IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

August 4, 2010 Session

LARRY H. COLEMAN v. MATTHEW KISBER, ET AL.

Direct Appeal from the Chancery Court for Davidson County

No. 10-137-IV Russell T. Perkins, Judge

No. M2010-00642-COA-R3-CV - Filed October 4, 2010

This case involves a petition for access to certain documents pursuant to the Tennessee

Public Records Act, Tenn. Code Ann. § 10-7-101 et seq. The Appellees asserted in the trial

court, and on appeal, that the documents are confidential and privileged pursuant to the tax

information and tax administration information exceptionsfound in Tenn. Code Ann. § 67-1-

1702; pursuant to the “ECD exception” provided in Tenn. Code Ann. § 4-3-730(c); and also

pursuant to the Deliberative Process Privilege. The trial court denied the Appellant’s petition

finding that the ECD exception applied and therefore, held that the documents at issue should

remain confidential for five years. The trial court, however, found that the tax information

and tax administration information exceptions did not apply and declined to apply a

Deliberative Process Privilege. Appellant appealed the trial court’s denial of his petition.

On appeal, the Appellees assert that the trial court erred in not finding the tax information

and tax administration information exceptions applicable and in not applying the Deliberative

Process Privilege. After reviewing the record, including the withheld documents, we find

that the trial court erred in not finding that the tax information and tax administration

information exceptions, as provided in Tenn. Code Ann. § 67-1-1702, applied.

Consequently, we affirm the trial court’s denial of the Appellant’s petition but for different

reasoning.

Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Chancery Court Affirmed

in part and Reversed in part

J. STEVEN STAFFORD,J., delivered the opinion of the Court, in which ALAN E. HIGHERS, P.J.,

W.S., joined and HOLLY M. KIRBY, J. filed a separate concurring opinion.

Steven A. Riley and James N. Bowen, II, Nashville, Tennessee, for the appellant, Larry H.

Coleman.
Robert E. Cooper, Jr., Attorney General and Reporter;Janet M. Kleinfelter, Deputy Attorney

General; Joe R. Shirley, Assistant Attorney General; Virginia Barham, Assistant Attorney

General for appellees, Matthew Kisber and Reagan Farr.

OPINION

In 2009, the Tennessee General Assembly enacted the Tennessee Small

Business Investment Company Credit Act, Tenn. Code Ann. §4-28-101 et seq.(“TNInvestco

Act”) in an effort to spur economic development and job creation. Under the TNInvestco

Act, the State allocates up to $120 million in tax credits to up to six “qualified

TNInvestcos.” The chosen TNInvestcos then sold the tax credits to participating insurance

1

companies (taxpayers) to generate capital. The insurance companies purchasing the tax

credits could then use the tax credits to reduce their tax liability in the years 2012 through

2019. According to the statute, the decision of which qualified TNInvestcos will receive the

tax credit lies within the sole discretion of the Commissioner of Economic and Community

Development and the Commissioner of Revenue. To assist them in making their decisions,

the Appellees, the Commissioner of Revenue, Commissioner Reagan Farr, and the

Commissioner of Economic and Community Development, Commissioner Mathew Kisber,

developed an evaluation matrix which they each used separately to evaluate and rank the

entities which applied.

Twenty-five entities, including Appellant Larry H. Coleman’s (“Mr. Coleman”)

company – Coleman Swenson Booth Inc., – applied to become a TNInvestco and to receive

the tax credit. From these twenty-five, Commissioner Kisber and Commissioner Farr chose

ten finalists. As announced by the Commissioners, the finalists were the ten entities which

received the highest score on the TNInvestco evaluation matrices developed by the

Commissioners. On November 5, 2009, Commissioner Kisber and Commissioner Farr

announced the six entities chosen to receive the tax credit, along with two alternates.

Unfortunately, Mr. Coleman’s company was not one of the chosen entities.

Mr. Coleman and his attorney made several public recordsrequestsin December 2009

and January 2010. The Commissioners responded to these requests and provided some, but

not all, of the requested records related to the TNInvestcos. The Commissioners asserted that

some of the requested documents did not exist and denied the requests for other documents

which the Commissioners determined to be confidential under State law.

This case began on January 27, 2010 when Mr. Coleman filed his Petition for Access

A “TNInvestco” is a business which completes the application process and is certified by the 1

Department of Economic and Community Development as meeting the established criteria. 

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to Public Records. In his petition, Mr. Coleman requested that the trial court order the

Commissioners to turn over all of the requested records “pursuant to the Tennessee Public

Records Act, Tenn. Code Ann. § 10-7-503 et seq.” Mr. Coleman also requested that the trial

court award him attorney’s fees. The parties agree that the documents in dispute on appeal

are (1) the twenty-five scored evaluation matrices, (2) a Tax Credit Purchase Agreement, (3)

a Side Letter to that Agreement, and (4) the Letters of Understanding between an insurance

company and a TNInvestco regarding the purchase of investment tax credits. The documents

at issue were filed on February 9, 2010, under seal for review by the court.

