Case Title: In re HS-122

Citation: 

Docket Number: 2011-128

State: vermont

Court: Vermont Supreme Court

Date: 2011-12-22T00:00:00Z

Document:
In re HS-122 (2011-128)
 
2011 VT 138
 
[Filed 22-Dec-2011]
 
ENTRY ORDER
 
2011 VT 138
 
SUPREME COURT
  DOCKET NO. 2011-128
 
DECEMBER TERM, 2011
 
In re HS-122
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APPEALED FROM:
 
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Superior Court, Bennington Unit,
  
 
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Civil Division
 
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DOCKET NO. 195-5-10
  Bncv
 
 
 
 
 
Trial Judge: John P. Wesley
 
In the above-entitled
cause, the Clerk will enter:
 
¶ 1.            
This case concerns public access to income-adjusted property tax
records.  Appellee Joseph O'Dea seeks a copy of the Town of Manchester's
state property tax adjustment report, which contains a list of the property tax
adjustments of Town taxpayers based in most instances on their income. 
Because we conclude that this report consists of "return information" within
the meaning of 32 V.S.A. § 3102, we hold that the information requested is
confidential.  Therefore, we reverse.
¶ 2.            
Vermont residents pay two property taxesmunicipal property taxes and a
state education property tax, which is collected through municipalities when
they collect local property taxes.  See 32 V.S.A. §§ 5401-5412. 
Residents may, however, be entitled to a property tax adjustment from the
state, which is essentially a reduction in the resident's property tax
liability.  32 V.S.A. §§ 6061-6069.  Somewhat confusingly, the
term "adjustment" in this context refers both to several individual reductions
that are available and to the ultimate sum of these reductions.  The first
two types of adjustment affect the taxpayer's property tax liability and are
based on a taxpayer's household income.  For the first type, an adjustment
is available where the taxpayer's state education property tax burden exceeds a
certain percentage of the taxpayer's household incomethe relevant percentage
itself being a function of income.  See id.
§ 6066(a)(1).  The amount of this adjustment is determined by
household income, the value of the property, and the state's education property
tax rate.  See id.  Although the statute does not include an
explicit income ceiling for eligibility, in practice only households with
income less than approximately $97,000 will qualify for this adjustment. 
For the second type, an adjustment is available to a taxpayer whose household
income does not exceed $47,000 if the taxpayer's total (municipal and state)
property tax liability after the first adjustment exceeds a certain percentage
of household incomethe relevant percentage again being a function of
income.  See id. § 6066(a)(3).  The taxpayer's household
income and total property tax liability after the first adjustment are used to
calculate this adjustment.  This second adjustment essentially provides
low-income households with a rebate for local property taxes.  
¶ 3.            
Finally, in addition to these two income-based adjustments, there is a
third type of adjustment: a household may receive an adjustment in property
taxes by electing to allocate any overpaid income taxes to property
taxes.  See id. § 6066a(b).  Thus, income withholdings or
tax refunds directed toward payment of property taxes also factor into the
total adjustment amount.  In fact, in order to encourage such allocation
of tax refunds, the state offers a small additional adjustment as an incentive
for choosing to allocate an income tax refund in this way.  See id.
§ 6066(h).  The sum of all these various adjustments forms a total
adjustment that the state instructs municipalities to apply to property tax
bills.  See id. § 6066a.  Basically, the total adjustment
represents the amount of the normal property tax liability that a taxpayer is
not required to pay to the municipality.  
¶ 4.            
In order to administer this process, the Department of Taxes calculates
the appropriate total adjustment for each claimant and transmits this
information to the municipality in which the property is located.  Id.
§ 6066a(a)-(b).  The calculation is based on information in the
annual income tax return or other returns submitted contemporaneously with the
income tax return.[1] 
The information for each municipality is transferred in a HS-122 report. 
The report contains a list of all homesteads in the municipality that qualify
