Title: Preti Flaherty Beliveau & Pachios LLP v. State Tax Assessor

State: maine

Issuer: Maine Supreme Court

Document:

MAINE SUPREME JUDICIAL COURT 
Reporter of Decisions 
Decision: 
2014 ME 6 
Docket: 
Cum-13-165 
Argued: 
October 7, 2013 
Decided: 
January 16, 2014 
  
Panel: 
SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, and GORMAN, JJ. 
 
 
PRETI FLAHERTY BELIVEAU & PACHIOS LLP 
  
v. 
  
STATE TAX ASSESSOR 
  
  
ALEXANDER, J. 
 
[¶1]  Preti Flaherty Beliveau & Pachios LLP (Preti) appeals from the 
judgment of the Superior Court (Cumberland County, Warren, J.) affirming the 
Maine Revenue Service’s denial of Preti’s Freedom of Access Act request, 
pursuant to 1 M.R.S. §§ 402(3) and 408-A (2013), for documents containing 
methodologies, formulas, or calculations relating to apportionment of Maine 
income tax liability for nonresident partners of a professional services partnership 
entity based in or with a significant business presence in Maine.  The Maine 
Revenue Service had denied Preti’s request, citing the privacy protections in 
36 M.R.S. § 191(1) (2013), which excepts certain tax information and records from 
the definition of public records pursuant to 1 M.R.S. § 402(3)(A).   
[¶2]  On appeal, Preti argues that the court erred in its interpretation of 
36 M.R.S. § 191(1) and that any confidential information can be redacted from the 
 
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documents it seeks.  Because the documents that are covered by Preti’s request for 
information consist entirely of information deemed confidential pursuant to 
36 M.R.S. § 191(1), we affirm. 
I.  CASE HISTORY 
 
[¶3]  Preti is a Maine-based law firm, organized as a limited liability 
partnership.  It was originally organized in Maine, and its largest presence is in 
Maine.  However, Preti also has affiliated law offices in other states, including an 
office with resident partners in Concord, New Hampshire.   
[¶4]  The Maine income tax liability of Preti’s New Hampshire partners was 
subject to previous litigation leading to our opinion in Luker v. State Tax Assessor, 
2011 ME 52, 17 A.3d 1198.  In Luker, the Preti partners in the New Hampshire 
office had each established separate professional corporations to receive 
partnership distributions from Preti.  Id. ¶ 3.  We held that “the partnership 
distributions should be attributed to the individual Attorneys for Maine income tax 
purposes,” and “that each Attorney individually, and not his respective 
[professional corporation], earned the income from the partnership distributions in 
2004 and 2005.”  Id. ¶ 16. 
[¶5]  Continuing its efforts to determine the proper Maine income tax 
treatment for distributions to its New Hampshire partners, Preti filed a Freedom of 
Access Act request pursuant to 1 M.R.S. §§ 401-521 (2013) with the Maine 
 
3 
Revenue Service and the State Tax Assessor.  That request sought access to State 
Tax Assessor records regarding the apportionment applied to other firms with 
nonresident partner income pursuant to 36 M.R.S. §§ 5192(5)1 and § 5211(17)2 
(2013).  The Maine Revenue Service denied Preti’s request to the extent that it 
sought taxpayer-specific information and also requested clarification.  Preti 
responded by limiting the scope of its request and by filing an appeal of the partial 
denial with the Superior Court pursuant to 1 M.R.S. § 409(1) (2013).  While Preti’s 
appeal to the Superior Court was pending, Preti further limited its document access 
request. 
[¶6]  Ultimately, Preti’s request, as modified, sought all allocation and 
apportionment formulas, methodologies, or calculations applicable to the 
determination of Maine income tax for nonresident partners in a partnership 
pursuant to 36 M.R.S. §§ 5192(5) and 5211(17).  Preti expressly did not seek 
                                         
1  Title 36 M.R.S. § 5192(5) (2013) provides: 
 
Alternate methods. The assessor may, on application, authorize or may require the use 
of such other methods of determining a nonresident partner’s portion of partnership items 
derived from or connected with sources in this State, and the modifications related 
thereto, as may be appropriate and equitable, on such terms and conditions as he may 
require. 
 
2  Title 36 M.R.S. § 5211(17) (2013) provides: 
 
Variations. If the apportionment provisions of this section do not fairly represent the 
extent of the taxpayer’s business activity in this State, the taxpayer may petition for, or 
the tax assessor may require, in respect to all or any part of the taxpayer’s business 
activity, if reasonable: . . .  
D. The employment of any other method to effectuate an equitable 
apportionment of the taxpayer’s income. 
 
