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 Maine Revenue Service s ’ denial of Preti’s Freedom of Access Act req ue st , pursuant to 1 M.R.S. §§ 402(3) and 408

- A (2013 ) , for documents containing methodologies, formulas, or calculations relating to apporti onment of Maine income tax liability
for nonresident partners of a professional services partnership entity based in or with a significant business presence in Maine. Maine Revenue Services 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 de fin ition 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 the2
documents it seeks. Because the documents that are covered by Preti’s request for information consist entirely of infor mation deemed confidential pursuant to
36 M.R.S. § 191(1) , w e affir m. 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 partne rs 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 corporation s to receive partnership distributions from Preti. Id. ¶ 3. We held that “ the partnership distributions should be attributed to the individual Attorney s for Maine income tax
purpo ses,” and “ that each Attorney individ ually, 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 Maine Revenue3
Services and the State Tax Assessor . That request sought access to State Tax
Assessor records regarding the apportionment applied to other firms with

non resident partner income pursuant to 36 M.R.S. § § 5192(5) 1 and § 5211(17) 2 (2013 )

. Maine Revenue Services denied Preti’s request to the extent that it sough t 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 furthe r lim ited 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 partne rship pursuant to 36 M.R.S. § § 5192(5) and 5211(17)

. Preti expressly did not seek (1) records over ten years old; (2) reco rds involving entities other tha n

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 repre sent 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 b usiness activity, if reasonable: . . . D. The employment of any other method to effectuate an equitabl e apportionment of the taxpayer’ s income.4 partnerships; (3) any emails, corresponde nce, or other records unless they expressly set forth actual apportionment formulas, methodologies , and/or calculations used to app ortion 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 tax payer - specific financial information. [¶7 ] In October 2012, Maine Revenue Services completed its search in response to Preti’s request and produced two documents that contained no taxpayer

- spec ific information of any kind. Maine Revenue Services also fil ed with the court for in camera review seven documents , which are the subject of this appeal

. [¶8 ] After conducting a de novo trial p ursuant to 1 M.R.S. § 409 and after reviewing the do cuments in camera , the Superior Court determined that the documents it had reviewed were confiden tial 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 Maine Revenue Services by the taxpayers and does not extend to Maine Revenue Services’ own method ologies, formulas or decisions

. It further contend s that any information exempted from disclosure by sect ion 191(1)5
can be redacted to allow access to Maine Revenue Services’ formulas and methodolog ies

. A

. Standard of Review and Rules of Statutory Construction [¶1 0 ] We review the statutory const ruction of the F reedom of Access Act (F OAA ) de novo as a questio n of law. See Anastos v. Town of Brunswick , 2011 ME 41, ¶ 5, 15 A.3d 127 9

. Statutory exceptions to the FOAA are t o 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
establishin g 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. [¶1 1 ] When interpreting a statute, we accord its words th eir 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 f or the section at issue in seeking to obtain a harmo nious
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 legislative6 history to determine the intent of the legislature. Cyr , 2007 ME 28, ¶ 9, 916 A.2 d
967

. B

. Plain Meaning of Section 191(1) [¶1 2 ] The FOAA provides the public the right to inspect and copy any

“ public r ecord.” 1 M.R.S. § 408

- A (2013 ). A “public r ecord” 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 age ncy or public official of this S tate . . . 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 s ubject to disclosure unless explicitly designated confidential by statute. [¶1 3 ] Title 36 M.R.S. § 191(1) designates certain tax infor mation as

con fidential, 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 p ortion 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 Tit le 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. [¶1 4 ] Preti argues that section 191(1) protects only information provided by taxpayers to Maine Revenue Services . However, n owhere in the text of section7 191(1) does the phrase “p rovided 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 t o 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, e ven when strictly construed, t he language of section 191(1) creates a broad sweep that protects all information , from whatever

sourc e , provide d pursuant to Title 3 6, including information generated by Maine Revenue Services

. [¶1 5 ] Section 191(1) also pr ohibit s the disclosure of “any information set
forth in any of those documents or obtained from examination or i nspection under this Title of the premises or property of any taxpayer. ” This language affirmatively indicates that any information Maine Revenue Services generates from review of taxpayer specific returns and information is protected.
C

. Statutory Context [¶1 6 ] 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 the8 intent of the Legislature, may be achieved .”)

. S ection 191(2) contains man y detailed exemptions from the section 191(1) privacy p rotections

. [¶1 7 ] Preti’s i nterpretation 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 no ne are to be treated as surplus age if they can be reasonably construed .”). For example,

s ection 191(2)(H) authorizes Maine Revenue Servi ces 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 Maine Revenue Services , not information submitted to Maine Revenue Services by the taxpay er
. Under Preti’s interpretation , this information would not be confidential and there would be no need for an exemption allowing for th e release of this information. [¶1 8 ] 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, t he Maine Revised Statutes for
2012 contained two exemptions labeled UU. See id. One exempted from protection the production of any reconsider ation 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 Maine Revenue Services

.9 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 d ocuments 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) unambiguo usly mandates that all taxpayer

- specific information receiv ed or generated by Maine Revenue Services 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 d isclosure 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 document10 contains only protected informa tion 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 F OR C LERK R EFERENCE O NLY