Does the public have a right to know how the Department of Revenue interprets Kentucky’s tax laws in recurring disputes that affect taxpayers?

On October 30, 2017, the Bluegrass Institute Center for Open Government filed an amicus curiae, or friend of the court, brief in which it urged the Kentucky Supreme Court to affirm a Court of Appeals’ opinion recognizing that right. It is the first amicus brief filed by the Center for Open Government since the Center was created earlier this year.

The Bluegrass Institute Center for Open Government is not a party to the case, Finance and Administration Cabinet, Department of Revenue v. Mark F. Sommer and Tax Analysts, but filed the brief “because it has an immediate and direct interest in ensuring that interpretation of the Open Records Law, the issue that lies at the heart of this appeal, continues to reflect the legislatively and judicially recognized presumption of openness for the public good.”

The purpose of the brief is to assist the Court in better understanding the broad importance of the legal issues presented.

The case involves an open records request submitted to the Finance and Administration Cabinet and Department of Revenue in 2012 for copies of unappealed “final rulings” in tax protests brought under KRS 131.110. Revenue issues these final rulings when the disputed tax issues cannot be resolved through the KRS 131.110 process. It has consistently denied the public access to the rulings based on taxpayer privacy and, in this case, the assertion that redaction of personal information from the rulings would impose an unreasonable burden.

The Court of Appeals determined that production of the unappealed final rulings “is not prohibited by any provision of law.” “Quite the contrary,” the court reasoned, as long as the rulings are “suitably redacted by the Department of Revenue to protect taxpayer privacy,” production “is required by our Open Records Act.”“[T]he substantive portions of final rulings,” the court observed, “contain a wealth of information relative to the implementation of our tax laws” to which the public has been denied access under Revenue’s “unreasonably and overly broad view of KRS 131.190(1)(a) and KRS 131.081(15).” The court rejected Revenue’s claims and concluded that “great bodies of information related to the reasoning and analysis of the Department of Revenue with respect to its task in administration of our tax laws . . . can indeed be made public without jeopardizing the privacy interests of individual taxpayers.”

In its brief to the Supreme Court, the Center for Open Government focused on Revenue’s argument that “the specter of ‘suitable redaction’ is a red herring because the ORA redaction requirement only applies to records actually subject to the ORA,” an argument that is premised on the erroneous belief that an agency record containing both excepted and nonexcepted information is not a public record.

Such a record, we noted, “is no less a public record for purposes of open records analysis, and public agencies are statutorily mandated to respond to a request for such a record by separating he excepted and making the nonexcepted material available for examination.” We emphasized the grave threat to public access that Revenue’s argument for ”a wholesale blanket approach to withholding public records” represents.

We drew on an extensive body of open records caselaw recognizing and implementing the legislative presumption favoring access to public records as well as the single reported case in which an agency unsuccessfully argued that the duty to redact excepted information and produce nonexcepted information was overly burdensome.

The Bluegrass Institute Center for Open Government stands with the appellees in support of the Court of Appeals’ holding which, in our view, gives “maximum effect both to the privacy protections of taxpayers and to the public’s interest in knowing how our tax laws are administered.”

Does the public have a right to know how the Department of Revenue interprets Kentucky’s tax laws in recurring disputes that affect taxpayers?  The simple answer is “yes.”