On February 5, 2010, the trial court entered an order requiring the Commissioners to

appear on February 16, 2010 and show cause as to why Mr. Coleman’s petition should not

be granted.

On February 9, 2010, the Commissioners filed a response to Mr. Coleman’s petition.

In their response, the Commissioners asserted that the information requested, was (1)

confidential “tax information” or “tax administration information” pursuant to Tenn. Code

Ann. § 67-1-1702; (2) was confidential pursuant to Tenn. Code Ann. § 4-3-730(c) (the “ECD

exception”) as the records were designated by the Commissioner of Economic and

Community Development with the agreement of the Attorney General, as harmful to the

ability of this state to compete or conclude agreements or contracts for economic or

community development; and (3) that the scored evaluation matrices were protected by the

Deliberative Process Privilege. Accordingly, the Commissionersrequested that the trial court

deny Mr. Coleman’s petition.

On February 9, 2010, Commissioner Farr, as Commissioner of the Department of

Revenue, filed an affidavit. His affidavit details his background and experience as well as

the process he and Commissioner Kisber utilized in selecting the six entities to receive the

tax credit. His affidavit details what is considered “taxpayer information” or “tax

administration information” and therefore confidential pursuant to Tenn. Code Ann. §67-1-

1702. He also explains why he believes it is in the best interests of the State not to produce

the requested documents. In pertinent part, his affidavit provides:

14. Business tax incentives and credits are enacted by states

(and by Congress) for various reasons. The Tennessee General

Assembly has enacted a number of statutes authorizing business

tax incentives and creditsthat are designed to generate economic

development and create jobs in Tennessee .... Furthermore, the

General Assembly has charged the Department of Revenue with

administering these tax credits and incentives. In administering

these programs, the Department has consistently considered the

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information created by the Department or collected from

participants in the programs used by the Department to

constitute “tax administration information” as provided in Tenn.

Code Ann. §§67-1-1701(6)-(7). Additionally, the Department

has consistently considered information related to such

programs to be “taxpayer information” as provided in Tenn.

Code Ann. § 67-1-1701(8) if the information concerns a

taxpayer’s identity or the nature, source, or amount of the

taxpayer’s income, payments, receipts, deductions, exemptions,

credits, assets, liabilities, net worth, tax liability, tax collected,

deficiencies, over assessments, or tax payments.

15. As described above, the TNInvestco program represents a

tax policy decision enacted by the General Assembly that is

formulated to generate economic development in Tennessee.

Accordingly, the Department considers information created by

the Department or obtained from participants in this program

and used by the Department in administering and executing the

program to constitute tax administration information. To the

extent that such information identified a taxpayer participating

in the TNInvestco program or identifies the nature, source, or

amount of the taxpayer’s investment tax credit issued under this

program, the Department considers such information to

constitute tax information.

16. Tenn. Code Ann. § 67-1-1702 provides that “tax

information” and “tax administration information” shall be

confidential and shall not be disclosed by any officer or

employee of the State or by any other person, except as

otherwise authorized under title 67, chapter 1, part 17. Tenn.

Code Ann. § 67-1-1711 provides that the Commissioner of

Revenue is authorized to disclose tax administration information

if the commissioner determines that such disclosure is in the

best interests of the State. Accordingly, information obtained in

connection with the Department’s administration and execution

of the TNInvestco program will be disclosed only in accordance

with these statutes.

* * *

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30. Based on my experience in administering business tax

incentive programs and recruiting businesses to the State, as set

forth above, and in the exercise of my discretion given to me as

the Commissioner of Revenue under Tenn. Code Ann. § 67-1-

1711, I have determined that the disclosure of the withheld

documents is not in the best interests of the State. Participation

of qualified businesses is fundamental to the success of the State

tax policies like the TNInvestco program- policies that are

designed to generate economic growth and development through

the offering of business tax incentives and credit. Because all

of the withheld documents, except for the scored matrices,

contain proprietary business and financial information of

qualified TNInvestcos and/or participating insurance companies,

I have determined that their disclosure will inhibit businesses

from participating in future rounds of the TNInvestco program,

as well as in future economic development tax incentive

programs.

31. With respect to the scoring matrices, I have determined that

public disclosure of these documents would not be in the best

interests of the State because such disclosure could also chill

participation in future rounds of the TNInvestco program, as

well as in future economic tax incentive programs. The General

Assembly created the TNInvestco program for the purpose of

growing small business in Tennessee by generating capital

through the use of tax credits. The program’s success is

dependent upon attracting a pool of well qualified TNInvestco

applicants from which the State chose those applicants whose

investmentstrategies are most closely aligned with the economic

development strategies of the State. Commissioner Kisber and

I used the scoring matrices as a tool for ranking the applicants

for purposes of reducing the pool from twenty-five to the ten

applicants that we would interview. Making public that the

State ranked Firm X ten places higher than Firm Y would only

do harm to those firms who chose to participate in the evaluation

process and would undoubtedly have a chilling effect on future

participation in any similar economic incentive program.

