Kentucky Department of Revenue – Secrets Revealed

Top secret! - Young businessman with finger on his lips

Many states, like my home state of Florida, have broad freedom of information laws. Known in Florida as the Sunshine Laws, the state’s citizens can request a wide range of information from the government. Under the laws, so long as the information is not made confidential by a specific statute/law, then the government has an obligation to provide the citizen with whatever is requested. As a state and local tax (“SALT”) practitioner, I often use this knowledge to my advantage. I often request documents and statistics from the state that I find beneficial to myself, my client, or my practice.

Other states have similar laws. In Kentucky, the Open Records Act gives its citizens a mechanism to request a broad spectrum of information from its government. Like many state agencies believe, the Kentucky Department of Revenue thought it was above the law. In a decision sounded on no legal basis, the DOR in Kentucky did not make available to its citizens some 700 administrative court decisions because it feared it would disclose confidential taxpayer information. Further, the DOR argued that producing some 700 opinions was overly burdensome and would not be helpful to its citizens. Mark Sommer, an attorney in Louisville, had a fundamental problem with the secrecy of the government and challenged the DOR’s interpretation of the law by filing suit.

In a well-crafted argument, Sommer essentially argued that the taxpayers have a fundamental right to be aware of what its government is doing. The government should not be allowed to make rulings in secrecy when transparency would give others guidance as to how the government is interpreting and administering the law. The DOR disagreed and believed that such rulings would not be helpful to its taxpayers. In addition to be being “burdened” by producing some 700 rulings, the production would unduly infringe on the privacy rights of taxpayers.

On August 26, 2014, a Kentucky Court ruled that the DOR was obliged to release redacted copies of its final rulings under the Act. The judge concluded that the law was “abundantly clear” and the DOR could comply with this “burdensome” ruling without infringing on taxpayer privacy. Judge Shepard went on to state that he balanced the privacy interests of the taxpayers against the public’s right to be informed about its governments workings, and held that the public’s right to be informed outweighed the privacy concerns.

Following the ruling, Sommer stated that the Kentucky judge “set[] the standard for what transparency in SALT matters should really be about.” The attorney for Tax Analysts, Cornish Hitchcock, continued, “The decision is an important victory over ‘secret law’ that affects taxpayers without their knowledge. The Department’s ruling are definitive statements of the agency’s interpretation of Kentucky tax law, and they can be cited against taxpayers even when taxpayers don’t know that they exist.”

This case serves as one of countless examples of the need for government accountability. Without transparency the government is free to be overly oppressive and unfair to its citizens. Something just seems fishy about a government unwilling to share its interpretation of laws with its citizens. I commend the team involved in fighting this peculiar issue in Kentucky. If other states are equally unfair about similar issues then I hope others follow Kentucky’s lead and fight back.

Original Post By:  Jerry Donnini

Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA , based in Fort Lauderdale, Florida. Mr. Donnini’s primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini is currently pursuing his LL.M. in Taxation at NYU.

One comment

  1. Tom Norris says:


    During my LL.M program, we had a Mississippi tax practitioner lecture. Based upon the lecture of the Mississippi presenter, State tax practice in Mississippi was virtually closed because they didn’t publish their tax decisions. It was described as a need to join a long-active firm who had gone down and picked up copies of precedent from the Tax Division and thus represented a semi-private library of precedent. Might be worth a gander!

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