Opinion
Opinion By: Gregory D. Stumbo, Attorney General; James M. Ringo, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Kentucky Department of Revenue's (Department) denial of William P. Sturm's June 28, 2004 open records request to inspect and copy all sales and use tax records and the computer "history text" pertaining to American Homes, Inc. and a copy of the complete computer "history text" of Byron T. Hall (a/k/a Terry Hall), violated the Open Records Act. For the reasons that follow, we conclude that Department properly denied access to the requested records under authority of KRS 61.878(1)(l) and KRS 131.190(1).
By letter dated July 7, 2004, John E. Swain, Jr., Attorney, Division of Collections, responded to Mr. Sturm's request on behalf of the Department, advising, in relevant part:
The Department respectfully declines to provide all sales and use tax records that the Department possesses concerning American Homes, Inc. KRS 61.878(1)(l) exempts disclosure of information which is prohibited, restricted or otherwise made confidential by the General Assembly. KRS 131.190 forbids an employee of the Department from divulging information of any affair of a person to any other person. The question then becomes, for the purposes of 131.190, is American Homes, Inc., a person? KRS 446.010 (26) says a person may be a corporate entity. It seems logical that the legislature intended that corporations enjoy the same confidentiality in regard to its own tax information as any other taxpayer. Otherwise any person could request all the information the Department has about any corporation. It seems like the legislature intended corporations receive the same protections granted to every taxpayer in the Commonwealth. American Homes, Inc. has to be considered a separate entity from that of Byron Hall.
The fact that Mr. Hall's liability is predicated on the actions of American Homes, Inc. still would not allow Mr. Hall to receive information about another taxpayer. Much liability is predicated on the business dealings of at least 2 parties and having one's debt predicated on the interaction of another taxpayer wouldn't entitle a person to see the other taxpayer's tax information.
Having said that, the Department would honor an open records request if it did not run afoul of KRS 131.190, e.g., the Department can divulge information about a taxpayer to the taxpayer's authorized representative, which would certainly include the attorney for the corporation. In this case we have no authorization from American Homes, Inc.
Byron T. Hall does not have his own history text. A history text of Byron Hall's sales and use tax cases does not exist, therefore, it cannot be provided to you. Of course, a history text of American Homes, Inc. does exist but, again, American Homes, Inc. is a separate entity from Byron Hall and the Department does not have authorization from American Homes, Inc. to release any of its information. The history text of American Homes, Inc., also includes the dealings of other taxpayer's besides American Homes, and the Department does not have authorization to release any of that information. Again, if the Department did have authorization it would satisfy KRS 131.190.
Subsequent to the Department's response, Mr. Sturm initiated the instant appeal. In his letter of appeal he explained that the Department had made an assessment against American Homes, Inc., which began doing business in 1994 and ceased doing business in 1997 when its assets were sold to Clayton Mobile Homes. He further explained that because American Homes, Inc. was now defunct, the Department had chosen to assess his client, Terry Hall, who had been Vice-President of American Homes, Inc. during its existence, for the whole assessment liability it claimed due and owed by the company, under authority of KRS 139.185. That statute provides in part that a corporate officer of any corporation "shall be personally and individually liable, both jointly and severally, for taxes imposed under this chapter, and neither the corporate dissolution nor withdrawal of the corporation from the state nor the cessation of holding any corporate office shall discharge the foregoing liability of any person." Mr. Sturm, in part, argues:
It seems to go without saying that when KRS 139.185 allows Terry's liability to be predicated on the tax liability of AHI [American Homes, Inc.], any confidentiality due AHI at that point has been either (1) waived by AHI or (2) has been eliminated as to AHI by the General Assembly by virtue of the statute [KRS 139.185]. In other words, Terry Hall would not be assessed except for the fact that AHI did not pay its taxes. AHI has thus waived any right it has to confidentiality a[t] least against someone who is being asked to pay its assessment. At the same time, the Legislature is saying in KRS 139.185 that it is not granting confidentiality to a company that has not paid its taxes thus causing one of its officers to be liable.
After receipt of notification of the appeal and a copy of the letter of appeal, Mr. Swain provided this office with a response, on behalf of the Department, to the issues raised in the appeal. Elaborating on the Department's original response, He explained, in relevant part:
. . . Mr. Hall states that as he WAS a vice president of the corporation, he WAS an agent of the corporation, and therefore, he is an "authorized representative" or an "authorized agent. " The Department of Revenue agrees that he WAS an "authorized agent" entitled to be provided the tax records of AHI.