Furthermore, the State only ranked the firms in the context of

the State’s economic development goals, but the appearance

could be that the State considers certain firms to be “better” than

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others, which is certainly not the case. Moreover, there would

be no benefit to making these documents public. By the very

nature of the program, it is already known which firms were

ranked in the top ten for purposes of conducting follow-up

interviews. Whether another firm was ranked eleventh or

twenty-fifth on the scoring matrix is irrelevant and disclosure of

that information would only do harm to the TNInvestco program

itself, as well as the State’s long-term goals for economic

development.

(emphasis original). Commissioner Farr also asserted the Deliberative Process Privilege as

to the evaluation matrices.

Commissioner Kisber, as Commissioner of the Department of Economic and

Community Development, also filed an affidavit on February 9, 2010. In it he details his

background and experience as well as the process he and Commissioner Farr utilized in

selecting the six entities to receive the tax credit. In pertinent part, his affidavit provides:

11. As was previously determined under Tenn. Code Ann. § 4-

3-730(c) that information supplied to the State in response to

Part 2 of the TNInvestco application should be confidential and

not subject to personal inspection by any citizen of Tennessee.

I have also determined, with General Cooper’s affirmative

agreement, that the documents Commissioner Farr and I are

withholding from public inspection by Mr. Coleman are of such

a sensitive nature that their disclosure or release would seriously

harm this State’s ability to conclude agreements or contracts for

economic or community development. Shortly after I became

Commissioner, I met with Attorney General Paul Summers to

discuss how we should proceed when public recordsrequests are

made for information that I think should be confidential under

Tenn. Code Ann. § 4-3-730(c), and General Cooper and I are

following that same process under which the Attorney General

reviews documents that I deem to be sensitive, we discuss my

reasoning, and if he agrees that the documents or information is

of such a sensitive nature that its disclosure or release would

seriously harm the ability of the State to compete or conclude

agreements or contracts for economic or community

development, his staff then sends me a memo to memorialize

our discussion. I have attached as Exhibit B to this affidavit the

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memorandum that I received from the Attorney General’s Office

memorializing our decision that the records being withheld from

public inspection in this lawsuit are of such a sensitive nature

that their disclosure or release would seriously harm the ability

of the State to compete or conclude agreements or contracts for

economic or community development.

12. More specifically, Commissioner Farr has determined that

the Tax Credit Purchase Agreement; the Side Letter to this

agreement; a Letter of Understanding between an insurance

company and one of the TNInvestcos; . . . and the completed

scoring matrices that we used as a tool in awarding the tax credit

allocations are tax information under Title 67 of the Tennessee

Code or tax administration information that is therefore

confidential. In addition, it is my determination under Tenn.

Code Ann. § 4-3-730(c), to which the Attorney General has

affirmatively agreed, that this same information is of such a

sensitive nature that its disclosure or release would seriously

harm the ability of our State to compete or conclude agreements

or contracts for economic or community development.

13. My reasons for this determination include that, the tax

credits created by the Act, and that Commissioner Farr and I

have awarded to the six qualified TNInvestcos, have been sold

to insurance companies under the Act in order to raise capital to

be invested in small businesses qualified under the statutes. In

light of my experience in working to grow economic

development in Tennessee, it is my opinion that disclosing the

details of the financial transactions under the TNInvestco

program would seriously harm the State’s ability to conclude

future agreement or contracts for economic or community

development. Commissioner Farr and I are working with

members of the legislature in an effort to expand the TNInvestco

program this legislative session. The price of the tax credits that

have been sold resulted from private negotiations by the

TNInvestcos, brokers on their behalf, and various insurance

companies. If details of these financial transactions become part

of public domain, that would remove the market forces and

artificially set a floor and ceiling for future tax credit sales under

the program, thereby harming the State’s ability to raise as much

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capital from the future sale of tax credits as possible.

14. Further, an insurance company that may have paid more

than a competitor for the tax credits received could be harmed

in its business reputation. In my opinion, for this program to be

successful, it needs a large pool of insurance companies willing

to participate, and disclosing their investment decisions to the

general public will deter participation. Additionally, the scoring

matrices reflect my judgment of a TNInvestco’s application, not

necessarily what I might think of the firm separate and apart, for

example, from its proposed strategy for achieving

transformational economic development outcomes through

focused investments of capital in seed or early stage companies

with high-growth potential. A firm I may have scored low on its

application because of its proposed strategy could be hurt in its

business reputation if the scores become public record, and the

public were to misunderstand the matrices were only a guide for

my decision under the TNInvestco Program, and not necessarily

my opinion on whether a particular firm might be a good choice

for its clients and investors in other circumstances, trying to

achieve goals different from those of the TNInvestco Program.

In my experience, the willingness of insurance companies and

venture capital firms to participate in future rounds of the

TNInvestco Program, or even in future state programs of a

similar nature, will be seriously harmed if the details of their

financial transactions to date under the Act are disclosed or

released to the general public.

