Opinion ID: 2362254
Heading Depth: 3
Heading Rank: 3

Heading: Application of Financial Records Privacy Act: Implied Amendment of Tax Enforcement Procedures Act

Text: Having determined that the Commissioner's authority to issue the summons in this case suffers from no constitutional defects, the application of the Financial Records Privacy Act, T.C.A. §§ 45-10-101, et seq. (Supp. 1985), must be considered. We have been called upon to construe both T.C.A. § 67-1-1437 and the Financial Records Privacy Act for the first time. T.C.A. § 67-1-1437, which is part of the Tax Enforcement Procedures Act, was enacted in 1972; T.C.A. §§ 45-10-101, et seq., was passed in 1983. [2] We first consider the effect, if any, of the Financial Records Privacy Act on the Tax Enforcement Procedures Act. By enacting the Financial Records Privacy Act, the Legislature recognized that customers of financial institutions and the financial institutions themselves have a legitimate expectation of privacy in their records. Further, the act also encourages adequate record keeping by protecting this interest in privacy and preventing unauthorized intrusions into the affairs of the customers and institutions. The controlling question is whether the Legislature effectively amended the Tax Enforcement Procedures Act when it passed the Financial Records Privacy Act. T.C.A. § 67-1-1402 of the Tax Enforcement Procedures Act specifically provides: [3] (c) In the event of any conflict between the provisions of this part and those of any other specific statutory provisions contained elsewhere in this title, or in any other title, it is hereby declared to be the legislative intent that, to the extent such other specific provisions are inconsistent with or different from the provisions of this part, the provisions of this part shall prevail. Provided, however, that there shall be preserved and prevail over this part such other provisions of this title or of any other title which govern, restrict, or confer special authority or powers upon the commissioner or his delegate in the exercise of their responsibilities to enforce the collection of public taxes and which are not inconsistent with the provisions of this part... . The Financial Records Privacy Act, however, explicitly includes in the definition of a person any department or agency of this state ... and any court of this State. T.C.A. § 45-10-102(6) (Supp. 1985). In T.C.A. § 45-10-102(7), a subpoena is defined to mean any writ, order, or other writing directed to a financial institution, or an officer thereof, and requiring the production of a financial record or records... . Clearly, these definitions can encompass both the Department of Revenue itself and the investigative summons issued in this case. While [r]epeals and amendments by implication [are] not favored, English v. Farrar, 206 Tenn. 188, 196, 332 S.W.2d 215, 219 (1960), they are recognized as a matter of necessity. Id. See also, e.g., Oliver v. King, 612 S.W.2d 152, 154 (Tenn. 1981); State v. Hudson, 562 S.W.2d 416, 419 (Tenn. 1978); Reams v. Trostel Mechanical Industries, Inc., 522 S.W.2d 170, 173 (Tenn. 1975); Metropolitan Government of Nashville v. Hillsboro Land Co., Inc., 222 Tenn. 431, 440, 436 S.W.2d 850, 854 (1968). Furthermore, a repeal or amendment by implication is indicated ... only when two statutes are manifestly repugnant or in irreconcilable conflict of substance; however, such repugnance or conflict will not be found where any fair and reasonable construction will permit the statutes to stand together. Metropolitan Government of Nashville v. Hillsboro Land Co., Inc., supra, 222 Tenn. at 440, 436 S.W.2d at 854. An Act may be deemed to amend an existing statute, by implication, even though the existing statute was not mentioned by title or substance. English v. Farrar, supra, 206 Tenn. at 196, 332 S.W.2d at 219. Also, the Legislature is presumed to have knowledge of its prior enactments and to know the state of the law at the time it passes legislation. See , e.g., Neff v. Cherokee Insurance Co., 704 S.W.2d 1, 4 (Tenn. 1986); Grubb v. Mayor and Aldermen of Morristown, 185 Tenn. 114, 122, 203 S.W.2d 593, 596 (Tenn. 1947). The rule may be stated that where two acts conflict and cannot be reconciled, the prior act will be repealed or amended by implication to the extent of the inconsistency between them, and a special statute or a special provision of a particular statute controls a general provision in another statute or general provision in the same statute. Strader v. United Family Life Insurance Co., 218 Tenn. 411, 417, 403 S.W.2d 765, 768 (1966) (citations omitted). See also Dorrier v. Dark, 537 S.W.2d 888, petition to rehear denied, 540 S.W.2d 658 (Tenn. 1976). To the extent that the procedures for obtaining financial records from a financial institution are more exacting and restrictive, the Financial Records Privacy Act impliedly amends the previously enacted Tax Enforcement Procedures Act, regardless of T.C.A. § 67-1-1402. T.C.A. § 67-1-1402 is a general provision of the prior enactment and itself recognizes that there shall... prevail over this part such other provisions of ... any other title which govern, restrict, or confer special authority or powers upon the commissioner or his delegate... . T.C.A. § 67-1-1402(c) (emphasis added). The Financial Records Privacy Act cannot be construed other than to restrain the more general evidence gathering powers of the Department of Revenue under T.C.A. §§ 67-1-1301, 67-1-1302, and 67-1-1437. The Legislature has provided definitions in T.C.A. § 45-10-102 that not only include the Department of Revenue, but T.C.A. § 45-10-103(4) expressly permits the financial institution to make disclosures when the making of reports or returns required under the tax laws ... of this state is involved. Clearly, the Legislature contemplated that the Financial Records Privacy Act would have some effect on the Commissioner's authority and thus on the Tax Enforcement Procedures Act. The powers of the Commissioner of Revenue to obtain evidence from a financial institution under T.C.A. § 67-1-1437, or the other tax provisions cited above, have thus been restricted, especially considering that the Financial Records Privacy Act prohibits disclosure except as provided in T.C.A. §§ 45-10-103 and 45-10-104. T.C.A. § 45-10-104 states that disclosure may be made in response to a subpoena that complies with the requisites of T.C.A. §§ 45-10-106 and 45-10-107. We cannot say that the Legislature did not intend the Department of Revenue to be included when, by the terms of the statute itself, the collection and assessment of tax liabilities have been expressly included. If there is no conflict between former laws or statutes and a subsequent law or statute and the earlier and later laws involve the same subject matter, they will be construed in pari materia. If there is an irreconcilable conflict, the former laws are repealed [or amended] by implication. Strader v. United Family Life Insurance Co., supra, 218 Tenn. at 416, 403 S.W.2d at 767. Although the conflict is not sufficient to work a repeal by implication, the conclusion does follow that the Financial Records Privacy Act, having more specific and restrictive requirements for issuing subpoenas, requires that the Commissioner or his delegate must comply with the provisions of that Act when issuing an investigative summons to a financial institution. [4] These provisions amend the Tax Enforcement Procedures Act insofar as they are more protective, restrictive, and exacting than T.C.A. § 67-1-1437.