Where the Department disagrees with Mr. Hall is that just because at one time in the past, a person was an agent or representative of a corporation doesn't necessarily mean he is one forever. No where in Mr. Hall's request for records does he say he is an agent now, or that as an agent he is requesting records on AHI's behalf. If Mr. Hall's request had stated that he IS an authorized agent and he is seeking AHI's records in that capacity, he would have gotten the records he requested.
Is the Department of Revenue to assume that because a person was an agent that he will always be an agent? KRS 131.190 provides for jail time for the Department of Revenue employee who assumes wrongly that an agent at one time means agent for life.
In a reply to the Department's supplemental response, Mr. Sturm argues that since Terry Hall was an officer during the assessment periods and since the Department of Revenue has determined he was an agent of the corporation during those periods, the requested record should be released.
We are asked to determine whether the Department's denial of the requested records was consistent with the Open Records Act. For the reasons that follow, we conclude that the Department properly denied access to the requested records under authority of KRS 61.878(1)(l) and KRS 131.190(1).
KRS 61.878(1)(l) authorizes the nondisclosure of:
Public records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly.
Subsection (l) incorporates the confidentiality provisions of KRS 131.190. That statute provides in relevant part:
[n]o present or former secretary or employee of the Revenue Cabinet, . . . member of a county board of assessment appeals, property valuation administrator or employee thereof, or any other person, shall 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 cabinet 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.
In OAG 86-11, we held that records pertaining to the affairs of the business of a particular coal company, such as the amount of taxes paid or the amount of coal extracted, can only be released to the company or its properly authorized agent.
In 95-ORD-11, we held that the Revenue Cabinet, relying on KRS 131.190(1), KRS 131.081, and KRS 133.047, properly denied the request of the attorney for Dominion Trust Company, executor of the estate of Eugene Bane, for the unmined mineral tax returns of several coal companies, which he stated would constitute evidence of Mr. Bane's holdings at the time of his death and he needed the information to discharge his duties in probating the estate. In denying the request, the Revenue Cabinet asserted it did not consider the executor of an estate an agent of the partnership or corporation and to obtain access to the requested records the executor would have to obtain written authorization from the coal companies' authorized agent. Adopting the Cabinet's reasoning and citing KRS 131.190, we concluded that records pertaining to the affairs of a particular coal company can only be released to the company or its authorized agent.
In OAG 83-78, this office upheld the Revenue Cabinet's denial of a request for the adjusted cost reports filed by the group self-insureds operating in the state, affirming the Cabinet's argument that KRS 131.190(1) makes tax records and reports to the Cabinet concerning taxes confidential. In that opinion, we noted:
That specific statute 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 [now Revenue Cabinet] 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.
In 98-ORD-78, we stated that, as a rule of general application, this office will defer to the public agency in its interpretation of confidentiality provisions which are binding upon it. In that opinion, we deferred to the Revenue Cabinet in its interpretation of KRS 131.190(1) and affirmed its denial of a request to inspect maps, filed with tax returns, which contained information such as names of owners, boundaries, locations of seams, and amounts of coal severed and remaining on the property as a reserve. See, also e.g., 94-ORD-76 (deferring to Cabinet for Human Resources in its interpretation of KRS 620.050(4); 97-ORD-33 (deferring to Corrections Cabinet in its interpretation of KRS 197.025).
In the instant appeal, it is the Revenue Cabinet's interpretation that Terry Hall must certify that he is currently an authorized agent of American Homes, Inc. and that, without that status, the Department would be divulging information of the business affairs of American Homes, Inc. in violation of the confidentiality provisions of KRS 131.190(1). Thus, in the absence of any legal authority which is contrary to this position, we defer to the Department in its interpretation and affirm its denial of the request.
We also affirm the Department's denial of the request for a copy of the history text of Mr. Hall's sales and use tax cases on the basis that such records do not exist. Obviously, a public agency cannot afford a requester access to a record that it does not have or that does not exist. 99-ORD-98. The Department discharged its duty under the Open Records Act by affirmatively so advising and explaining why the requested record did not exist. 99-ORD-150. Accordingly, we find no violation of the Open Records Act in this regard.
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 proceedings.
William P. SturmAttorney at Law307 Wilkinson StreetFrankfort, KY 40601
John E. Swain, Jr.AttorneyDivision of CollectionsP.O. Box 5222Frankfort, KY 40602
Michael KalinyakGeneral CounselFinance & Administration Cabinet Capitol Annex, Room 383Frankfort, KY 40601