Oklahoma Tax Commission v. McInnis

LAVENDER, Justice

(dissenting)

I am unable to agree with the majority of the court in its opinion in this matter for the following reasons.

To my mind the issue presented here is not whether the Attorney General of the State of Oklahoma is entitled to inspect the tax records of a certain taxpayer as a preliminary step to prosecuting the taxpayer for violating the criminal provisions of the tax laws of the State of Oklahoma. Even upon a cursory examination of 68 O.S. Supp.1965, Sec. 205(b) (4) it would appear that the Attorney General, as well as the county attorney, would be entitled to examine such records for such purposes.

The issue here presented, however, is whether or not this court shall issue its writ prohibiting the Judge of the District Court of Oklahoma County from carrying out a judgment and sentence of contempt against one Mr. Howell, an employee of *360the Oklahoma Tax Commission, who, pursuant to advice of counsel, refused to obey an order of the court to deliver the tax records of a certain taxpayer for the years 1960 and 1961 to a grand jury sitting in Oklahoma County. The order of the court which Mr. Howell refused to obey is herewith quoted directly from the record:

“The Court: Mr. Howell, at this time the court will direct you ’to produce the records in the subpoena before the Grand Jury.” (Emphasis supplied.)

In other words, is a grand jury entitled to compel, by subpoena, the production before it of the heretofore considered confidential and privileged tax returns of an Oklahoma citizen?

68 O.S.Supp.1965, Sec. 205, formerly 68 O.S.1961, Sec. 1454, is the statute, the construction of which is before the court in this action. Said section is herewith reproduced in part:

“§ 205. Records and files of Commission confidential and privileged— Exceptions
“(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, 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, or of the State tax law affected, or when the determination of the action or proceeding will affect the validity or the amount of the claim of the State under any State tax law, or when the information contained therein constitutes evidence of the violation of this Article, or any State tax law. Nothing herein contained shall be construed to prevent:
“ * * *
“(4) The disclosing of information or evidence to the Attorney General or any County Attorney when such information or evidence is to be used by such officials to prosecute violations of the criminal provisions of any State tax law or of this Article. Such information disclosed to the Attorney General or any County Attorney shall be kept confidential by them and not be disclosed except when presented to a court in a prosecution for violation of the tax laws of the State of Oklahoma and a violation by them by otherwise releasing the information shall be a felony;
* * *
“It is further provided that the provisions of this Act shall be strictly interpreted and shall not be construed as permitting the disclosure of any other information contained in the records and files of the Tax Commission relating to income tax or to any other taxes.
“ t- * *

In Oklahoma Tax Commission v. Clendinning, 143 Okl. 271, 143 P.2d 143, 151 A.L.R. 1035, this court, in passing upon the restrictions imposed by the Legislature making the tax records of individuals privileged from disclosure, had this to say in 1943:

“No one questions the power of the Legislature to so give tax returns this confidential and privileged status. Similar provisions (against disclosure) *361are applied to income tax returns in the various states, and to federal income returns. * * * It is not pointed out where any authority has ever denied the power to so provide. * * * This act (68 O.S.1941, Sec. 1454, which is now 68 O.S.Supp.1965, Sec. 205) 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 any one, nor in any manner, except as specifically authorized by the act itself, and will be used only for the purposes specifically provided. The Legislature is in complete control as to the wisdom of the act. Our duty is but to follow it and apply it. We are not at liberty to minimize the declared public policy evinced by these express provisions of the act making the information contained in said returns confidential and privileged. * * * ”

Nothing appears in the record before us, nor has our attention been directed to any authorities, which would lead us to a different view of the privileged status of tax returns than that expressed in the above quotation from the Clendinning case. As far as this writer is concerned, the above is still the law of this jurisdiction.

The opinion of the majority interprets Section 205(h), supra, as authorizing the Tax Commission to produce tax records of individuals to a grand jury because in said sub-section it is provided that a court may require production of such records “when the records or files or the facts shown thereby are directly involved in an action or proceeding under the provisions of this Article, * * * or when the information contained therein constitutes evidence of the violation of this Article, or any State tax law.”

In other words, as I understand the majority opinion it states that an investigation by a grand jury is “an action or proceeding” and that therefore the tax records (under 205(b)) are available.

I cannot agree. In the first place, I am of the opinion that the portion of Section 205 (b) above quoted was obviously intended to apply to civil actions and proceedings in courts and before administrative boards, as such actions and proceedings are provided for in the other provisions of the Uniform Tax Code, and that such provisions have no application to criminal prosecutions for violation of the tax laws.

The use of the terms “action or proceeding” in the quoted portion of Sec. 205 (b) impels me to a consideration of the meaning of these terms as set forth in other provisions of our statutes and as interpreted by the previous opinions of this court. An “action” is defined in our statutes as follows :

Title 12 O.S.1961, Sec. 4:
“An action is an ordinary proceeding in a court of justice by which a party prosecutes another party for the enforcement or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense.” (Emphasis supplied.)

The term “proceeding” in the quoted portion of Sec. 205(b) above is obviously used in the sense of a “special proceeding.” See Title 12 O.S.1961, Sec. 3, as follows:

“Remedies in the courts of justice are ■ divided into:
“First, Actions.
“Second, Special proceedings.”

Following Section 4 of 12 O.S.1961, supra, appears Section 5, which is:

“Every other remedy is a special proceeding.”

