Court Opinion

ID: 9549204
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:14:50.619608+00
Date Added: 2024-06-11T15:19:59.873037
License: Public Domain

OPALA, Justice,
dissenting:
In this original action the Oklahoma Tax Commission [Commission] seeks this court’s order barring the State Auditor and Inspector [Auditor] from access to the tax returns. The court’s opinion arms the Auditor with a carte blanche for an all-inclusive examination of the Commission’s “records and files”. I cannot join in sanctioning this blanket invasion of taxpayers’ privacy.1 At *690stake in this first-impression controversy— miscast here in the posture of a dispute between the Senate-backed Commission and an elected constitutional officer of the State — is this government’s continued fidelity to the solemn “compact and pledge”, made by the legislature in 1939, that taxpayers’ returns shall stand protected from all eyes — public or private — which are without statutorily-recognized interest in their inspection.2
I.
Both powers and duties of the Auditor vis-á-vis the Commission are purely statutory. The Constitution, Art. 6 § 19, assigns to him no broader task than that of examining the state and all county treasurers. All of his other responsibilities are prescribed by the legislature. Statutes vary widely in defining the scope and depth of the audit to be conducted in the different agencies of government.3
The Commission is subject to a “continuous examination and audit” required by 68 O.S.Supp.1979 § 106.4 The legislature annually appropriates for a postaudit of the Commission.5 By § 106, supra, which deals specifically with the Commission, the subject of the Auditor’s examination of the Commission is confined to “books and accounts”. The same phrase is used in the more general provisions of 74 O.S.Supp.1979 § 212, while another general statute, 74 O.S.Supp.1979 § 215, seems to authorize the Auditor’s examination “for the various purposes” of “books, papers, accounts, bills, *691vouchers and any other documents, or property”. The expanded language of § 215, while appearing all-inclusive when read by itself, is obviously qualified, and hence limited, by its reference to authorized “purposes” for each agency’s audit. It will hence not serve to enlarge the source of the Auditor’s authority over the Commission nor does it speak to the scope and depth of the audit he is required to perform in the Commission’s office. Equally unacceptable is the notion that the Auditor’s powers came to be expanded by the 1976 addition to 68 O.S.Supp.1979 § 205(a) of the phrase “except as provided otherwise by law”.This language, added by Okl.Sess.L.1976, Ch. 123, Sec. 1, to the provisions of § 205(a), was an obvious reference to the second section of that act, now 63 O.S.Supp.1979 § 804.16. The last cited section created an entirely different privilege-and-confidentiality regime for the “annual registration, license or certificate of title of any vessel, motorboat or motor.6 In short, § 205(a), as amended in 1976, will not do to give the Auditor powers greater than those derived by him from 68 O.S.Supp.1979 § 106 — the section that defines the “various purposes” for the examination.
A general review of § 106, supra, considered singly and together with all the other statutory provisions defining the nature of the audit contemplated by the legislature for the various government offices, yields at least two elements common to the totality of the framework. These elements are significant in the search for an answer to the dispositive question here in suit. First, there is no statute which extends to the Auditor powers over office records equal to those conferred on him by Art. 6 § 19, Okl.Con., with respect to the state and county treasurers. Over the records of the treasurers, while they undergo his examination “without notice”, the Auditor is given “complete possession”. Second, none of the enactments authorizes the Auditor to run a performance audit as distinguished from an examination of the agency’s financial accountability. Performance audit function is assigned in unmistakable terms exclusively to the Fiscal Services Division of the State Legislative Council.7 Because that division is without power to examine confidential records, it is doubtful that it could itself impose on the Commission an audit to evaluate that agency’s programmatic performance.
By long-continued administrative construction of the applicable law, uninterrupted since 1939, the Commission’s financial accountability audit has not included an examination of tax returns. I find no statutory warrant for the Auditor’s claim to some legitimate, legislatively-recognized interest in the inspection of these returns for any purpose. The Commission, not the Auditor, is the undisputed final arbiter of a person’s tax liability to the State. He can add absolutely nothing to it nor can he subtract anything from it. His comment on the validity of a tax assessment or a refund claim would be but an exercise in supererogation.
Absent litigation, the Commission’s review of a return constitutes the ultimate judgment upon the correctness of the computations contained in it, the deductions and exemptions claimed and the accounting methods used. The law simply leaves no room for a duplicate review by the Auditor — total or partial. It is not the business of the Auditor to judge the Commission’s *692performance in administering tax laws or to determine who does or does not pay taxes.8
II.
Tax returns have been “privileged and confidential” since 1939 9 and “secret” since 1943.10 They are essentially treated as private documents in which the citizens may rightly assert an expectation of privacy. The Commission has exclusive authority to keep these documents in its custody.11 While the provisions of 68 O.S.Supp.1979 § 205(b)(3) allow for an “examination of [the Commission’s] . . . records and files by the” Auditor or his agents, that section cannot by itself confer powers on the Auditor nor can it enlarge the scope of the permissible audit. Properly construed in conjunction with other statutes in pari materia, § 205(b)(3) is not a grant or source of power but rather a license to inspect that material which is necessary to the performance of the legitimate auditing function. In short, the access to be accorded the Auditor under § 205(b)(3) must be function-related.
The Auditor’s hope of establishing the necessary function nexus must rest on his claim that the information sought from the returns is absolutely essential to the proper performance of his statutorily-mandated financial accountability audit. This is the sum total of his legitimate, legislatively-authorized interest which can be made textually demonstrable. His claim to inspection of tax returns must hence be confined within the perimeter of that interest.12