Attached to Commissioner Kisber’s affidavit wasthe memorandum from the Attorney

General’s office which memorialized the discussion the Commissioners and the Attorney

General had regarding the confidentiality of the requested documents. The memorandum

states that the Attorney General reviewed the documents at issue and agreed that the

documents should be confidential pursuant to the ECD exception under Tenn. Code Ann. §

4-3-730(c). The memorandum explains in detail the concerns with releasing the documents

as discussed by the Commissioners and the Attorney General. Some of these concerns

include: that disclosing the details of the financial transactions by which the tax credits were

sold would harm the State’s ability to conclude future agreements in the TNInvestco

program; that an insurance company participating in these transactions may have its business

reputation harmed by the release of the details of the financial transactions; that the prices

paid could become the floor and the ceiling for future transactions, thus harming the State’s

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ability to raise capital; and that the release of the documents would chill the willingness of

insurance companies and venture capital firms to participate in the TNInvestco program in

the future, harming the future success of the program. The memorandum also details the

discussion had regarding the evaluation matrices and the concern that the release of this

information could harm a business’ relationship with others and put it at a disadvantage; and

that releasing these matrices would chill willingnessto participate in the TNInvestco program

in the future, harming the State’s ability to conclude the sale of tax credit agreements in the

future for purposes of economic development.

On February 11, 2010, Mr. Coleman filed a memorandum of law in support of his

petition. In this memorandum, Mr. Coleman asserted that if the Commissioners were

concerned about releasing the identities of the insurance companies that purchased the tax

credits, they could redact the names and prices paid. Mr. Coleman also asserted that the

Commissioners had waived any privilege or confidentiality by releasing a blank copy of the

scoring matrix and by announcing that the ten finalists were the entities that had scored the

highest on the matrices. Mr. Coleman also asserted that the privileges claimed and

confidentiality exceptions asserted by the Commissioners were inapplicable.

On February 12, 2010, the Commissioners filed a reply. In this reply, the

Commissioners asserted that they had not waived the exception as (1) they had not

voluntarily disclosed the withheld documents and then sought to gain an advantage through

selective disclosure and (2) the exception is not a qualified, equitable privilege that is subject

to waiver. Further, the Commissioners asserted the Deliberative Process Privilege, the “tax

information” and “tax administration information” exceptions, and the ECD exception.

Moreover, the Commissioners submitted that redaction was not required.

A hearing was held on February 16, 2010 at which each side presented its arguments

to the trial court, relying on the affidavits submitted. Following the hearing, Mr. Coleman

filed a “Post Hearing Brief.” Attached to this brief were affidavits from several of the

TNInvestcos which were not among the ten finalists. Each affidavit assertsthat the respective

TNInvestco does not object to the State releasing the scored evaluation matrices reflecting

the firm’s scores and ranking.

On March 2, 2010, the trial court filed a memorandum containing its decision. First,

the trial court found that the “tax administration information” and “tax information”

exceptions provided in Tenn. Code Ann. § 67-1-1702 do not apply to the documents in

question. The trial court explained that the documents were not submitted “as part of a past

or current tax review by the Department of Revenue” and also that “no past or current need

to apply the Tennessee tax law exists and no need to invoke Tennessee’s tax administrative

mechanisms is present.” As to the ECD exception, pursuant to Tenn. Code Ann. § 4-3-730,

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the trial court found, after reviewing the documents at issue, “that the records could

reasonably be characterized as sensitive documents that ‘disclosure or release would

seriously harm the ability of our State to compete or conclude agreements or contracts for

economic or community development,’” and that therefore the exception applied. Next, the

trial court found that the Deliberative Process Privilege has not been adopted in Tennessee

and declined to adopt the privilege in this case. The trial court also declined to find that the

Commissioners waived the confidentiality of the documents. The trial court based this

decision on two reasons: (1) that the authorities supplied by Mr. Coleman do not apply to the

statutory exceptions and that there must be an intentional waiver of the statutory exceptions

and (2) that even if the authorities provided by Mr. Coleman apply, the conduct of the

Commissioners did not amount to a waiver. The trial court declined to rule on the argument

that the statutory exceptions could not be waived. Finally, the trial court found that the

Commissionersfailure to produce the requested documents was not willful, and therefore did

not award Mr. Coleman attorney’s fees.

On March 4, 2010, the trial court entered an order reflecting its decision. This order

incorporates the trial court’s memorandum by reference and denies Mr. Coleman’s petition.

Also, the trial court ordered that the four documents at issue remain confidential and under

seal for a period of five years.

Mr. Coleman filed a notice of appeal on March 9, 2010. He raises five issues for our

review. We restate them as follows:

1. Whether the trial court erred in finding that the Commissioners were entitled, pursuant

to Tenn. Code Ann. § 4-3-730(c), to withhold the documents in their entirety as

opposed to redacting the portions of the information identified by Commissioner

Kisber as harmful?

2. Whether the trial court erred in finding that Commissioner Kisber was entitled to

withhold the requested documents pursuant to Tenn. Code Ann. § 4-3-730(c)?

3. Whether Commissioner Kisber’s withholding of the evaluation matrices pursuant to

Tenn. Code Ann. § 4-3-730(c) was reasonable?

