue, present or former member of a county board of assessment appeals, present or former property valuation administrator or employee, present or former secretary or employee of the Finance and Administration Cabinet, former secretary or employee of the Revenue Cabinet, or any other person, shall intentionally and without authorization inspect or divulge any information acquired by him of the affairs of any person, or information regarding the tax schedules, returns, or reports required to be filed with the department or other proper officer, or any information produced by a hearing or investigation, insofar as the information may have to do with the affairs of the person's business.
Similarly, the Kentucky Taxpayers' Bill of Rights at KRS 131.081(15) emphatically provides:
Taxpayers shall have the right to privacy with regard to the information provided on their Kentucky tax returns and reports, including any attached information or documents. Except as provided in KRS 131.190, no information pertaining to the returns, reports, or the affairs of a person's business shall be divulged by the department to any person or be intentionally and without authorization inspected by any present or former commissioner or employee of the Department of Revenue, member of a county board of assessment appeals, property valuation administrator or employee, or any other person.
Although this office has not had occasion to address the specific question presented, KRS 131.190(1) has been the subject of a number of prior decisions. Early on, this office recognized:
That specific statute [KRS 131.190] dealing with the subject [of the confidentiality of tax records and reports] prevails over any provision of the Kentucky Open Records Law. . . . The Department of Revenue is not only allowed a policy of keeping such records confidential but is mandated by a statute with penal provisions to keep such records confidential. [Citations omitted.]
OAG 83-78, p. 2. As a rule of general application, this office will defer to a public agency with regard to interpretation of confidentiality provisions which are binding upon it. 98-ORD-78, p. 3 (deferring to then Revenue Cabinet as to interpretation of KRS 131.190); 04-ORD-252 (deferring to Department of Workers' Claims as to interpretation of KRS 342.229); 97-ORD-33 (deferring to Department of Corrections as to interpretation of KRS 197.025(1)); 94-ORD-76 (deferring to then Cabinet for Human Resources as to interpretation of KRS 620.050(4)). Because the instant appeal presents no reason to depart from this approach or deviate from governing precedents, the same result necessarily follows. In our view, the reasoning contained in 98-ORD-120, 04-ORD-042, and 04-ORD-152 must be followed on the facts presented; a copy of each decision is attached hereto and incorporated by reference. In the absence of binding authority which is contrary to the Department's position regarding application of KRS 131.190(1) and 131.081(15), its denial must be affirmed.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.
Distributed to:
Frank A. WichmannThomas S. CrawfordDouglas M. Dowell
Footnotes
Footnotes
1 In providing Mr. Wichmann with contact information for the custodial agency, the Department complied with KRS 61.872(4).
2 See 04-ORD-187, pp. 12-18, for the analysis employed in determining whether a public agency has properly denied access on the basis of the attorney-client privilege.
3 Any issues related to records which the Department has already provided to Mr. Wichmann are moot per 40 KAR 1:030, Section 6, pursuant to which: "If requested documents are made available to the complaining party after a complaint is made, the Attorney General shall decline to issue a decision in the matter." See 04-ORD-046; 03-ORD-087. In applying this mandate, the Attorney General has consistently held that when access to public records which are the subject of a request is denied but subsequently granted, the "propriety of the initial denial becomes moot." 04-ORD-046, p. 5, citing OAG 91-140. Accordingly, this office must decline to issue a decision as to the specified correspondence already released to Mr. Wichmann.
4 In applying KRS 131.190(1) to business licensing records, the Attorney General has recognized that information "which reveals the affairs of the business such as profits, taxes, deductions, and salaries, is also exempt [in addition to social security numbers, etc.]." 01-ORD-63, p. 3 (citations omitted). To the extent that disclosure of the amount paid or owed or the penalty assessed "reveals the private details of the taxpayer's business" that information is also protected. Id. In sum, KRS 131.190(1) "does not erect an impenetrable barrier to disclosure of business licensing records, but is, instead, limited to information that 'may have to do with the affairs of a person's business' and is not otherwise made a matter of public record." 07-ORD-255, p. 3; 04-ORD-038. Here, the Department implicitly argues that all of the documents "may have to do with the affairs" of the business in question.