The sole purpose for the auditor’s examination is the preparation of an audit. The audit is not open-ended but statutorily limited in scope. Its report is by law made a public record.13 The Legislature surely did not contemplate the Auditor’s inclusion in that report of any information that would violate the carefully erected framework of taxpayer’s privacy. What was doubtless intended to be published in the Auditor’s report is carefully outlined in § 205(b)(2) as “. . . statistics so classified as to prevent the identification of a particular [taxpayer’s] report and the items thereof.” All this makes it abundantly clear that for the preparation of his audit report the Auditor need not have access to the identity of individual taxpayers nor to the detailed information in their returns. What he does not need, he has no legitimate interest in seeing. His visual periphery must be made coextensive with his legitimate interest.
III.
For proper performance of his narrowly-defined function the Auditor does, however, need to abstract from individual returns the following data: (a) the amount of tax declared (b) the amount of tax prepaid from withholding or pursuant to the declared estimate of income and (c) the amount of tax remitted with the return or the amount of refund claimed to be due. The identity of the taxpayer is not relevant to the “purposes specifically provided by law.” If at all possible to so arrange, access to identifying references should be withheld from the Auditor.14 Under no circumstances should *693his personnel be allowed to copy into their worksheets any identification data. This measure appears essential to the preservation of the taxpayer’s privacy. The statute confers on the Auditor no legal warrant for keeping any material abstracted by his personnel from the Commission’s files from becoming a public record in their hands. The law contemplates no removal of the Commission’s records either by copy or in an abstract form. The terms of § 205(b)(3) authorize no more than an Auditor’s “examination” of “records and files” of the Commission. They give the Auditor no right of access to any information other than that which may be published under the authority of § 205(b)(2) — “the statistics so classified as to prevent the identification of a particular report and the items thereof.” While under § 205(a) the Auditor’s personnel may not “divulge or disclose”, under the threat of criminal prosecution as provided in § 205(e), any information gleaned by them from the Commission’s files, the confidential material in the Auditor’s hands, whether in a copy or abstract form — on the worksheets or otherwise — is not privileged. It ceases being part of the “Commission’s” records. It becomes public record by force and operation of general law. 51 O.S.1971 § 24 and 68 O.S.Supp.1979 § 205(b).
Even a cursory comparison of § 205(a) testimonial immunity provisions with the language in § 205(b) dealing with privilege from in-court production of records will readily reveal that the former have an application sweep vastly broader than the latter. The terms of § 205(b) clearly restrict the privilege from production in court to documents in the hands of the “Tax Commission” or “any employee engaged in such [tax Law] administration or charged with the custody of such records or files.” In contrast with § 205(b), the confidentiality [nondisclosure requirement] and testimonial immunity provisions of § 205(a) clearly extend beyond the Commission and its employees. They unmistakably cover “any person who may have secured the information” from the Commission’s “records and files.”
In short, to sanction the Auditor’s open-ended access to the returns would break down the carefully constructed privilege- and-confidentiality regime of § 205. It would transmute the taxpayer’s secrets from “records and files” of the Commission into a public record and make his return no more confidential than any copy thereof reposed in private possession or in court records.15
The pledge made here by the Auditor that he will treat the Commission’s records in his possession as confidential and is mindful of the criminal penalty for disclosure of the information contained in them affords us no solution to the legal problem we confront. The taxpayer who is privileged by § 205 privacy regime of our law has an absolute right to insist that his confidences not be shared with officialdom— high or petty — who are without legislatively-recognized interest in the information entrusted to the state in his return. This much has stood as an honored principle of our decisional law ever since § 205 first came under judicial examination in 1943.16
I would hence hold that from the returns of the taxpayers, whose anonymity must be protected so far as humanly possible, the Auditor may abstract no more than the three items deemed to be function-related *694and essential to the beginning of a meaningful audit trail through the necessary document flow.
CONCLUSION
I.
The Auditor has no legitimate, legislatively-recognized interest in the tax returns.17 His § 205(b)(3) access to the “records and files” of the Commission stands circumscribed by the outer perimeter of his power to audit. What he cannot audit, he cannot inspect. The Auditor’s access under § 205(b)(3) should hence be limited to those “records and files” which are legitimately related to his function of conducting a financial accountability audit. While the returns must be withheld from the Auditor’s reach, he should be allowed to abstract from them only three items which are to serve as the source for his audit trail through the Commission’s document flow. Taxpayers’ identity should be protected from disclosure to the Auditor to the fullest extent possible.
II.
The court’s decision today has added to the bureaucratic establishment at the Capitol yet another layer of permanent tax authority with unrestrained power to dictate to the Commission a brand new set of rules for a massive overhauling of accounting and other internal procedures by which revenue is to be computed, processed, adjusted and settled. The authority so sired by us will no doubt establish itself directly or obliquely as the final administrative arbiter of every taxpayer’s liability. With its newly-gained responsibility the layer will grow beyond its present-day dimension. After making the initial splash on the government scene it will eventually accommodate itself to some comfortably symbiotic existence level. Our unwarranted fear of some adverse public sentiment to the 1939 confidentiality regime for the taxpayers makes us forget, all-too quickly, that the sunshine let in today may well turn into tomorrow’s sunburn. If, as it was intimated.to us at oral argument, the Commission stands suspected of inefficiency or malfeasance, a grand jury inquest18 would be a far more appropriate device than turning the Auditor loose to conduct a massive extrastatutory performance audit with not even an iota of guidelines for the inquisition to safeguard the taxpayers’ privacy interest.
Loath to disturb the long-continued administrative practice and finding no legislative authority to the contrary, I would confine the Auditor to a thorough financial accountability audit and leave up to a grand jury the inquest into the Commission’s activities in administering the revenue laws.