 
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(1) records over ten years old; (2) records involving entities other than 
partnerships; (3) any emails, correspondence, or other records unless they 
expressly set forth actual apportionment formulas, methodologies, and/or 
calculations used to apportion or otherwise determine Maine income taxes owed by 
nonresident partners in a Maine partnership; or (4) the identity of any taxpayer or 
the details of taxpayer-specific financial information. 
[¶7]  In October 2012, the Maine Revenue Service completed its search in 
response to Preti’s request and produced two documents that contained no 
taxpayer-specific information of any kind.  The Maine Revenue Service also filed 
with the court for in camera review seven documents, which are the subject of this 
appeal.   
[¶8]  After conducting a de novo trial pursuant to 1 M.R.S. § 409 and after 
reviewing the documents in camera, the Superior Court determined that the 
documents it had reviewed were confidential pursuant to 1 M.R.S. § 402(3)(A) and 
36 M.R.S. § 191(1), and thus not subject to redaction or disclosure.  Preti timely 
appealed from that judgment.   
II.  LEGAL ANALYSIS 
 
[¶9]  Preti argues that the privacy protection of section 191(1) is limited to 
information provided to the Maine Revenue Service by the taxpayers and does not 
extend to the Maine Revenue Service’s own methodologies, formulas or decisions.  
 
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It further contends that any information exempted from disclosure by section 
191(1) can be redacted to allow access to the Maine Revenue Service’s formulas 
and methodologies. 
A. 
Standard of Review and Rules of Statutory Construction 
[¶10]  We review the statutory construction of the Freedom of Access Act 
(FOAA) de novo as a question of law.  See Anastos v. Town of Brunswick, 
2011 ME 41, ¶ 5, 15 A.3d 1279.  Statutory exceptions to the FOAA are to be 
strictly construed to carry out the legislative mandate that the FOAA be “liberally 
construed and applied to promote its underlying purposes and policies.”  1 M.R.S. 
§ 401 (2013); Cyr v. Madawaska Sch. Dep’t, 2007 ME 28, ¶ 8, 916 A.2d 967.  
When an agency denies a FOAA request, the agency bears the burden of 
establishing that there is just and proper cause for the denial.  Anastos, 2011 ME 
41, ¶ 5, 15 A.3d 1279; Dow v. Caribou Chamber of Commerce & Indus., 2005 ME 
113, ¶ 9, 884 A.2d 667.   
 
[¶11]  When interpreting a statute, we accord its words their plain meaning 
and will look beyond those words only if the result of a plain meaning reading is 
illogical or absurd.  Cyr, 2007 ME 28, ¶ 9, 916 A.2d 967.  We will consider the 
whole statutory scheme for the section at issue in seeking to obtain a harmonious 
result.  Stromberg-Carlson Corp. v. State Tax Assessor, 2001 ME 11, ¶ 9, 765 A.2d 
566.  If the words of the statute are ambiguous, we will then look to the legislative 
 
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history to determine the intent of the legislature.  Cyr, 2007 ME 28, ¶ 9, 916 A.2d 
967. 
B. 
Plain Meaning of Section 191(1) 
[¶12]  The FOAA provides the public the right to inspect and copy any 
“public record.”  1 M.R.S. § 408-A (2013).  A “public record” is defined as “any 
written, printed or graphic matter or any mechanical or electronic data compilation 
from which information can be obtained . . . that is in the possession or custody of 
an agency or public official of this State . . . except: (A) [r]ecords that have been 
designated confidential by statute. . . .”  1 M.R.S. § 402(3)(A).  Thus, all records in 
the possession of a state agency are public records subject to disclosure unless 
explicitly designated confidential by statute.  
 
[¶13]  Title 36 M.R.S. § 191(1) designates certain tax information as 
confidential, excepting that information from the definition of public record 
contained in 1 M.R.S. § 402(3).  Section 191(1) provides, in pertinent part: 
[I]t is unlawful for any person who, pursuant to this Title, has been 
permitted to receive or view any portion of the original or a copy of 
any report, return or other information provided pursuant to this Title 
to divulge or make known in any manner any information set forth in 
any of those documents or obtained from examination or inspection 
under this Title of the premises or property of any taxpayer. This 
prohibition applies to both state tax information and federal tax 
information filed as part of a state tax return. 
 
