OF THE STATE OF CONNECTICUT
|In the Matter of a Complaint by||FINAL DECISION|
|against||Docket #FIC 2004-163|
Commissioner, State of Connecticut,
Department of Revenue Services,
|Respondent||March 9, 2005|
The above-captioned matter was heard as a contested case on August 5 and October 7, 2004, at which times the complainant and the respondent appeared and presented testimony, exhibits and argument on the complaint.
After consideration of the entire record, the following facts are found and conclusions of law are reached:
1. The respondent is a public agency within the meaning of §1-200(1)(A), G.S.
2. It is found that, on February 26, 2004, the complainant made a request to the respondent for an extensive array of records relating to the collection of the sales tax at Connecticut supermarkets.
3. By letter dated March 29, 2004, the respondent declined to provide any of the records requested on February 26, 2004. In seven numbered paragraphs addressing different aspects of the complainant’s request, respondent claimed that the various records requested were exempt from mandatory disclosure as preliminary drafts and notes, or as tax return information, or both, citing §§1-210(b)(1), 1-210(b)(10), and 12-15(a), G.S.
4. By letter dated and filed with the Freedom of Information Commission (“Commission”) on April 1, 2004, the complainant appealed to the Commission, alleging that the respondent’s failure to provide the various records violated the Freedom of Information Act (“FOIA”).
5. At the August 5, 2004 hearing, the complainant narrowed his request to the records of audits of supermarkets collecting the sales tax, but limited in time to audits completed after January 1, 2002 (the “requested records”). The hearing officer ordered the respondent to file a written statement concerning the feasibility of submitting these audit records for an in camera inspection, and provided the complainant an opportunity to comment on respondent’s statement. The requested records were within the scope of complainant’s original request, as acknowledged at paragraph 2 of respondent’s March 29, 2004 letter, which is described at paragraph 3, above.
6. In a three page, single spaced letter dated August 23, 2004, the respondent detailed her claim that disclosure of the audit records would unlawfully disclose “return information”. Citing the decision of the United States Supreme Court in Church of Scientology of California v. IRS, 484 U.S. 9 (1987) (“Scientology”), the respondent argued that this decision established that the relevant federal statutes “did not permit the disclosure of return information merely by redacting taxpayer-identifying information”. She further stated that the relevant Connecticut statutes were “substantively identical” to the federal statutes, and that Connecticut law was that federal law should guide interpretation in this circumstance.
7. At both the August 5 and October 7, 2004, hearings, the complainant argued that the supermarkets are not the taxpayers when they collect sales tax from their customers, only tax collectors. Because the retail purchasers should be considered the taxpayers, complainant reasoned that the prohibition against the disclosure of “return information” did not apply to the requested records.
8. It is found that the requested records constitute fifty-five audit files, which include approximately 11,000 pages. However, the resolution of the case turns on the question of law that was first fully developed in respondent’s August 23, 2004 letter.
9. Section 1-210(b)(10), G.S., exempts from mandatory disclosure:
Records, tax returns, reports and statements exempted by federal law or state statutes…. (emphasis added)
10. The very first phrase of §1-210(a), G.S. recognizes the exemptions from mandatory disclosure established in other state statutes. Sections 12-15(a) and (h), G.S., set forth exemptions for tax returns and return information using “an elaborate description”, to quote the U.S. Supreme Court’s language for describing the federal statute which is nearly identical to §12-15(h)(2), G.S. Scientology at 15.
11. Section 12-15(h)(2), G.S., defines “return information”, but also includes a sentence stating that such information “does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer” (emphasis added). In similar fashion, 26 U.S.C. §6103(b)(2) excludes from “return information” for purposes of federal law “data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer” (emphasis added). This provision of the federal law is known as the Haskell Amendment and its scope was the express subject of Scientology.
12. Chief Justice Rehnquist, delivering the unanimous opinion of the Court, affirmed the Court of Appeals conclusion that:
the Haskell Amendment requires that some modification have occurred in the form of the data contained in the documents. [M]ere deletion of the taxpayer’s name or other identifying data is not enough, since that would render the reformulation requirement entirely duplicative of the nonidentification requirement. (emphasis added)
Scientology at 13.
The Court went on to recognize that “return information” might include the report of an audit examination, id. at 14, the very records that are at issue in the present contested case. The opinion emphasized that the purpose of the Haskell Amendment was for research purposes and to ensure that statistical studies continue to be subject to FOIA disclosure. So, to summarize, Scientology establishes that return information, even if all taxpayer identification is removed, remains return information not subject to mandatory disclosure.
13. It is concluded that when the language of a federal tax statute is nearly identical to that of a state statute, Connecticut law is that the federal law should guide interpretation. Commissioner of Revenue Services v. Peska, 220 Conn. 77, 83 (1991); See Carpentari-Waddington, Inc. v. Commissioner of Revenue Services, 231 Conn. 355, 364 (1994).
14. It is also concluded that the exclusion from the definition of “return information” set forth at paragraph 10, above, does not permit the disclosure of the requested records merely by redacting taxpayer-identifying information.
15. Moreover, it is also concluded that §12-408, G.S., imposes the sales tax “on all retailers…[f]or the privilege of making any sales…at retail”, and that the retailer simply collects reimbursement for the tax from the purchaser in trust for the State of Connecticut. If a retailer fails to collect the sales tax from purchasers, the retailer is still liable for the tax.
16. It is therefore concluded that the supermarkets are the taxpayers when they collect sales tax from their customers, and that the prohibition against the disclosure of “return information” does apply to the audits of supermarkets, which are the requested records.
17. Finally, it is concluded that respondent did not violate §1-210(a), G.S., when she declined to disclose the requested records, even with the redaction of taxpayer identifying information.
The following orders by the Commission are hereby recommended on the basis of the record concerning the above-captioned complaint:
1. The complaint is hereby dismissed.
2. This contested case has had the incidental effect of developing some testimony under oath concerning overpayment of the sales tax at supermarkets that could be of use to the complainant as he pursues his public policy concerns.
Approved by Order of the Freedom of Information Commission at its regular meeting of March 9, 2005.
Petrea A. Jones
Acting Clerk of the Commission
PURSUANT TO SECTION 4-180(c), G.S., THE FOLLOWING ARE THE NAMES OF EACH PARTY AND THE MOST RECENT MAILING ADDRESS, PROVIDED TO THE FREEDOM OF INFORMATION COMMISSION, OF THE PARTIES OR THEIR AUTHORIZED REPRESENTATIVE.
THE PARTIES TO THIS CONTESTED CASE ARE:
38 Parish Road
Rocky Hill, CT 06067 and
c/o Daniel S. Blinn, Esq.
Consumer Law Group, LLC
35 Cold Spring Road
Rocky Hill, CT 06067
Commissioner, State of Connecticut,
Department of Revenue Services
c/o Paul M. Scimonelli, Esq.
Assistant Attorney General
55 Elm Street
PO Box 120
Hartford, CT 06141-0120
Petrea A. Jones
Acting Clerk of the Commission