. The privilege-and-confidentiality regime for tax returns is created by the terms of 68 O.S. Supp.1979 § 205. In pertinent part this statute provides:
*690“(a) The records and files of the Tax Commission concerning the administration of this article, or of any state tax law, shall be considered confidential and privileged, except as provided otherwise by law and neither the Tax Commission nor any employee engaged in the administration thereof or charged with the custody of any such records or files, nor any person who may have secured information therefrom, shall divulge or disclose any information obtained from the said records or files or from any examination or inspection of the premises or property of any person.
(b) Neither the Tax Commission nor any employee engaged in such administration or charged with the custody of any such records or files shall be required by any court of this state to produce any of them for the inspection of any person or for use in any action or proceeding except when the records or files or the facts shown thereby are directly involved in an action or proceeding under the provisions of this article . . . Nothing herein contained shall be construed to prevent:
‡ * * ‡ * *
(2) The publication of statistics so classified as to prevent the identifícation of a particular report and the items thereof;
(3) The examination of such records and files by the State Auditor and Inspector, or his duly authorized agents;
******
(c) Any violation of the provisions of this section shall constitute a misdemeanor, and shall be punishable by a fine not exceeding One Thousand Dollars ($1,000.00), or by imprisonment in the county jail for a term not exceeding one (1) year, or by both such fine and imprisonment; and the offender shall be removed or dismissed from office. * * * ” [Emphasis added].

. Okl.Sess.L.1939, p. 369 § 6; 68 O.S.1941 § 1454; Oklahoma Tax Commission v. Clendinning, 193 Okl. 271, 143 P.2d 143, 146, 151 A.L.R. 1035 [1943],

. The Auditor’s responsibility vis-á-vis the different agencies may be found in 57 O.S.Supp. 1979 § 537(D) [Department of Corrections]; 64 O.S.Supp.1979 § 87c [Commissioners of Land Office]; 69 O.S.Supp.1979 § 315 [Commission and Department of Transportation]; 70 O.S. Supp.1979 § 5-127 [local school districts] and 74 O.S.Supp.1979 §§ 212, 215 [general provisions].