4. Whether the trial court erred in finding that the Commissioners did not waive any

right they had to withhold the evaluation matrices from disclosure?

5. Whether the trial court erred in finding that Mr. Coleman was not entitled to his

attorney’s fees?

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On Appeal, the Commissioners also raise two issues for our review. We restate them as

follows:

1. Whether the trial court erred by not finding that the documents requested were “tax

information” or “tax administration information” confidential pursuant to Tenn. Code

Ann. § 67-1-1702?

2. Whether the trial court erred in finding that the Deliberative Process Privilege did not

apply in this case to exempt the scored matrices from public disclosure?

Standard of Review

We review the trial court’s findings of fact de novo with a presumption of correctness,

unless the evidence preponderates otherwise. Tenn. R. App. P. 13(d). No presumption of

correctness, however, attaches to the trial court’s conclusions of law and our review is de

novo. Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000).

The construction of a statute is a question of law which we will review de novo with

no presumption of correctness as to the trial court's conclusions. Ivey v. Trans. Global Gas

& Oil, 3 S.W.3d 441, 446 (Tenn. 1999). When interpreting a statute, we are "to ascertain and

give effect to the legislative intent without unduly restricting or expanding a statute's

coverage beyond its intended scope." Owens v. State, 908 S.W.2d 923, 926 (Tenn. 1995).

"Courts must restrict their review 'to the natural and ordinary meaning of the language used

by the legislature in the statute, unless an ambiguity requires resort elsewhere to ascertain

legislative intent.'" Ardoin v. Laverty, M2001-03150-COA-R3-JV, 2003 WL 21634419, at

*4 (Tenn. Ct. App. July 11, 2003) (quoting Browder v. Morris, 975 S.W.2d 308, 311 (Tenn.

1998) (citations omitted)).

Analysis

The Public Records Act creates a presumption of openness as to government

documents. As provided in Tennessee Code Annotated section 10-7-503(a)(2)(A):

All state, county and municipal records shall, at all times during

business hours, which for public hospitals shall be during the

business hours of their administrative offices, be open for

personal inspection by any citizen of this state, and those in

charge of the records shall not refuse such right of inspection to

any citizen, unless otherwise provided by state law.

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However, the final clause of Tenn. Code Ann. § 10-7-503(a)(2)(A) states that documents are

open to inspection by the public “unless otherwise provided by state law,” qualifying the

presumption of openness by creating an exception for any document which another state law

designates as protected or privileged. See also Arnold v. City of Chattanooga, 19 S.W.3d

779 (Tenn. Ct. App. 2000). “It was the legislature that opened the door making records

public in the first place. Certainly, . . . the legislature could decide that its policy was too

broad and close the door on certain records.” Thompson v. Reynolds, 858 S.W.2d 328, 329

(Tenn. Ct. App. 1993).

One such exception is provided in Tennessee Code Annotated § 67-1-1702(a) which

provides:

Notwithstanding any provision of law to the contrary, returns,

tax information and tax administration information shall be

confidential and, except as authorized by this part, no officer or

employee of the department and no other person, or officer or

employee of the state, who has or had access to such information

shall disclose any such information obtained by such officer or

employee in any manner in connection with such officer's or

employee's service as an officer or employee, or obtained

pursuant to the provisions of this part, or obtained otherwise.

(emphasis added). However, “tax information” is “subject to disclosure to the taxpayer who

is the subject of that information.” Bridgestone v. Chumley, No. M2007-00813-COA-R9-

CV, 2008 WL 2415483, at *6 (Tenn. Ct. App. June 11, 2008) (citing Tenn. Code Ann. § 67-

1-1703(a)). Although, “[t]ax information shall not . . . be disclosed to such person or

2

Tenn. Code Ann. § 67-1-1703(a) provides: 2

The commissioner shall, subject to such requirements and conditions as

may be prescribed by rules, disclose the return of any taxpayer, or tax

information with respect to such taxpayer, to such person or persons as the

taxpayer may designate in a written request for or consent to such

disclosure, or to any other person at the taxpayer's request to the extent

necessary to comply with a request for information or assistance made by

the taxpayer to such other person. Tax information shall not, however, be

disclosed to such person or persons if the commissioner determines that

(continued...)

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persons if the commissioner determines that such disclosure would be seriously burdensome

to tax administration.” Tenn. Code Ann. § 67-1-1703. Tax administration information is not

subject to disclosure upon demand of a taxpayer. Bridgestone, 2008 WL 2415483, at *6.

However, the Commissioner of the Department of Revenue is authorized to disclose tax

administration information “if the commissioner determinesthatsuch disclosure isin the best

interest of the state....” Tenn. Code. Ann. § 67-1-1711. Further, the code provides that it is

3

a Class E felony for any person to disclose, except as authorized by law, tax information.

Tenn. Code Ann. § 67-1-1709; see also Bridgestone, 2008 WL 2415483, at *6.

