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September 10, 2012
Wyoming Transparency: Policy Sacrifices Openness for Privacy

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by Jennifer Carr --

News Analysis

Wyoming ( Wyoming Department of Revenue's policy of not publishing letter rulings, combined with a unique state law protecting the confidentiality of property sale information, is less than ideal from a transparency perspective, practitioners and state officials say.

Wyoming is considered a taxpayer-friendly state. It has no corporate or personal income tax. The Tax Foundation rated Wyoming as having the best state business tax climate and the fourth lowest tax burden in 2012. Up to 80 percent of the state's tax revenue comes from mineral production. Wyoming also has a state and local sales tax and an ad valorem property tax administered by the counties.

But legislative efforts at taxpayer friendliness may be going too far and creating problems by overemphasizing taxpayer privacy and failing to provide a framework for tax transparency.

Letter Rulings

The state's practitioners give the state reasonably good marks for tax guidance, despite its policy of not publishing private letter rulings.

Wyoming taxpayers may request a letter ruling by letter or e-mail. DOR Excise Tax Division Administrator Dan Noble said that although there is no statute granting the department specific letter ruling authority, the DOR issues the letter rulings under its general authority to operate the state's tax system.

Noble added that the requests and responses are tracked through an internal database that allows ruling authors to examine prior rulings by topic. The ideal turnaround time is two weeks, according to Noble, who acknowledged that that time frame is not always met. Taxpayers who rely on the rulings are typically immune from penalties and interest, assuming they properly described the facts and circumstances of their tax situation in their request.

Although it isn't barred from publishing the letter rulings, the DOR declines to do so. Noble cited the state's taxpayer confidentiality statute as the reason for withholding the rulings. The statute, found in the taxpayer bill of rights, states that taxpayers have "a right to confidentiality as to records protected against disclosure by statute." Provisions in the tax code detail the confidentiality rights for the different types of taxes and generally prohibit tax administrators from disclosing information obtained in the course of their duties.

Practitioners in the state question the policy of not publishing the letter rulings. Lawrence Wolfe, a partner at Holland & Hart LLP, Cheyenne, said that in some of his letter ruling requests, he doesn't identify the client, thus eliminating any confidentiality concern. Randy Reed, a partner at Dray, Dyekman, Reed & Healey, P.C., Cheyenne, said that the DOR's apparent concern about taxpayers relying on letter rulings for other taxpayers is misguided because lawyers are perfectly capable of distinguishing facts from one case to another.

Wolfe and Reed agreed that although from a transparency and guidance perspective, it would be helpful if the letter rulings were published, other department policies, such as using letter rulings to issue general guidance, prevent some of the negative effects of withholding publication that result in other states, like Washington.

Noble and Reed also agreed that if the DOR notices a pattern of requests in letter rulings, it may issue general guidance on the matter. Wolfe added that the DOR does a "pretty good job of providing advice to people" and is generally receptive regarding requests for informal advice.

Statements of Consideration

The transparency of Wyoming's property tax appeals process could also be improved.

As in most other states, documents must be filed with local officials, including the property tax assessor, when property is sold in the state. In Wyoming, the document is called a statement of consideration and must include the date of the sale, the purchase price, and other terms of the sale.

The difference in Wyoming is that that information isn't public as a matter of state law. A survey of surrounding states -- and several across the country -- showed that such information is almost always readily available online, usually on county websites. Property owners in Wyoming who contest their assessments may see only a limited number of statements and only during a 30-day appeals period. It is a misdemeanor to publicly disclose information from the statements, except as specifically allowed, and violators are subject to a fine of up to $750 and up to six months' imprisonment.

Thus, property owners may appeal using only sales records relied on by the county assessor, and they may not, according to a Wyoming Supreme Court opinion interpreting the statute, "review all statements of consideration [the taxpayer] deems relevant."

Albany County assessor Grant Showacre, president of the Wyoming County Assessor's Association, said that although taxpayers are bound by the 30-day appeals period, they are generally allowed to see any sale that affected their property valuation and not just those that the assessor believed most closely resembled their property. Most of those appealing their tax assessments, according to Showacre, want to see what sales the assessor didn't include in the valuation report.

The problem with the system, according to Rep. Mike Madden (R), is that it reduces "openness and transparency for preparing tax appeals for residential property." Even though Madden couldn't say whether the policy makes it more difficult for taxpayers to challenge their assessments -- aside from the time constraints -- he described it as problematic.

"It's not an up-to-date way of doing things," he said.

Showacre agreed. "I've got nothing to hide," he said. But the statute "gives the appearance" that something is being hidden and creates "transparency questions" in the mind of the taxpayer, he said.

Attempts have been made to change the statute. In 2009 and 2010, bills were introduced in the Legislature that would have made the statements of consideration for residential property public records. Both bills failed in the House after passing the Senate.

Madden said that agricultural interests were primarily responsible for the amendment's failure, because they want their property purchases and sales treated as proprietary information. Even though the legislation would have applied only to residential property, agricultural interests feared the change would eventually affect other property classes.

However, Showacre said the state's real estate agents wanted to keep the information private in an effort to maintain the value of their services. Attempts to contact the Wyoming Association of Realtors to learn its position on keeping statements of consideration private were unsuccessful.

Erin Taylor of the Wyoming Taxpayers Association highlighted the change as one of her organization's goals for the Legislature. She may be in luck. Madden said he intends to introduce the legislation in the next session, perhaps with the support of a different industry.

"I'd like to take a pass on it again," Madden said.

Showacre said that if the amendment passes, information for his county would be online as quickly as possible.


Although Wyoming does a good job of offering guidance to its taxpayers, there is still room for improvement, even if the DOR's practice of publishing guidance based on letter rulings appears to lessen the transparency problem created by keeping them secret.

And keeping property tax assessments secret only compounds the state's transparency problems, which have two common characteristics.

First is an overemphasis on taxpayer and property owner confidentiality. Taxpayers deserve and should expect nondisclosure of their confidential tax information. However, Wyoming goes above and beyond many states in that regard. Nothing in the confidentiality statutes prohibits publishing letter rulings, and most states -- many of which have similar confidentiality requirements -- publish redacted versions of the rulings without any difficulty. And, unlike Wyoming, most other states freely release information regarding property sales.

The second characteristic was identified by Showacre when he said he would like to put all property sale information online so taxpayers could make their own judgments about their tax situation and appeal.

The DOR and county assessors don't appear to be deliberately hiding relevant information from taxpayers; both appear to be effectively providing all information that they deem relevant and legally available. However, such systems still require a vetting on the part of government officials. The more efficient -- and more transparent -- approach would be to offer everything and allow taxpayers to decide what they deem relevant for their appeal and tax strategy.

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