23-ORD-199
August 3, 2023
In re: Mark Sommer/Kentucky Department of Revenue
Summary: The Kentucky Department of Revenue (the “Department”)
violated the Open Records Act (“the Act”) when it denied a request for
redacted copies of taxpayer settlement agreements.
Open Records Decision
Mark Sommer (“Appellant”) submitted a request to the Department for copies
of “any settlement Agreement between the [Department] and any taxpayer having
distilled spirits in a bonded warehouse, which is related to the ongoing assessment or
collection of tax under” KRS 132.140 as amended by 2023 Ky. Acts. Ch. 148 § 1. The
Appellant acknowledged that the records “released by the Department shall be
sufficiently redacted to protect the involved taxpayer’s confidentiality under
applicable provisions of Kentucky law.” In a timely response, the Department denied
his request under KRS 131.190(1) and KRS 61.878(1)(l). This appeal followed.
The disclosure of certain tax information is prohibited under KRS 131.190(1),
which provides that “[n]o . . . person, shall intentionally and without authorization
inspect or divulge any information acquired by him or her 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.” KRS 131.190(1) is incorporated into the Act under
KRS 61.878(1)(l), which exempts from inspection public records “the disclosure of
which is prohibited or restricted or otherwise made confidential by enactment of the
General Assembly.” However, the Act also requires that “[i]f any public recordcontains material which is not excepted . . . the public agency shall separate the
excepted and make the nonexcepted material available for examination.”
KRS 61.878(4); see also Dept. of Revenue v. Eifler, 436 S.W.3d 530, 533 (Ky. App.
2013) (affirming the Attorney General’s decision to require the Department to redact
private information that would reveal a taxpayer’s identity from records related to
registration for the “Utility License Tax” and provide the remainder of the
documents).
Here, the Appellant asserts that the requested records could be “sufficiently
redacted to protect the involved taxpayer’s confidentiality” under KRS 61.878(4). In
contrast, the Department argues that “redaction of taxpayer settlement agreements
pursuant to KRS 61.878(4) is not possible.”
To determine whether the taxpayer settlements could be redacted under
KRS 61.878(4), and to ensure the Department has carried its burden of proof, the
Office asked the Department to provide for the Office’s confidential review one
taxpayer settlement agreement that would accurately represent the substance of all
the requested settlement agreements. See KRS 61.880(2)(c). Initially the Department
agreed to provide the Office with one such agreement. However, the Department later
notified the Office that it would not provide an actual agreement because it is
prohibited from disclosing “information regarding the tax schedules, returns, or
reports required to be filed with the department or other proper officer, or any
information produced by . . . investigation, insofar as the information may have to do
with the affairs of the person’s business.” KRS 131.190(1). The Department claims
the Office’s authority under KRS 61.880(2)(c) to obtain copies of the actual records
involved in a dispute under the Act does not meet one of the exceptions in
KRS 131.190.
Instead of providing a copy of an actual settlement agreement with a taxpayer,
the Department provided the Office with a “mocked-up settlement agreement” that
it claims accurately reflects the general contents of the settlement agreements at
issue. The Office cannot reveal the contents of the “mocked-up settlement
agreement.” See KRS 61.880(2)(c); 40 KAR 1:030 § 3. However, the “mocked-up
settlement agreement” can accurately be described as a template, or form agreement,
in which a taxpayer’s information is simply inserted. The language of the agreement
makes no reference to any particular taxpayer and the identity of any taxpayer could
not be ascertained by any of the prepopulated language. In other words, if the
“mocked-up settlement agreement” really is an accurate reflection of the settlement
agreements, then the Department could easily redact the fields of information itinserted that were unique to an individual taxpayer and the remainder of the
agreement would not divulge “the affairs” of that taxpayer. Accordingly, the
Department violated the Act when it denied the Appellant’s request for records under
KRS 131.190(1) and KRS 61.878(1)(l) because the information protected by those
exemptions can be redacted under KRS 61.878(4).
A party aggrieved by this decision may appeal it by initiating an action in the
appropriate circuit court under KRS 61.880(5) and KRS 61.882 within 30 days from
the date of this decision. Under 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 proceedings. The Attorney General will accept notice of the complaint
emailed to OAGAppeals@ky.gov.
Daniel Cameron
Attorney General
s/ Matthew Ray
Matthew Ray
Assistant Attorney General
#211
Distributed to:
Mark F. Sommer
Sherry D. Dungan
Bethany Atkins Rice