The terms tax information, tax administration, and tax administration information are

all specifically defined by the code. Tax information:

means a taxpayer's identity, the nature, source, or amount of the

taxpayer's income, payments, receipts, deductions, exemptions,

credits, assets, liabilities, net worth, tax liability, tax collected,

deficiencies, overassessments, or tax payments, whether the

taxpayer's return was, is being, or will be, examined or subject

to other investigation or processing, or any other data, received

by, recorded by, prepared by, furnished to, or collected by, the

commissioner with respect to a return or with respect to the

determination of the existence, or possible existence, of liability,

(...continued) 2

such disclosure would be seriously burdensome to tax administration.

(emphasis added).

Tenn. Code Ann. § 67-1-1711 provides:

3

The commissioner is authorized to disclose tax administration

information, other than returns and tax information, if the commissioner

determines that such disclosure is in the best interests of the state;

provided, that no provision of law shall be construed to require disclosure

of criteria or standards used or to be used for the selection of returns or

persons for audit or examination, or data used or to be used for

determining such criteria or standards, ifthe commissioner determines that

such disclosure will impair assessment, collection, or enforcement under

state tax laws.

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or the amount of the liability, of any person for any tax, penalty,

interest, fine, forfeiture, or other penalty, imposition or offense,

administered by or collected by the commissioner, either directly

or indirectly. "Tax information" does not include data in a form

that cannot, either directly or indirectly, be associated with, or

otherwise be used to identify, directly or indirectly, a particular

taxpayer[.]

Tenn. Code Ann. § 67-1-1701(8) (emphasis added). Tax administration information:

means criteria or standards used or to be used for the selection

of returns or persons for audit or examination, or data used or to

be used for determining such criteria or standards; audit

procedures; and any other information relating to tax

administration[.]

Tenn. Code Ann. § 67-1-1701(7) (emphasis added). Tax administration is defined in the

code as:

the administration, management, conduct, direction, and

supervision of the execution and application of the state tax

laws, rules, or related statutes or rules and reciprocity

agreements with the several states or federal government to

which the state of Tennessee is a party. "Tax administration"

also means the development and formulation of state tax policy

relating to existing or proposed tax laws, related statutes and

reciprocity agreements and includes assessments, collection,

enforcement, litigation, publication, and statistical gathering

functions under such laws, statutes, rules or reciprocity

agreements[.]

Tenn. Code Ann. § 67-1-1701(6).

The courts of this State have only had a couple of opportunities to review the

application of the “tax information” and “tax administration information” exceptions to the

Public Records Act. In McLane Co. v. State, 115 S.W.3d 925 (Tenn. Ct. App. 2003), this

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Court reviewed a trial court’s decision to grant a licensed wholesale tobacco distributor’s

petition, under the Tennessee Public Records Act, seeking disclosure of the identities of all

licensed wholesale tobacco distributors in Tennessee. This Court reversed the trial court,

finding that the tax information exception as provided in Tenn. Code Ann. § 67-1-1702

applied and therefore, the identities of the licensed wholesale tobacco distributors must

remain confidential. Id. at 931. This Court recognized that “the licensing and taxing

functions performed by the Department [of Revenue] are separate and distinct in nature,”

but found that the confidentiality provisions of Tenn. Code Ann. § 67-1-1702 apply to the

information collected by the Department of Revenue during the licensing procedure. Id.

at 930. This Court reasoned that the licensed wholesale tobacco distributors were required

to pay a tax to the Department of Revenue under Tenn. Code Ann. § 67-4-1002, for the

privilege of selling tobacco in Tennessee, and that therefore, the identity of all of the

licensed wholesale tobacco distributors was confidential “tax information” pursuant to Tenn.

Code. Ann. § 67-1-1702. Id. In making this decision, the Court compared the laws

regarding the licensed wholesale tobacco distributors to the laws governing the taxation of

petroleum products. Id. at 931. This Court noted that the legislature specifically provided

in Tenn. Code Ann. § 67-3-2011 that the Commissioner of the Department of Revenue, as

he deemed necessary, could release a list of all current licensees of petroleum products. Id.

The Court explained, that the legislature could have provided the same exception for the

identities of those licensed as wholesale tobacco distributors. Id. However, since the

General Assembly chose not to provide such an exception, the identities must remain

confidential as provided in Tenn. Code Ann. § 67-1-1702.

This Court again had the opportunity to discuss the application of the tax

administration information and the tax information exceptions in Bridgestone v. Chumley,

No. M2007-00813-COA-R9-CV, 2008 WL 2415483, at *6 (Tenn. Ct. App. June 11, 2008).

The documents Bridgestone sought related to its audit and its claim for a tax refund. Id.

at *3. In Bridgestone, the issue revolved around whether the documents sought constituted

tax administration information or tax information. Id. at *4-5. This distinction was

important because if the documents at issue constituted tax administration information they

would be confidential pursuant to Tenn. Code Ann. § 67-1-1702. However, if the

documents at issue were tax information, they must be disclosed to the taxpayer to which

they pertained, unless disclosure was “seriously burdensome.” Id. at *6. In considering

this issue, the Court found that there are two purposes of the “Confidentiality Act”: “(1) to

protect the confidentiality of taxpayer information from third parties and (2) to further the

Department’s ability to formulate tax policy; develop standards, criteria and audit

procedures; and administer, manage, and enforce the tax laws.” Id. at *13.