[¶14]  Preti argues that section 191(1) protects only information provided by 
taxpayers to the Maine Revenue Service.  However, nowhere in the text of section 
 
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191(1) does the phrase “provided by the taxpayers” exist, nor can it be implied 
from a plain reading of section 191(1) that its privacy protections apply solely to 
tax returns, reports, or other information “provided pursuant to this Title” by the 
taxpayer.  36 M.R.S. § 191(1).  Section 191(1) prohibits disclosure of any 
information appearing in “any report, return or other information provided 
pursuant to [Title 36].”  Thus, even when strictly construed, the language of 
section 191(1) creates a broad sweep that protects all information, from whatever 
source, provided pursuant to Title 36, including information generated by the 
Maine Revenue Service.   
[¶15]  Section 191(1) also prohibits the disclosure of “any information set 
forth in any of those documents or obtained from examination or inspection under 
this Title of the premises or property of any taxpayer.”  This language 
affirmatively indicates that any information the Maine Revenue Service generates 
from review of taxpayer specific returns and information is protected. 
C. 
Statutory Context 
 
[¶16]  This interpretation is confirmed by the statutory context in which 
section 191(1) appears.  See Stromberg-Carlson Corp., 2001 ME 11, ¶ 9, 765 A.2d 
566 (“In determining plain meaning, we consider the whole statutory scheme for 
which the section at issue forms a part so that a harmonious result, presumably the 
 
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intent of the Legislature, may be achieved.”).  Section 191(2) contains many 
detailed exemptions from the section 191(1) privacy protections. 
 
[¶17]  Preti’s interpretation of section 191(1) would render multiple 
exemptions in section 191(2) unnecessary surplusage, contrary to our rules of 
construction.3  See Allied Resources, Inc. v. Dep’t of Public Safety, 2010 ME 64, 
¶ 15, 999 A.2d 940 (“All words in a statute are to be given meaning, and none are 
to be treated as surplusage if they can be reasonably construed.”).  For example, 
section 191(2)(H) authorizes the Maine Revenue Service to disclose the reasons for 
revocation of a taxpayer’s Title 36 registration.  The reasons for revocation of a 
taxpayer’s registration is information generated by the Maine Revenue Service, not 
information submitted to the Maine Revenue Service by the taxpayer.  Under 
Preti’s interpretation, this information would not be confidential and there would 
be no need for an exemption allowing for the release of this information. 
[¶18]  At oral argument, there was some discussion regarding the 
applicability of 36 M.R.S. § 191(2)(UU) (2012).  Because the Legislature amended 
section 191(2)(UU) differently in two Public Laws, the Maine Revised Statutes for 
2012 contained two exemptions labeled UU.  See id.  One exempted from 
protection the production of any reconsideration decision or other document setting 
                                         
3  Title 36 M.R.S. § 191(2)(H), (L), (P), (Q), (Y), (EE), (JJ) (2012) all contain exemptions allowing for 
the release of information obtained, maintained, issued, and/or generated by the Maine Revenue Service. 
 
 
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forth or discussing the assessor’s practice, interpretation of law, or application of 
the law to particular facts in a redacted format, pursuant to a discovery or a FOAA 
request.  P.L. 2011, ch. 644, § 5.  The other UU exemption struck the language 
regarding the production of other documents, allowing only the production of 
reconsideration decisions and advisory rulings issued on or after July 1, 2012.  
P.L. 2011, ch. 694, § 8.  Review of the legislative history of the UU exemption 
demonstrates that neither version is applicable in this case because ultimately they 
only exempt redacted reconsideration decisions and advisory rulings issued on or 
after July 1, 2012 from section 191(1) confidentiality, and none of the documents 
at issue in this case fall into those categories.  
 
[¶19]  Based on the plain language of section 191(1) and the statutory 
context in which section 191(1) appears, section 191(1) unambiguously mandates 
that all taxpayer-specific information received or generated by the Maine Revenue 
Service pursuant to Title 36 is confidential, including federal tax return 
information, and is not subject to disclosure under the FOAA.  
 
[¶20]  Because all of the information contained in the documents at issue 
here is protected by section 191(1), Preti is not entitled to disclosure of the 
documents pursuant to the FOAA.  See Springfield Terminal Ry. Co. v. Dep’t of 
Transp., 2000 ME 126, ¶ 11 n.4, 754 A.2d 353 (noting that when a document 
 
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contains only protected information an agency need not disclose any portion of the 
document). 
 
The entry is: 
Judgment affirmed. 
 
 
 
 
 
 
 
On the briefs and at oral argument: 
 
Sigmund D. Schutz, Esq., Preti, Flaherty, Beliveau & Pachios, LLP, 
Portland, for appellant Preti, Flaherty, Beliveau & Pachios, LLP 
 
Scott W. Boak, Asst. Atty. Gen., Office of the Attorney General, for 
appellee State Tax Assessor 
 
 
 
Cumberland County Superior Court docket number AP-2012-46 
FOR CLERK REFERENCE ONLY