Opinion
Opinion By: Jack Conway, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Finance and Administration Cabinet and Department of Revenue ("agencies") properly relied on KRS 61.878(1)(l), KRS 131.190(1)(a), and KRS 131.081(15) in denying Mark F. Sommer's February 23, 2012, request for copies of "'Final Rulings' issued by either the Department or the Cabinet with a date shown thereon of January 1, 2004, through the current date." Mr. Sommer acknowledged the necessity of redacting "any identifying and/or confidential information or data" to protect taxpayer confidentiality. We find that although most of the arguments advanced by the agencies in denying Mr. Sommer's request lacked merit, the restrictive language found at KRS 131.190(1)(a) and KRS 131.081(15), coupled with KRS 61.878(1)(l), incorporating enactments of the General Assembly that prohibit or restrict disclosure of public records or information, and augmented by KRS 131.990(2), containing severe penalties for unauthorized disclosure of taxpayer information, support the agencies' decision to withhold even redacted copies of the final rulings. This legislative scheme distinguishes Kentucky from other jurisdictions, such as Indiana, that regularly make public redacted copies of their final ruling letters.
In their March 15 response to Mr. Sommer's request, the agencies quoted KRS 131.190(1)(a) prohibiting intentional and unauthorized inspection or divulgence of:
any information acquired by, [ inter alia , Cabinet or Department employees] of the affairs of any persons, 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.
The agencies also invoked KRS 131.081(15), codifying "[t]his expectation of privacy. " They maintained that the taxpayer does not waive his statutory privacy right by receipt of a final ruling. Instead, they asserted, the taxpayer waives his right of privacy only if he appeals the final ruling to the Kentucky Board of Tax Appeals. At that juncture, the agencies acknowledged, the final ruling becomes a public record.
The agencies rejected Mr. Sommer's suggestion that taxpayer privacy could be adequately protected by redacting "identifying and/or confidential information or data" before releasing the records. They explained:
The final ruling letters address the underlying facts, which directly concern the taxpayer's business affairs . . . [as well as] the application of the law to those facts . . . . In several instances, the legal issue itself has such limited application that the taxpayer can be identified . . . .
It was the agencies' position that "the only items that would not be redacted would be the date of the final ruling letter and the boilerplate language regarding the taxpayer's appeal rights," and that review and redaction of the seven hundred responsive records "is unduly burdensome pursuant to KRS 61.872(6)." With reference to final rulings appealed to the Board of Tax Appeal, and therefore public record, 1 the agencies explained that they are not custodians of the Board's records and provided Mr. Sommer with the name and location of the Board's records custodian. On September 25, 2012, Mr. Sommer initiated this appeal from the agencies' denial of his request, asserting that the agencies' response "is not in accordance with multiple provisions of law. "
In correspondence directed to this office after commencement of Mr. Sommer's appeal, the agencies advanced additional arguments in support of their position as set forth below:
1. Acknowledging that the Open Records Act contains no statutory deadline for filing an appeal, the agencies maintained that Mr. Sommer's appeal should be dismissed because it was filed six months after their written denial. Adjudication of the appeal, the agencies argued, would deprive them of "closure or finality regarding their open records management" and "be especially prejudicial and detrimental to agencies" facing voluminous records requests in the course of a year.
2. Because Mr. Sommer did not identify the "multiple provisions of law" the agencies allegedly violated, his appeal should be dismissed "as being substantively and procedurally deficient." The agencies lamented the "impossib[ility of] respond[ing] to an appeal that does not state any reason for same."
3. Reiterating that they provided adequate grounds for denial in their original denial, the agencies nevertheless cited the KRS 131.190 access restriction on final ruling tax information that appears on "the Records Retention Schedule for the State Archives and Records Commission" as additional support for their position.
Responding to these arguments, Mr. Sommer again argued that taxpayer privacy could be adequately protected by redacting personally identifiable information, emphasizing that "a taxpayer's need for transparency in Kentucky is no different from the needs of taxpayers in other states, such as Indiana, where the Indiana Department of Revenue regularly publishes redacted Letters of Finding, . . . making them accessible to the general public, through a searchable database on its website." While we agree that the value of transparency is as great in Kentucky as it is in Indiana or elsewhere, we find that records maintained by these agencies are governed by confidentiality provisions, and related penalty provisions, that find no equivalent in Indiana law. Whatever hardship these provisions work on open records applicants, they narrowly circumscribe the applicants' right of access to agency records containing taxpayer information that reveal the affairs of any person or of the person's business.