This Court found that “insofar as the documents withheld by the Department . . .

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reflect on the Department’s consideration or internal discussion of the question of law [or

policy] presented by Bridgestone” – whether it can be subjected to more than one audit –

the documents are tax administration information even though they refer to a specific

taxpayer. Further, the trial court found that “[t]o the extent . . . the documents reflect on the

Department’s determination of a factual matter relating to an audit of a taxpayer, they are

taxpayer specific and not excluded from disclosure as ‘tax information that does not include

data in a form that cannot, either directly or indirectly, be associated with, or otherwise used

to identify, directly or indirectly, a particular taxpayer.’” Id. at *12. The “touchstone” in

this analysis, as noted by the Court, was the term “data.” Id. This Court defined “data” as

“‘factual information (as measurements or statistics) used as a basis for reasoning,

discussion, or calculation.’”, id. (citing Webster’s Ninth New Collegiate Dictionary 325

(1986)), and also as “‘organized information generally used as the basis for an adjudication

or decision. Commonly, organized information, collected for a specific purpose.’” Id.

(citing Black’s Law Dictionary 395 (6 ed. 1990)). Using these definitions, this Court held

th

that “to the extent to which the withheld documents reflect the Department’s recording or

preparation of information used to determine the existence or amount of Bridgestone’s tax

liability, they are tax information as defined by the code.” Id.

In the present case, the trial court found that the withheld documents did not

constitute tax information or tax administration information. As provided in its order, the

trial court reasoned that the documents “were not submitted to Commissioner Farr as part

of a past or current tax review by the Department of Revenue.” Further, the trial court stated

in its order that it “is reluctant to rule that the foregoing tax law exceptions clearly apply to

exclude from public disclosure documents gathered under the TNInvestco Act where, as

here, no past or current need to apply the Tennessee tax law exists and no need to invoke

Tennessee’s tax administrative mechanisms is present.”

The Commissioners assert on appeal that the trial court erred. Specifically, they

assert that the TNInvestco Act is a state tax law or related statute, that the documents at

issue were used to award, issue, and administer the tax credits provided by the TNInvestco

Act and therefore, the documents are confidential under the tax administration information

exception. Additionally, the Commissioners assert that the Letter of Understanding also

constitutes confidential tax information.

After thoroughly reviewing the record, including the withheld documents, we find

that the trial court erred in not finding the tax administration information and tax

information exceptions applicable in this case. First, we find the trial court’s interpretation

of tax administration as only involving a past or present tax review to be too narrow. As

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defined in Tenn. Code Ann. § 67-1-1701, tax administration includes the “administration,

management, conduct, direction, and supervision of the execution and application of the

state tax laws, rules, or related statutes . . . [and] also means the development and

formulation of state tax policy relating to existing . . . tax laws, [or] related statutes.” The

TNInvestco Act provides for up to $120 million in tax credits to be distributed to up to six

businesses as qualified and chosen solely by the Commissioner of the Department of

Revenue and the Commissioner of the Department of Economic and Community

Development. Moreover, the TNInvestco Act provides for the method for determining the

amount of tax credit a chosen investor may take each year. Further, the TNInvestco Act

providesthe qualifications necessary and the criteria to be considered by the Commissioners

in determining which applicants will receive the tax credits. While not located within Title

67 of the code, the title involving taxes, the TNInvestco Act is clearly related to the

administration of taxes and the determination of tax liability in Tennessee. It would be

illogical for this Court to conclude that the statute which creates and provides the

mechanism for awarding $120 million in tax credits to be unrelated to the tax laws and

policy of this State.

Even if we assume that the TNInvestco Act is not directly related the Department of

Revenue’s taxing function, under the reasoning in McLane the documents are still

protected. In McLane, this Court held that the identities of all the licensed wholesale

tobacco distributors was confidential tax information after recognizing that the Department

of Revenue’s taxing function was entirely separate from its licensing function. McLane,

115 S.W.3d at 930. Additionally, Tenn. Code Ann. § 67-1-1702 provides that no officer or

employee of the Departmentshall disclose tax information or tax administration information

“obtained by such officer or employee in any manner in connection with such officer’s or

employee’s service as an officer or employee....” (emphasis added). The withheld

documents were obtained by Commissioner Farr as part of his duties as Commissioner of

the Department of Revenue. Consequently, they will be protected if they constitute tax

administration information or tax information.