. Continuous audit is defined as one “in which the detailed work is performed either continuously or at short, regular intervals throughout the fiscal period. Such continuous work leads up to the completion of the audit upon the closing of the accounting records at the end of the fiscal period.” Governmental Accounting, Auditing and Financial Reporting, p. 157 [Municipal Finance Officers Association 1968].

. Post-audit means “an audit made after the transactions to be audited have taken place and have been recorded or have been approved for recording by designated officials . . Governmental Accounting, etc., supra note 4, at p. 166; Director of Revenue v. State Auditor, 511 S.W.2d 779, 783 [Mo.1974].
Most but not all of the recent annual appropriation acts, cited to us by the Commission, characterize the examination required to be made as a “post-audit”. See 74 O.S. 1971 § 285(44); 74 O.S.Supp. 1973 § 285(44); Okl.Sess.L.1975, Ch. 247, § 5; 74 O.S.Supp. 1978 § 285(44) and 74 O.S.Supp.1979 § 285(44).

. The 1976 insertion of the quoted phrase “except as provided otherwise by law” may have been viewed as necessary when 68 O.S.Supp. 1976 § 205.1 was enacted in the same session. Okl.Sess.L.1976, Ch. 152, p. 214. The terms of § 205.1 created another exception to the regime of confidential “records and files” of the Commission.

. 74 O.S.Supp.1979 § 452.4. Performance audit is defined in this section as “an examination of the effectiveness of administration and its efficiency and adequacy in terms of the program of a state agency, authorized by law to be performed, and the conformance of expenditures, with legislative intent in the appropriation of funds.” [Emphasis added]. The same definition was adopted in the State of Washington. Matter of Washington State Bar Association, 86 Wash.2d 624, 548 P.2d 310, 313 [1976],

. Identical conclusion under a similar statutory framework was reached in Director of Revenue v. State Auditor, supra note 5, at p. 783.

. 68 O.S.1941 § 1454; Okl. Tax Commission v. Clendinning, supra note 2.

. 51 O.S.1971 § 24.

. Not even the Archives and Record Commission may claim the custody of tax returns or remove them from the office of the Commission. 74 O.S.1971 § 572(b).

. The privilege-and-confidentiality regime of § 205 does not belong to the officialdom of this government but rather to ihe taxpaying public. It constitutes “the state’s compact and pledge to the taxpayer that his tax return shall be kept inviolate, confidential and privileged, and not disclosed to anyone, nor in any manner, except as specifically authorized by the act itself, and will be used only for the purposes specifically provided" [emphasis added]. Oklahoma Tax Commission v. Clendinning, supra note 2.

. 68 O.S.Supp.1979 § 106 provides that “. . [the] report ... of the State Auditor [is] a public record.”

. Our conclusion here is consistent with that reached by the Supreme Court of Missouri construing a similar statutory framework. Di*693rector of Revenue v. State Auditor, supra note 5.

. Once a person has made his/her income an issue in litigation, a copy of his/her tax return may become a legitimate subject of production in court, but its examination must be restricted to the relevant portions of the return. Matchen v. McGahey, Okl., 455 P.2d 52, 56 [1969], Application of Umbach, Okl., 350 P.2d 299 [I960], Court records are public under 51 O.S.1971 § 24.

. Oklahoma Tax Commission v. Clendinning, supra note 2; The principle was reiterated some twenty years later in Oklahoma Tax Commission v. McInnis, Okl., 409 P.2d 355, 356 [1965], The dissent of Justice Lavender, joined by Justice Davison, placed even a stronger emphasis upon the spirit of pronouncement in Clendinning. 409 P.2d at 359, 361. It is not without significance to note that Justice Davi-son concurred in Clendinning.

. In Winters v. Governor’s Special Committee, Okl., 441 P.2d 370, 374, we said: “Freedoms protected against invasion by the First Amendment should not be placed in danger in the absence of a clear legislative determination that a need exists for, and state interest demands, a particular inquiry by an investigative organ of government. There is no power in either judicial, executive or legislative branch of the government ‘to expose for the sake of exposure’. Watkins v. United States, 354 U.S. 178, 200, 205, 77 S.Ct. 1173, 1184, 1 L.Ed.2d 1273. The lack of any indications in the statute itself that the legislature desired the information the committee seeks to elicit here concerning the treasurer's activities must be regarded as the absence of statutory authority to carry the inquiry into that area.” [Emphasis added].

. Winters v. Governor's Special Committee, supra note 17, at p. 377.