for an adjustment as well as the amount of each total adjustment.  The
list documents how much less the municipality should bill in property taxes to
each eligible homestead based on the various adjustments described above. 
The Town's property tax bill to each taxpayer shows the amount of total
property taxes, the share of the total to be paid by the state, and the share
to be paid by the taxpayer.
¶ 5.            
Appellee requested a copy of the HS-122 report for the Town of
Manchester from the Town Treasurer.  The Town denied appellee's request,
asserting that the HS-122 report is exempt from disclosure under various
provisions of 1 V.S.A. § 317(c).  The Town does provide the total
property tax bill of each taxpayer but redacts the information showing the
amount paid by the state and the amount paid by the taxpayer.  Appellee
then appealed this denial to Bennington Superior Court, Civil Division. 
The court held a hearing on the merits on November 15, 2010, and subsequently
issued an opinion declaring the report to be public information and ordering
the Town to produce the report.  The Town appeals from this
decision.  Insofar as this appeal involves construing the statutory scheme
for confidentiality of tax records, our review is de novo.  See In re
South Burlington-Shelburne Highway Project, 174 Vt. 604, 605, 817 A.2d 49,
51 (2002) (mem.) ("Statutory interpretation is a question of law; thus our
review is nondeferential and plenary.").  
¶ 6.            
The Town argued that the information was exempt from disclosure under
two exemptions in the Public Records Act: (1) 1 V.S.A. § 317(c)(1), based on 32
V.S.A. § 3102(a); and (2) 1 V.S.A § 317(c)(6).  The trial courtalthough
recognizing that the Town invoked "four separate exemptions"analyzed the claim
only under the latter subsection, which it found was the Town's "principal
argument."  That subsection exempts "a tax return and related documents,
correspondence and certain types of substantiating forms which include the same
type of information as in the tax return itself filed with or maintained by the
Vermont department of taxes or submitted by a person to any public agency in
connection with agency business."  1 V.S.A. § 317(c)(6).  The
trial court ruled that the information was not covered by the exemption because
it was "derivative information" as described in Finberg v. Murnane, 159
Vt. 431, 435, 623 A.2d 979, 982 (1992).  We concluded in Finberg
that derivative documents were covered by the exemption only to the extent necessary
"to avoid disclosure of information taken from the return and related
documents."  Id.  Thus, under § 317(c)(6) and Finberg,
the court concluded that the confidentiality of the HS-122 report turned on
whether it revealed income information taken from individual returns.[2]  Based on evidence presented by the
plaintiff and the Town, as well as an opinion from the Attorney General's
Office and the report of a study committee of the Legislature, the court
concluded that the total adjustment amount could not be used to calculate the
income of the taxpayer's household in all cases due to the income-independent
third type of adjustment as described above.  Confidentiality was
therefore not deemed necessary.  Accordingly, the trial court concluded
that the HS-122 report was not covered by the exemption in § 317(c)(6).
¶ 7.            
We do not reach the question of whether the HS-122 report is covered by
§ 317(c)(6) because we conclude that the report is confidential under the
statute governing confidentiality of tax records, 32 V.S.A. § 3102. 
As we discussed in Finberg, the confidentiality provisions in the tax
statute can be broader than the exemption for tax records in the Public Records
Act.  See 159 Vt. at 436, 623 A.2d  at 982 ("We are also not persuaded that
we should read the Access to Public Records Act exception as broadly as the
specific exception for tax return information held by the Vermont Commissioner
of Taxes.").  We explained that the Public Records Act exemption may be
viewed "as the minimum protection for tax records applicable to all taxing
authorities and types of taxes" whereas the confidentiality provision in Title
32 may be viewed "as a broader confidentiality policy applicable only to the
state tax information the Legislature has specified."  Id.  If
the tax statute makes information confidential, then that information will also
be confidential under the Public Records Actnot because of the (c)(6)
