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December 18, 2013
Kentucky Judge Expresses Skepticism Over DOR's Refusal to Release Letter Rulings
by Jennifer Carr

Full Text Published by Tax Analysts®

Based on the tone and content of his comments, a Kentucky circuit court judge appears likely to order the Department of Revenue to release redacted copies of the agency's final letter rulings.

The hearing, which was held December 16 in Frankfort before Franklin Circuit Judge Phillip Shepherd, was part of an ongoing dispute between the department and Mark Sommer, member at Frost Brown Todd LLC, Louisville, on whether the final rulings are subject to the state's Open Records Act or whether the taxpayer confidentiality statute effectively prevents their release.

Tax Analysts later joined the litigation and also seeks to have the rulings published.

At the hearing, Jennifer Barber, managing associate at Frost Brown Todd, represented Sommer and argued that the Open Records Act requires release of public documents with the exception of a few, specific classes of records.

Representing Tax Analysts, Cornish Hitchcock, principal at Hitchcock Law Firm PLLC, Washington, asserted that IRS practice demonstrates that these types of rulings can be published while still maintaining the confidentiality of taxpayer information.

Speaking for the department, Laura Ferguson, assistant general counsel for the DOR, argued that the confidentiality statutes require such significant redaction as to render them unhelpful, especially when balanced against the burden of preparing the 700 existing rulings for publication.

Although Shepherd indicated that he needed to review some additional information, including an attorney general's ruling upholding the department's decision, he appeared inclined to rule in Sommer's favor.

After describing the DOR's publication burden as not insurmountable, Shepherd said the rulings have "real and significant consequences for the taxpayer and the public." Shepherd further noted that he could not think of any other administrative decision made by a public agency that is withheld from the public.

Shepherd later added that he did not see a privacy issue where most business taxes were concerned, particularly property taxes.

Barber was cautiously optimistic about the hearing and described the court as "very engaged in the issue of tax transparency."

Hitchcock said the "judge understood the pros and cons of both sides" and expressed hope that "Kentucky taxpayers will have more information sooner rather than later."

Ferguson declined to comment on the hearing.

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