Request By:
Bradley A. Sears
Bob Cox
Douglas M. Dowell
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 the request submitted by Bradley A. Sears on behalf of his client, William E. Groome, "a private purchaser of delinquent oil and gas tax bills." Because Mr. Sears has acknowledged on appeal that the corresponding "tax return forms" originally requested are confidential, and the Department has established that "deed book and page numbers corresponding to any and all leases for each tax bill listed" are not requested on the forms and therefore cannot be produced, the sole issue presented is whether the Department properly withheld "the well numbers and lease numbers for each tax bill listed." Because that information would reveal the affairs of the named taxpayer-owners, KRS 131.190(1) and 131.081(15) prohibit disclosure. Based upon the mandatory language of these provisions, incorporated into the Open Records Act by operation of KRS 61.878(1)(l), the denial of Mr. Sears' request is affirmed in accordance with governing precedents.
By letter dated June 16, 2008, Mr. Sears made his original request for "tax return forms, with Social Security numbers redacted, corresponding to each of the following tax bills for the years 2004 and 2005. If the actual forms are not available or are otherwise confidential, then I am requesting the information contained in those tax return forms regarding interest(s) in the properties and deed book and page numbers corresponding to any and all leases for each tax bill listed." In a timely written response, Attorney Manager Douglas M. Dowell, Office of Legal Services, observed that Mr. Sears' request "appears to seek tax returns pertaining to ad valorem tax assessments for gas reserves that are the subject of delinquent tax bills." As Mr. Dowell explained, such forms are identified as "Form 62A384-Gs," which are often completed by the lessees of the gas reserves. "Identifying information relating to the lessors who own interests in the reserves" can be found on the back of the forms and some lessees "may provide this information by separate spreadsheets." Either way, this information "is ultimately used to prepare the tax bills, which are mailed to the address provided by the lessee. In some cases, the bills are sent to the lessor in care of the lessee. " Mr. Dowell's understanding was that Mr. Sears possessed "these tax bills and they reflect the best addresses the Department has for the lessors or gas interest holders."
In denying Mr. Sears' request for the completed forms with Social Security numbers redacted, Mr. Dowell explained that such information "is expressly made confidential by law and its disclosure strictly prohibited. See KRS 131.190; 131,081(15); 131.355; 131.990(2); 133.047. It is also exempt from disclosure under the Open Records Act. See KRS 61.878(1)(a), (i) and (l)." In further support of the agency's position, Mr. Dowell attached copies of 08-ORD-118 and 93-ORD-130, "which discuss the relevant legal rules in considerable detail." Noting that 93-ORD-130 addresses a similar type of request, Mr. Dowell asserted that "its reasoning and outcome" support denial of Mr. Sears' request.
By letter dated June 24, 2008, Mr. Sears reiterated his request for the deed book and page numbers, if available, for each of the listed tax bills, and the "well numbers and lease numbers as they appear on Form 62A384-G for each tax bill listed." 1 Arguing that by virtue of the lien held on the property, a "private purchaser" who acquires delinquent tax bills essentially "stands in the place of the government agency which initially assessed the tax," Mr. Sears argued that KRS 131.190 does not extend the prohibition on disclosure "to information that is 'in any way made a matter of public record. '" In this context, Mr. Sears believes the deed book and page numbers, and the well and lease numbers "are not confidential and should be released upon request."
Quoting an excerpt from 93-ORD-130, Mr. Sears asserted that a "plain reading" of the decision suggests that, "while certain information found on a property tax return form 62A384-G may be confidential, other information found on these forms may not be considered confidential simply by virtue of being placed on this form." Moreover, the facts involved in that decision "differ significantly from the present situation" insofar as the surface co-owner asked for information that concerned neither her interest as a taxpayer nor her interest as a co-owner whereas Mr. Sears' client "has an interest in the subject property and for all purposes could properly be considered the taxpayer and/or the de facto owner of the interests at issue." When KRS 131.190(2) is read in conjunction with KRS 134.420 and 134.470, the argument "can also be made that a private purchaser of a delinquent tax bill who holds a lien on the subject interest stands in place of the taxing agency. Thus, any information, otherwise confidential, must be the subject of a proper request where the private purchaser has the right, as any taxing authority would otherwise have, to foreclose on the subject interest." Regardless of this distinction, Mr. Sears contended that withholding the requested information will unnecessarily impede his client's enforcement of any liens by means of a foreclosure action. Insofar as Mr. Sears' client "can now be considered the de facto owner and taxpayer of the gas interests for each delinquent tax bill listed," Mr. Sears asserted that KRS 131.190 does not apply to him and the information "should be released so that foreclosure actions can be initiated. " Because the Department "should know what property it has assessed a tax on, the agency is the only party from which this information can be obtained."