In 10-ORD-184, this office analyzed the tension between legislation aimed at protecting taxpayer privacy and legislation aimed at ensuring the public's right to know "whether the burden of public expenses is equitably distributed" among taxpayers, whether a taxpayer "is meeting his public responsibilities . . . and legal obligation," and whether "public employees are diligently . . . carrying out their duties [relative to the fair and uniform imposition and collection of taxes] in an efficient and law-abiding manner." 10-ORD-184, p. 6 citing 97-ORD-9, p. 3, quoting from
Attorney General v. Collector of Lynn, 377 Mass. 151, 158, 385 N.E.2d 505 (1979). We noted that in an unpublished opinion issued by the Court of Appeals in 2010, the court "spoke directly to the value of limited transparency vis-a-vis taxpayer information . . . ." Kenton County Fiscal Court v. Kentucky Enquirer , 2008-CA-002064-MR (Ky. App. 2010). 2 The court concluded that the fiscal court interpreted KRS 67.790(8)(a), which virtually mirrors KRS 131.190(1)(a), "overbroadly." The court emphasized "that it is in the interest of public policy for the public to have access" to records "however limited the information may be once redacted, " but construed the phrase "affairs of any person" to extend protection to unspecified information "previously thought to be appropriate for public disclosure. " Kentucky Enquirer at 5. These authorities, we opined, "confirm that KRS 131.190(1)(a) [and] 131.081 (15) do not erect an impenetrable barrier to disclosure of taxpayer information." 10-ORD-184, p. 8. We therefore declined to "accord deference to [the agencies'] interpretation of these confidentiality provisions when that interpretation [was] at odds with recent legal authority." Id.
In 10-ORD-184 the Attorney General resolved a dispute involving access to records identifying by name, address, and date of registration taxpayers registered to pay utility license tax. The appeal before us involves access to final rulings issued by the Department of Revenue, pursuant to KRS 131.110, in taxpayer protests "of any tax assessed by it." Our review of a sampling of the final rulings, released to this office for in camera inspection at our request and under authority of KRS 61.880(2)(c), 3 suggests the broad range of facts and issues addressed in the final rulings and the challenges associated with redacting information "hav[ing] to do with the affairs of the person's business," and, more generally, "the affairs of any person." KRS 131.190(1)(a); see also KRS 131.081(15) (prohibiting disclosure of "information pertaining to the returns, reports, or the affairs of a person's business"). Although KRS 131.110(3) requires only a general statement of the issues in controversy and the department's position thereon, the final rulings contain substantially more information than the applications at issue in 10-ORD-184 and Kentucky Enquirer , above. That information is, perforce, less easily segregable. While "the winnowing process required of [public agencies] by the General Assembly under [KRS 61.878(4)] does not rise to the level of an unreasonable burden under KRS 61.872(6)" and "the prospect of a public agency's potentially negligent disclosure of protected items is simply an insufficient reason to thwart the openness the General Assembly sought to achieve when it enacted the Open Records Act, " 4 we apprehend no means by which the agencies can successfully segregate and redact information having to do with the affairs of the person's business in a manner consistent with KRS 131.190(1)(a) and 131.081(15) without violating taxpayer privacy.
The fact that Indiana regularly discloses redacted copies of final ruling letters does not alter our conclusion. Indiana Code ("IC") 6-8.1-7-1 prohibits disclosure of:
The amount of tax paid by any taxpayer, terms of a settlement agreements executed between a taxpayer and the department, investigation records, investigation reports, or any other information disclosed by the reports filed under the provisions of the law relating to any of the listed taxes, including required information derived from a federal return[.]
