Office of Information Practices

U Memo 20-4
January 7, 2020
Tax Review Estimate Records

In response to an appeal (U APPEAL 20-1) filed by a member of the public (Requester) after the Department of Taxation (TAX) denied him access to records, OIP issued a memorandum opinion, U MEMO 20-1.  That appeal concerned a request for “the worksheets, assumptions, estimates, and calculations for tax revenue estimates used by [TAX] for its testimony” on specified bills.  OIP Opinion Letter Number F19-05 (Opinion F19-05) previously concluded that under the UIPA, TAX could not withhold the underlying assumptions, source data and documents, and computations that it used to create revenue estimates presented in legislative testimony on the grounds that its disclosure would frustrate TAX’s legitimate function of producing objective and independent revenue estimates or on the grounds that the records were inchoate and draft working papers of a legislative committee.  HRS § 92F-13(3) and (5).

For U APPEAL 20-1, TAX asserted, and OIP agreed in U MEMO 20-1, that the request at issue is substantially similar to the request addressed by Opinion F19‑05.  TAX’s position in U APPEAL 20-1 was that it denied access to the records because TAX’s appeal to the First Circuit Court of Opinion F19-05 is currently pending and thus TAX considers disclosure “inappropriate at this time.”  See In Re OIP Opinion Letter No. F19-05, S.P. No. 19-1-0191.  On November 19, 2019, the First Circuit Court (Circuit Court) issued its Order Affirming Office of Information Practices Decision and Ordering Compliance which found that TAX failed to demonstrate that Opinion F19-05 was palpably erroneous and ordered TAX to comply with Opinion F19-05.  It was not known as of the date of this decision whether TAX would appeal the Circuit Court Order.

OIP concluded in U MEMO 20-1 that, following the precedent set in Opinion F19‑05, TAX had not established that the records at issue may be withheld under either (1) the UIPA’s exception to disclosure for records which, if disclosed, would frustrate a legitimate government function or (2) the UIPA’s exception to disclosure for working papers of “legislative committees.”  HRS § 92F-13(3) and (5).  OIP further found that TAX is therefore required by the UIPA to provide the requested records to Requester.

After U MEMO 20-1 was issued, TAX timely sought and OIP granted partial reconsideration of U MEMO 20-1 after finding that compelling circumstances justified granting reconsideration.  HAR § 2‑73‑19(d).  OIP granted limited reconsideration of U MEMO 20-1 based on TAX’s argument that section 92F-13(4), HRS, allows it to withhold a small portion of the requested records that contain confidential taxpayer information protected under section 235‑116, HRS.  Although specific taxpayer identities were not contained in the responsive records, TAX stated that it had belatedly discovered that the number of Real Estate Investment Trusts (REIT) upon which the revenue estimates were based was small enough to significantly increase the likelihood that the data could be associated with or attributed to specific taxpayers, and thus TAX now believed that disclosure of the unredacted spreadsheet would violate section 235-116, HRS, and that this section requires redaction part of the responsive records.  TAX relied on IRS Publication 1075 (September 2016) titled “Tax Information Security Guidelines for Federal, State, and Local Agencies: Standards for Protecting Federal Tax Returns and Return Information.”  In relevant part, this publication states that for return information statistical reports, “[s]tatistical tabulations prepared at the state level may not be released for cells containing data for fewer than 10 returns.”  As such, TAX asserted that the row that includes the subtotal figure in the spreadsheet as well as the row titled, “Behavior Adjusted Taxable” may not be disclosed because they contain (1) actual tax return data from specific taxpayers, and (2) aggregated data based on less than 10 records.

Following the precedent set in OIP Opinion F19-05, OIP concluded that TAX has not established that the records at issue may be withheld under either (1) the UIPA’s exception for records which, if disclosed, would frustrate a legitimate government function, or (2) the UIPA’s exception for working papers of “legislative committees.”  HRS § 92F‑13(3) and (5) (2012).  TAX is therefore required by the UIPA to provide the requested records to Requester with the exception of confidential taxpayer information which may be withheld under section 92F-13(4), HRS, as it is protected under a confidentiality statute.