Thus it appears by statute in Oklahoma that there are only two forms of remedy, by an “action” (as defined in Title 12 O.S. 1961, Sec. 4, supra) in a court of justice, or by “special proceeding.” In Harryman v. Bowlin, 153 Okl. 202, 4 P.2d 1011, this *362court defined a “special proceeding” as follows:

“The phrase ‘special proceeding,’ within its proper definition, is a generic term for all civil remedies in courts of justice which are not ordinary actions. * * * Where the law confers a right, and authorizes a special application to a court to enforce it, the proceeding is special, within the ordinary meaning of the term ‘special proceeding.’ ” (Emphasis supplied.)

i

The function of the grand jury is defined by Title 22 O.S.1961, Sec. 331, as :

“The grand jury has power to inquire into all public offenses committed or triable in the county or subdivision, and to present them to the court, by indictment or accusation in writing.”

When the matter has therefore been presented by indictment or accusation to the court it then becomes an “action” as that term is used in Section 205(b). Then, if that action is one involving a violation of the tax laws of the State of Oklahoma the tax records may be ordered by that court to be produced, for the records would then * * * directly involved in an action or proceeding under the provisions of this Article, or when the information contained therein constitutes evidence of the violation of this Article, * *

I am unable to see how the “action or proceeding” so described in Sec. 205(b) could possibly mean the investigation of a criminal matter by a grand jury in the performance of its statutory duty.

Scribner v. State, 9 Okl.Cr. 465, 132 P. 933, is cited in the majority opinion apparently to support the proposition that by the act of the grand jury in requesting certain tax records of an individual citizen of Oklahoma such person is automatically “charged with an offense.” The facts and issue in that case were totally different from the facts here which can be readily observed on reading the syllabus in that case. The only issue there was whether or not one who voluntarily testifies before a grand jury is by that act exempt from any subsequent prosecution for an offense about which he has testified.

Commonwealth v. Dean, 172 Pa.Super. 415, 94 A.2d 59, cited in the majority opinion, is really authority to support this dissenting view on the question of whether investigation procedure of a grand jury is the “proceeding” referred to in the quoted portion of Sec. 205(b). I have attempted here to point out that such section contemplated the use of the tax records in an action or proceeding in court as distinguished from an investigation procedure before a grand jury. The first paragraph of the syllabus in that case is as follows:

“The word ‘proceeding’ standing alone, is broad enough to cover each step or all steps in a criminal action from commencement to final termination, that is, from preliminary hearing to final disposition by an appellate court.”

“From preliminary hearing” would indicate to my mind that an action was filed in a court of justice, and therefore the word “proceeding” would, in view of this case, mean such an action in court.

Lindsay v. Allen, a Tennessee case, 82 S.W. 648, 649, and Marcus v. United States, 310 F.2d 143 (Third Circuit) were both interpreting specific statutes, the similarities of which to our Uniform Tax Procedure Code are not explained in the opinion.

I do not believe this court should take isolated quotations of doubtful applicability from other jurisdictions and permit them to override the clearly expressed policy of this State regarding the tax returns of its citizens as the majority has done in this case.

To me, the meaning of Sec. 205 of Title 68 O.S.1965 Supp. is clear and unambigu*363ous. First, the tax records are described as privileged and confidential. They are not to be made available except on certain occasions (defined specifically in' the statute). Insofar as criminal prosecutions for violations of the tax laws, Sec. 205(b) (4) authorizing the release of the information to the Attorney General or county attorney is the designation of specific persons to whom such records may be delivered, which special designation excludes all others. The established policy that the tax information may be released only to those designated public officials charged with the duty of prosecuting those accused of violating the tax laws is further emphasized by the fact that in the 1965 Legislature the following sentence was added to the section:

“Such information disclosed to the Attorney General or any County Attorney shall be kept confidential by them and not be disclosed except when presented to a court in a prosecution for violation of the tax laws of the State of Oklahoma and a violation by them by otherwise releasing the information shall be a felony.” (Emphasis supplied.)

By the express terms of the above statute the Attorney General or county attorneys may be convicted of a felony for disclosing the tax information except when presenting it to a court in a prosecution for a tax law violation, whereas under the majority opinion such information will be compelled to be disclosed to a grand jury, which is certainly not a “court” and the members of which could not possibly be convicted of a felony under Sec. 205(b) (4) for improperly disclosing such information. A great part of the protective barriers thus erected by the Legislature around these once considered confidential and highly privileged tax records of individual citizens is thus struck down. The clearly expressed Legislative intent that this Act be strictly construed is thwarted. To my mind, it would have been a simple matter for the Legislature to have included grand juries along with the Attorney General and county attorneys in Sec. 205(b) (4). It was for the Legislature to determine whether the grand jury should be included, not for this Court.

As stated at the beginning of this opinion, the issue here is only whether tax records of individual citizens may be inspected by a grand jury; however, in passing it should be noted that the Legislature has provided two remedies for the enforcement of the criminal provisions of our tax code. One remedy is that which gives the Tax Commission the right to initiate the prosecution. The second method is to permit the county attorney or Attorney General to examine the returns of a person suspected of violating the tax laws. If the county attorney or Attorney General, after inspecting the tax records, determines that a criminal violation of the tax laws has occurred they are authorized, of course, to file a complaint or information in a court, whereupon such tax records are admissible in evidence.

Either of the above remedies is well calculated to insure the protection of the tax records from public disclosure until it becomes necessary in the prosecution of one accused of evading his taxes.

I am of the opinion that the Oklahoma Tax Commission and the members thereof were entirely in good faith in refusing to deliver the income tax returns of the citizen involved here to the grand jury. The Commission in so acting was merely following the clearly expressed will of the people, through its Legislature, as such will, expressed in the law, has been heretofore interpreted by this Court.

I would therefore issue a writ of prohibition staying the execution of the judgment and sentence of direct contempt for and against the employee of the Oklahoma Tax Commission.

I respectfully dissent.

I am authorized to state that DAVISON, J., concurs in the views herein expressed.