The trial court reviewed the documents at issue and held that the tax administration

information and tax information exceptions did not apply. On appeal, we have conducted

our own independent review of the documents. After reviewing the withheld documents,

we have determined that all of the information contained within these documents constitutes

tax administration information. The Tax Credit Purchase Agreement and the Side Letter set

forth the terms and conditions controlling the placement, purchase and use of the investment

tax credits by detailing the terms and conditions for brokering the tax credits to taxpayers,

setting forth the procedures for issuing the tax credits and for the redemption of the tax

credits. The Letter of Understanding provides the terms and conditions for the purchase of

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the tax credit by a particular taxpayer, who is identified in the letter. It also provides the

amount of the named taxpayer’s tax credit, names the TNInvestco that sold the credit to the

named taxpayer and states how much the taxpayer paid for the tax credit. The scored

evaluation matrices provide the Commissioners’ thoughts and mental processes behind their

decision regarding which TNInvestcos would be awarded the tax credits. The withheld

documents clearly relate to the Department of Revenue’s administration, execution, and

supervision of the TNInvestco Act and its effect on the administration of the tax laws of this

State. Further, the documents evidence the development and formulation of the tax policy

behind the TNInvestco Act as developed by the Commissioners. As stated by this Court in

Bridgestone, part of the purpose behind the “Confidentiality Act” is to “further the

Department’s ability to formulate tax policy . . . and administer, manage and enforce the tax

laws.” Bridgestone, 2008 WL 2415483, at *13. Withholding these documents furthers that

purpose by allowing the Department of Revenue to develop and implement the TNInvestco

Act in a manner which will further the goals of the legislature in enacting the TNInvestco

Act – spurring economic development and raising capital.

Because all of the information contained within the withheld documents constitutes

tax administration information, absent a decision by the Commissioner of Revenue that

disclosure is in the best interests of the State, the documents cannot be disclosed. Tenn.

Code Ann. § 67-1-1711. The decision to disclose tax administration information lies solely

within the discretion of the Commissioner of the Department of Revenue. Tenn. Code Ann.

§ 67-1-1711. As provided in his affidavit, the Commissioner has determined that it is not

in the best interests of the State to release the withheld documents.

Further, to the extent to which the documents identify a taxpayer, the amount of a

taxpayer’s tax credit, and/or a taxpayer’s tax liability, the documents constitute tax

information and are confidential tax information pursuant to Tenn. Code Ann. §§ 67-1-

1701(8) and -1702(a). Also, to the extent that the documents contain “data” used by the

Department of Revenue to determine a taxpayer’s tax liability, which includes the amount

of tax credit the taxpayer will receive, the documents are tax information. Bridgestone,

2008 WL 2415483, at *12. Pursuant to Tenn. Code Ann. § 67-1-1702 tax information is

confidential unlessrequested by the particular taxpayer in accordance with Tenn. Code Ann.

§ 67-1-1703.

As discussed above, we have determined that all of the information contained in the

documents constitutes tax administration information. Furthermore, portions of the

documents also constitute tax information. Because both tax administration information and

tax information is excepted from disclosure pursuant to the Tennessee Public Records Act,

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all other issues are pretermitted. Mr. Coleman contends that the requested documents

4

should be released and that the Commissioners should merely redact the confidential

portions. However, because of our determination that the documents, in their entirety,

constitute tax administration information, and are therefore confidential, redaction, even if

required, is not a viable alternative. We note that Mr. Coleman asserted on appeal that the

5

trial court erred in not finding waiver. However, as set forth in his brief, he only argues that

the trial court erred in not finding waiver of the ECD exception. At no point in his briefs

does he address or assert waiver of the tax exceptions. Accordingly, this issue is waived on

appeal. Osborne v. Mountain Life Ins. Co., 130 S.W.3d 769, n.6 (Tenn. 2004) (“It is true

that not raising or briefing the issue before the trial court or the Court of Appeals is grounds

for waiver of review”) (citing Alexander v. Armentrout, 24 S.W.3d 267 (Tenn. 2000).

Also, we note that the trial court found that Tennessee had not adopted the Deliberative

Process Privilege and that the Commissioners raised this as an issue on appeal. Because we

have decided this case on another ground, we do not find it necessary to address this issue.

However, our opinion should not be interpreted as an affirmance of the trial court’s finding

on this issue.

Conclusion

For the foregoing reasons, we affirm the trial court’s denial of Mr. Coleman’s

petition. We reverse the trial court’s finding that the tax administration information and tax

information exceptions do not apply. All other issues are pretermitted. Costs of this appeal

are taxed to the Appellant, Larry H. Coleman and his surety for which execution may issue

if necessary.

_________________________________

J. STEVEN STAFFORD, JUDGE

The trial court determined that the requested documents were outside of the tax information and tax

4

administration information exceptions, but that the documents were confidential and not subject to public

disclosure under the ECD exception. “This Court will affirm a decree correct in result but rendered upon

different, incomplete, or erroneous grounds.” Hutcherson v. Criner, 11 S.W.3d 126, 136 (Tenn. Ct. App.

1999) (citing Gamblin v. Town of Bruceton, 803 S.W.2d 690, 693 (Tenn. Ct. App. 1990).

Tenn. Code Ann. § 67-1-1702(a). Because we have found that redaction, even if required, would 5

not be possible, we have not addressed whether the redaction statute, Tenn. Code Ann. § 10-7-503(c)(2), is

applicable to the tax exceptions found in Tenn. Code Ann. § 67-1-1702(a).

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