Unauthorized disclosure in Indiana is punishable as a Class C misdemeanor 5 carrying penalties of imprisonment for no more than sixty days and a fine of no more than five hundred dollars. 6 Kentucky's law prohibits disclosure of "information pertaining to the returns, reports, or the affairs of a person's business," 7 "information . . . of the affairs of any person," 8 and "information [that] may have to do with the affairs of the person's business." 9 Unauthorized disclosure in Kentucky is punishable by a fine of no more than one thousand dollars, imprisonment for no more than one year, or both. 10 Additionally, any officer or employee who violates KRS 131.190(1) may be disqualified and removed from office or employment. 11 The sweeping language of Kentucky's statutes relating to disclosure of taxpayer information, as well as the severity of the penalties imposed for unauthorized disclosure, compel us to affirm the agencies' position in this appeal.
Having so concluded, we reject, without extensive comment, the agencies' arguments that Mr. Sommer's appeal was untimely and should therefore have been dismissed. That argument was firmly rejected in
Department of Revenue, Finance and Administration Cabinet v. Wyrick, 323 S.W.3d 710 (Ky. 2010). Additionally, we reject the agencies' claim that Mr. Sommer's violated the procedural and substantive requirements of the Open Records Act by failing to identify the "multiple provisions of law" he alleged that the agencies violated, also warranting dismissal of the appeal. No authority exists for this position which shifts the burden statutorily assigned to the agencies by KRS 61.880(2)(c) to Mr. Sommer and is inconsistent with the minimal requirements of KRS 61.880(2)(a). 12 Finally, we reject the invocation of access restrictions appearing on the agencies' records retention schedule as additional grounds for nondisclosure of the records identified in Mr. Sommer's request. These schedules govern records management per Chapter 171 of the Kentucky Revised Statutes and do not purport to govern records access per Chapter 61 of the Kentucky Revised Statutes. A clear statement to this effect appears in the preface to the schedule. 13
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:
Mark F. SommerJennifer Y. BarberE. Jeffrey Mosley
Footnotes
Footnotes
1 KRS 131.355.
2 Kenton County Fiscal Court v. Kentucky Enquirer is an unpublished opinion rendered on March 12, 2010, that, pursuant to CR 76.28(4)(c) may be cited for consideration if there is no published opinion that adequately addresses the issue.
3 KRS 61.880(2)(c) provides:
On the day that the Attorney General renders his decision, he shall mail a copy to the agency and a copy to the person who requested the record in question. The burden of proof in sustaining the action shall rest with the agency, and the Attorney General may request additional documentation from the agency for substantiation. The Attorney General may also request a copy of the records involved but they shall not be disclosed.
4 Commonwealth v. Chestnut, 250 S.W.3d 655, 664-666 (Ky. 2008).
5 IC 6-8.1-7-3.
6 IC 35-50-3-4.
7 KRS 131.081(15).
8 KRS 131.190(1)(a).
9 KRS 131.190(1)(a).
10 KRS 131.990(2)(b).
11 KRS 131.990(2)(e). A similar provision exists in Indiana law at IC 6-8.1-7-3.
12 KRS 61.880(2)(a) establishes minimal requirements for an open records appeal. It provides:
If a complaining party wishes the Attorney General to review a public agency's denial of a request to inspect a public record, the complaining party shall forward to the Attorney General a copy of the written request and a copy of the written response denying inspection. If the public agency refuses to provide a written response, a complaining party shall provide a copy of the written request. The Attorney General shall review the request and denial and issue within twenty (20) days, excepting Saturdays, Sundays and legal holidays, a written decision stating whether the agency violated provisions of KRS 61.870 to 61.884.
13 Under the caption "Confidential Records," the retention schedule states:
While all records created, used and maintained by government agency personnel are public records, not all of those records are open to public inspection. Whether a record is open to public inspection is determined by the state's Open Records laws and other relevant state or federal statutes and regulations. Restriction of public inspection of confidential records may apply to the whole record or only to certain information contained in the record.
Kentucky's public records are considered open for public inspection unless there is some specific law or regulation that exempts them. Agency personnel who believe certain records are confidential should submit a citation from Kentucky Revised Statutes, Administrative Regulations, Code of Federal Regulations, or similar authority. State agency heads have the responsibility to know all the appropriate confidentiality laws, statutes and regulations that apply to the records maintained by their agency and to see that those laws are enforced. Even though a record series may or may not be marked confidential on a retention schedule, contradictory laws or regulations that are passed after the schedule has been approved must be honored.
(Emphasis added.)