Without discussion, the Kentucky legislature poked another hole in the state’s Open Records Act late Wednesday, tucking a provision that would make tax-related records secret into a 233-page tax bill that was not shared with the public until after it won final passage in the House and Senate.
House Bill 354 — now headed to Gov. Matt Bevin’s desk for his signature or veto — will cut taxes by $105 million a year with a batch of special breaks for banks and others.
But it also will place off-limits to the public several categories of documents held by the Kentucky Department of Revenue, including final tax rulings that are not appealed, requests for tax guidance, private letter rulings and requests concerning the division of income for interstate businesses.
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The Revenue Department asked for the last-minute language to shield its employees from the legal liability of accidentally releasing confidential taxpayer information in requested records, Senate President Robert Stivers, R-Manchester, said Thursday. A spokeswoman for the Revenue Department said she could not immediately comment.
By dropping these Open Records Act exemptions into a bill headed to final passage, lawmakers managed to avoid the public hearings and debate that are supposed to accompany a substantive change in law, said Amye Bensenhaver, a former assistant attorney general who is an authority on Kentucky’s open records and open meetings laws.
“That’s the scary thing about these legislative sessions. They’re so crafty, they get stuff like this stuck into bills when nobody is looking and then passed into laws that nobody gets a chance to read until after the fact,” Bensenhaver said.
A series of open records decisions up through the Kentucky Supreme Court last fall held that the types of records mentioned in the tax break bill must be made public on request, as long as any information identifying individual taxpayers is removed.
The case started when Mark Sommer, a tax lawyer with Frost Brown Todd in Louisville, filed an Open Records Act request with the Department of Revenue in 2012 asking for a set of final administrative decisions indicating how the agency set its tax policy.
Initially, the state said it would comply, but then it refused, saying it could not adequately redact the records without possibly disclosing confidential taxpayer information.
When Sommer appealed the state’s denial of his request, the attorney general’s office sided with the Department of Revenue. But Sommer prevailed in subsequent rulings from Franklin Circuit Court — at which point he was given some of the records he wanted, rulings from cases that were appealed publicly to the Kentucky Claims Commission — and from the Kentucky Court of Appeals.
The Supreme Court affirmed the Court of Appeals’ decision in November.
In its ruling, the Court of Appeals said the documents Sommer sought “contain a wealth of information relative to the implementation of our tax laws.”
“Our review of these rulings indicates that they contain 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. We are persuaded that that information can indeed be made available without jeopardizing the privacy interests of individual taxpayers,” the appellate court wrote.
The Department of Revenue still has not provided Sommer with all of the documents that he wanted. The agency filed a motion for reconsideration with the Supreme Court after losing in November, which is still pending.
Sommer’s attorney, Jennifer Barber, said Thursday that she and her client were reviewing the newly passed bill and did not have an immediate comment on it.
The Revenue Department is only one of many government agencies to wrongly assert that documents can’t be released to the public because some of their contents might have to be redacted, said Bensenhaver, who prepared friend-of-the-court briefs in support of Sommer’s case. If you can black out a taxpayer’s name and address and otherwise release a file showing how a state tax appeal was handled, then the law says you must, she said.
“They so broadly over-construed the privacy provision in the law that applies to them,” Bensenhaver said. “And I’m really annoyed and disappointed at the way they went about this. It’s so surreptitious. You lose in court, so you stick a change like this into a whole other bill when nobody is looking.”
Stivers, the Senate president, said lawmakers were not told there is a pending lawsuit directly related to the exemption the Department of Revenue wants added to state open records law.
“See, we were unaware of that. We didn’t know that was anything related to this case,” Stivers said. “The way it was explained to us, the impact of it, was that there would be occasions, because of some issues that had arisen, where they wanted to make sure their personnel were protected from any kind of criminal liability.”