Opinion
Opinion By: Andy Beshear, Attorney General; Michelle D. Harrison, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Finance and Administration Cabinet, Department of Revenue ("Department") violated the Open Records Act in denying Paula L. Pedigo's December 26, 2017, request for "a copy of the 'Agent's Narrative Report' for any audit in which Brent Billingsley is listed as the 'Taxpayer's Representative' for any audit conducted by the Department of Revenue during the years of 2016 and 2017." 1 In a timely response per KRS 61.880(1), Open Records Coordinator Adrienne B. Ernst advised Ms. Pedigo that she had sought access to records "that contain information that would be produced by investigations conducted by the Department into the affairs of Kentucky taxpayers. The Department is strictly prohibited by a number of statutory provisions from divulging this confidential information. See KRS 131.190; KRS 131.081(15); 131.990(2). See also [08-ORD-118]." Ms. Ernst noted that said confidentiality provisions are incorporated into the Open Records Act by operation of KRS 61.878(1)(l). Accordingly, the Department denied Ms. Pedigo's request based on the referenced statutory provisions. "If you can provide written documentation from any of the taxpayers in question explicitly granting their permission to disclose their confidential records to you," Ms. Ernst continued, "you may file another Open Records request for consideration."
Upon receiving notification of Ms. Pedigo's appeal from this office, the Department reiterated its original position. Associate General Counsel Katherine J. Fitzpatrick noted that "no exception exists consistent with KRS 131.190(1)(b) permitting" the Department to disclose the records in dispute. Unable to conclusively determine whether the entire content of the "Agent's Narrative Report[s]" was properly withheld under authority of KRS 131.190(1)(a) and 131.081(15), based on the limited information of record, this office asked Ms. Fitzpatrick for additional information pursuant to KRS 61.880(2)(c) and 40 KAR 1:030 Section 3. Specifically, this office requested the Department to provide us with a blank Report for in camera review. The Department promptly provided us with three different examples of completed Agent Narrative Reports (none with Brent Billingsley as the named Taxpayer Representative). Both KRS 61.880(2)(c) and 40 KAR 1:030 Section 3 prohibit disclosure by the Attorney General of the contents of the Reports, but our independent review confirmed that all of the information contained therein, except for the name and the address of the person or business, related directly to "affairs of the person's business," i.e., receipts, deductions, purchases, audit results, etc. Although "much but not all of the material generated in the administration of tax statutes and ordinances is privileged," the information contained in the records being sought, except for the name of the person/business and the address, falls in that category. OAG 86-11, p. 3; 08-ORD-177; 09-ORD-015.
Among those records which are excluded from application of the Open Records Act in the absence of a court order are those described by 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 question presented in relation to an Agent's Narrative Report in particular, 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; 08-ORD-118. As a rule of general application, this office has deferred 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)); compare 10-ORD-184. This general rule, of course, presumes that a public agency's interpretation of its confidentiality provision is consistent with existing legal authority.
In Kenton Cnty. Fiscal Court v. Kentucky Enquirer, 2010 WL 890012 (Ky. App. 2010)(2008-CA-002064-MR), 2 the Court of Appeals recognized the value of limited transparency vis -`-vis taxpayer information contained in occupational license applications, but extended protection to "items which reveal the affairs of the business" under the tax district counterpart to KRS 131.190(1)(a) codified at KRS 67.790(8)(a) . In so doing, the Court nevertheless found that it was "in the interest of public policy for the public to have access to occupational license applications however limited the information may be once redacted to provide the name and location of the business." Kenton Cnty. 2010 WL 890012, at *6 (emphasis added). Fundamental to its opinion was the Court's recognition that "[t]he law is clear that free and open examination of public records is in the public interest, " KRS 61.871, and the Attorney General's longstanding position that "it is in the public interest to know what business and professions have been licensed to exist and operate within the boundaries of the governmental unit." Id. at 5. The Court ultimately concluded that the Fiscal Court interpreted KRS 67.790(8)(a), which, in relevant part, mirrors KRS 131.190(1)(a), "overbroadly in this instance so as to exclude from disclosure the name and address of businesses and professions . . . ." Id. at *6.
Significantly, in Department of Revenue v. Eifler, 436 S.W.3d 530, 533 (Ky. App. 2013), the Court of Appeals followed the reasoning of Kenton Cnty. Fiscal Court in also finding "the Department's interpretation of KRS 131.190(1)(a) and KRS 131.081(15) is overbroad." The Department argued, "revealing the identity of those who pay the [Utility License Tax] and their liability date reveals their personal business affairs since it identifies them as taxpayers and the date of their taxation. . . and identifies the type of business in which they engage as well as their energy costs." Id. at 532. In rejecting the Department's argument that sufficient information was available on its website and in quarterly publications of its Tax Alert for the public to monitor its administration of the school tax without disclosure of individual tax returns, the Court weighed the "legislatively recognized policy of protecting the affairs of the taxpayer and the taxpayer's business against the competing public interest of the ORA." Id. at 533. Citing Kenton Cnty. Fiscal Court , the Court found that "redaction of private information on the tax returns could be accomplished" there as well. Id. Here, the record on appeal does not contain any information that would justify departing from the reasoning of Department of Revenue v. Eifler .
"Only that information that reveals the affairs of any person or any person's business is excluded from public inspection." 10-ORD-184, p. 8 (analyzing the tension that 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"). In Kenton Cnty. Fiscal Court, above , the Court of Appeals agreed that such items as profits, salaries, deductions, and taxes were appropriate to redact as information that reveals the affairs of a person or a person's business in refusing to extend blanket protection to the application. "The courts continue to favor openness of records and the ability to redact information [per KRS 61.878(4)] which is exempt under the statute." Department of Revenue v. Eifler 436 S.W.3d at 533. Accordingly, existing legal authority validates the Department's position to withhold all of the information contained in any responsive Agent's Narrative Report on the bases of KRS 131.190(1)(a) and 131.081(15) with the limited exceptions noted above.
Either party may appeal this decision by initiating action in the appropriate circuit court per KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General shall be notified of any action in circuit court, but shall not be named as a party in that action or in any subsequent proceeding.
Footnotes
Footnotes
1 Ms. Pedigo advised that she was making her December 26, 2017, request "[u]nder the Freedom of Information Act [FOIA]" The Department notified her that FOIA only applies to federal agencies. In 96-ORD-118, this office clarified that records in the custody or control of federal agencies are governed by FOIA "while the Open Records Act (KRS 61.870 to KRS 61.884) pertains to records in the custody or control of agencies of the state and local governments." Id. , p. 1; 06-ORD-108 (Lake Cumberland Corps of Engineers, a federal agency, is not subject to the Kentucky Open Records Act). Conversely, in 04-ORD-090, the Attorney General observed:
In Ferguson v. Alabama Criminal Justice Information Center, 962 F.Supp. 1446, 1447 (M.D. Ala. 1997), the United States District Court conclusively resolved this threshold issue, holding that neither 5 U.S.C. § 552, the Freedom of Information Act, nor 5 U.S.C. § 552(a), the Privacy Act, apply to state agencies. . . . [T]herefore, public agencies in Kentucky . . . are not governed by the "federal standard[.]"
Id. , p. 5.
2 Kenton County Fiscal Court v. Kentucky Enquirer is an unpublished opinion rendered on March 12, 2010, that may be cited for consideration if there is no published opinion that adequately addresses the issue. See CR 76.28(4)(c).