On June 27, 2008, Mr. Dowell responded to Mr. Sears' letter, initially advising that deed book and page numbers are not requested on the forms in question; accordingly, the Department "simply would not have that information." According to Mr. Dowell, the "well numbers or lease numbers would clearly be material or information that is part of the tax returns and would be confidential and exempt from disclosure under the Open Records Act for all of the reasons set forth" in his original response, a copy of which he attached. With regard to Mr. Sears' argument regarding KRS 131.190(2), Mr. Dowell was not persuaded that it constitutes a "valid basis for releasing material that is confidential, " the disclosure of which is prohibited by law. Rather, that provision "quite clearly applies to certain public or governmental officials or entities and not a private person." In closing, Mr. Dowell disagreed with Mr. Sears' assertion that the Department is the only place to obtain the information being sought as it may be obtained "from the taxpayer or in the case of the taxpayers listed in [the] request, the lessee or gas producer." However, the Department "is subject to strict statutory prohibitions on its disclosure of any such information." Noting that he "accept[s] the [D]epartment's determination that the tax return forms themselves are confidential, " Mr. Sears initiated this appeal from the denial of his request in a letter dated July 24, 2008.
Reiterating his earlier arguments, Mr. Sears explains that his client "has now been placed in the situation where he has purchased a delinquent tax bill, but does not know exactly what he has purchased. The only information given when a private purchaser buys delinquent tax certificates is found on the face of the tax certificate. " This information does not include "any description of the property now subject to a lien." In Mr. Sears' view, that "is the very essence" of the issue presented. More specifically, he believes "there is a conflict between the enforcement provisions of KRS Chapter 134 and the [D]epartment's interpretation of the confidentiality provision of KRS 131.190" and the Open Records Act insofar as "a private purchaser is prevented from provisions a description of the property in a foreclosure action or from otherwise knowing what he has an interest in because this information is now deemed 'confidential' simply by being placed on Form 62A384-G." According to Mr. Sears, redaction of Social Security numbers would suffice to safeguard the privacy interests of taxpayers. Because the oil and gas well numbers can be found on the internet, Mr. Sears argues that information "could hardly be considered 'confidential. '" Finally, Mr. Sears notes "this is not a situation where a party with no interest whatsoever in the underlying property is requesting information about a particular taxpayer or the property owned by that taxpayer." To the contrary, his client "has a lien on each and every property covered by the tax certificates included" on the list. Although the next logical step is to enforce those liens, Mr. Sears' client finds himself in the dilemma of being unable to determine on exactly what property he is foreclosing.
Upon receiving notification of Mr. Sears' appeal from this office, Mr. Dowell supplemented his response on behalf of the Department, initially confirming that "delinquent ad valorem tax claims may be purchased at an annual sheriff's sale by private persons. See generally KRS 134.430(1), (2) and (4); 134.440; 134.450; 132.820(1) and (7). The tax claims become what are called certificates of delinquency, which bear interest in the rate of 12%, and may be collected by a variety of means. See KRS 134.450(1); 134.460; 134.470; 134.500(1)." Although the certificate of delinquency constitutes prima facie evidence that the subject property was "subject to taxes levied thereon," etc. under KRS 134.460, the relevant statutory provisions " do not provide any warranties or assurances to the purchaser other than providing a refund if the certificate is declared void 'because of the irregularity of taxing officers. KRS 134.520." (Emphasis added.) Most importantly, none of the referenced provisions "allow a private purchaser of the certificates access to confidential tax return information." As previously indicated, "this material or information is expressly made confidential and the Department is prohibited from divulging it. See KRS 131.190; 131.081(15); 131.990(2); 133.047. By the same token, such information is exempt from disclosure under the Open Records Act. See KRS 61.878(1)(a), (i) and (.); 08-ORD-118; 93-ORD-130."