exemption but because of the (c)(1) exemption for "records which by law are
designated confidential or by a similar term."  1 V.S.A. § 317(c)(1);
see also Finberg, 159 Vt. at 436, 623 A.2d  at 982 ("This is a
recognition that in specific instances the Legislature may choose to go beyond
the general confidentiality policies contained in the public records
exceptions.").  
¶ 8.            
The HS-122 report falls squarely within the confidentiality requirements
of the tax statute.  Subsection (a) of the tax records statute states, "No
present or former officer, employee or agent of the department of taxes shall
disclose any return information to any person who is not
an officer, employee or agent of the department of taxes . . . ."  32
V.S.A. § 3102(a).  Subsection (b) defines " [r]eturn information' "
to include, among other items, "any other data, from any source, furnished to
or prepared or collected by the department of taxes with respect to any
person."  Id. § 3102(b)(3).  The total property tax
adjustment figure is indisputably a datum prepared by the department of taxes
with respect to a person.  Thus, the HS-122 report, compiling these
figures for persons in the Town of Manchester, comes within the ambit of return
information as defined in 32 V.S.A. § 3102(b)(3).  It is therefore
subject to the confidentiality requirement of § 3102(a).  It is
confidential irrespective of whether one can derive the income of a taxpayer
from the amount of the adjustment to the property tax liability.  Because
of the scope of the confidentiality provision of the tax statute, the
distinction used in Finberg between tax return information and
derivative records does not apply.
¶ 9.            
The confidentiality requirement clearly applies to the Town of
Manchester through subsection (h), which states, "If any provision of Vermont
law authorizes or requires the commissioner to divulge or make known in any
manner any return or return information, the person or persons receiving such
return or return information . . . shall be subject to the provisions of
subsection (a) of this section as if such person were the agent of the
commissioner."  Id. § 3102(h).  The tax adjustment
statute requires the commissioner to transfer the HS-122 report to
municipalities like the Town of Manchester.  Thus, the Town employees, as
the recipients of the return information, are subject to the confidentiality
requirements of § 3102(a).  They are therefore prohibited by law from
disclosing the requested information.[3]
¶ 10.        
We recognize that the exceptions to public access to governmental
records must "be construed strictly against the custodians of the records and
any doubts should be resolved in favor of disclosure."  Caledonian-Record
Publ'g Co. v. Walton, 154 Vt. 15, 20, 573 A.2d 296, 299 (1990).  Even
under a rule of strict construction of exceptions, however, we conclude that
the information in this case is not publicly accessible under the plain meaning
of the applicable statute.  The policy choice is for the Legislature, not
this Court.  In 32 V.S.A. § 3102, the Legislature has chosen a policy
of broad confidentiality for income tax information, which we must
implement.  
Reversed.

 
BY THE COURT:
 
 
 
 
 
 
 
Paul L. Reiber, Chief
  Justice
 
 
 
 
 
John A. Dooley, Associate
  Justice
 
 
 
 
 
Marilyn S. Skoglund,
  Associate Justice
 
 
 
 
 
Brian L. Burgess, Associate
  Justice
 
 
 
 
 
Thomas A. Zonay, Superior
  Judge,
 
Specially Assigned
 
 
 

[1]  The information is provided on the
Property Tax Adjustment Claim (Form HS-145) and the Household Income Schedule
(Form HI-144).  The current forms are available at
http://www.state.vt.us/tax/propertyadj.shtml.  The HS-122 reports sought in
this action, however, were from the prior three years.  Note that the
relevant income is that of all members of a household, not necessarily an
individual taxpayer. 
[2]  The court stated that "[e]ach aspect
of the Town's argument . . . is based on the premise that one can accurately
calculate a household's income . . . using the property tax adjustments found
in the HS-122 report." 
[3]  Like the trial court, we are puzzled
by the position of the Commissioner of Taxes that the information is
confidential where held by the tax department but not confidential where held
by employees of a municipality.  In view of § 3102(h), the information is
either publicly accessible when sought from either source or confidential as to
both.