In further support of the Department's position, Mr. Dowell notes that "in the area of unmined minerals assessment, the General Assembly has expressed an even stronger policy" in favor of preserving the confidentiality of the information that Mr. Sears seeks. Quoting KRS 131.355, Mr. Dowell observes that an exception to the general rule of openness relative to proceedings and records of the Kentucky Board of Tax Appeals is made "in cases of appeals of unmined mineral assessments where the records before the board include information provided to the Department of Revenue by the taxpayer or its lessees, and were generated at the taxpayer's expense." For example, "[n]o recorded or transcribed testimony concerning these records shall be considered a public record. . . . Neither records containing confidential information nor testimony concerning same shall be disclosed to parties outside the appeals proceedings." In sum, "the General Assembly has been even more emphatic in providing that the information sought by Mr. Sears is confidential and cannot be disclosed by the Department."
To reiterate, some of the information sought -- namely, deed book and page numbers -- "is not requested by the Department's tax return and thus would not be in the Department's possession." 2 Attached to Mr. Dowell's response is a copy of the tax return form in question, which verifies this assertion. In refuting Mr. Sears' argument regarding the availability of the oil and gas well numbers, Mr. Dowell explains that the "flaw in this line of argument is that the identities of the owners of those wells or the nature of their interests are information relating to the affairs of the taxpayer-owners that would be reported on the returns in question. That information is not part of any public record. " Finally, Mr. Dowell notes that Mr. Sears' client may seek to compel the production of this information through discovery in a proceeding to enforce the certificate of delinquency. Citing
Upjohn Company v. United States, 449 U.S. 383, 395-96 (1981), Mr. Dowell clarifies that confidentiality provisions "prohibit disclosure by the Department of information communicated to or learned by it concerning a taxpayer's affairs, but not discovery of the facts by other means." Although this "may mean more time and effort for Mr. Sears' client," that "additional private cost is far outweighed by the important public interest served by the law's assurance to taxpayers that information they provide to the Department for tax administration purposes will be treated as confidential. [Citations omitted.]"
Consistent with prior decisions upholding the Department's interpretation of KRS 131.190(1) and 131.081(15), including 08-ORD-118 and 93-ORD-130, this office finds Mr. Dowell's argument persuasive. To the extent Mr. Sears' appeal challenges the perceived conflict "between the enforcement provisions of KRS Chapter 134" and the Department's interpretation of these confidentiality provisions, his points are well-taken; however, is not justiciable in this forum as the Attorney General "is not empowered to resolve . . . non-open records related issues in an appeal initiated under KRS 61.880(1)." 99-ORD-121, p. 17.
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. Generally speaking, 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). See also 98-ORD-120; 04-ORD-042; 04-ORD-152. Although this office has consistently recognized "that much but not all of the material generated in the administration of tax statutes and ordinances is privileged," the information being sought falls in that category. OAG 86-11, p. 3.
In the instant appeal, the Department's interpretation is that disclosure of the oil and gas well numbers, and lease numbers requested would reveal information directly relating to the business affairs of the named (delinquent) taxpayers in violation of KRS 131.190(1). Absent binding authority to the contrary, this office finds no reason to depart from the reasoning of prior decisions, including 08-ORD-118 and 93-ORD-130, notwithstanding Mr. Sears' unique concerns; a copy of each decision is attached hereto and incorporated by reference. 3 Only the courts offer the relief Mr. Sears is seeking on behalf of his client.
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.
Footnotes
Footnotes
1 With regard to requests for information, as opposed to requests for specifically described public records, the analysis contained in 07-ORD-042 is generally controlling; a copy of that decision is attached hereto and incorporated by reference. Because the agency did not raise this argument nor would making redacted copies of the records in question available for inspection satisfy Mr. Sears' request, as the information being sought is protected, further discussion of this issue is unwarranted.
2 As frequently noted by this office, a public agency cannot produce for inspection or copying nonexistent records or those which it does not possess. See 07-ORD-023.
3 As in 08-ORD-118, this office does not reach the remaining arguments raised by the Department in light of this determination regarding the application of KRS 131.190(1) and 131.081(15), the more specific confidentiality provisions.