Present: All the Justices
CLINCHFIELD COAL COMPANY
OPINION BY
v. Record No. 000700 CHIEF JUSTICE HARRY L. CARRICO
January 12, 2001
RONNIE L. ROBBINS, COMMISSIONER
OF REVENUE, DICKENSON COUNTY
FROM THE CIRCUIT COURT OF DICKENSON COUNTY
Keary R. Williams, Judge
This case involves a declaratory judgment proceeding
brought by Clinchfield Coal Company (Clinchfield) against Ronnie
L. Robbins (Robbins), Commissioner of Revenue of Dickenson
County. In a bill of complaint, Clinchfield sought a
declaration that Robbins lacked the authority to employ Larry D.
Sturgill, P.C., a private accounting firm (the Sturgill firm),
and to appoint its members as deputy commissioners of revenue to
conduct an audit of Clinchfield’s business tax records.
Clinchfield also sought to have the trial court quash a summons
requiring Clinchfield to produce certain records for the
Sturgill firm’s use in conducting the audit. From a final
decree denying the requested relief, we awarded Clinchfield this
appeal.
Clinchfield, an affiliate of The Pittston Company
(Pittston), is engaged in the business of mining and processing
coal in Dickenson County. The County imposes a severance tax
upon persons engaged in the business of severing and extracting
coal in the County. Clinchfield files monthly severance tax
returns and pays severance taxes to the County.
Robbins’ duties as commissioner of revenue include the
enforcement of local taxes imposed by the County. On May 27,
1998, Robbins entered into an “Auditing Agreement” with the
Sturgill firm. The agreement made the Sturgill firm “solely
responsible for providing services reasonably required to
accomplish” work assignments involving “the acquisition of
information necessary to conduct a random audit of the coal and
gas severance(s) in Dickenson County.”
On June 23, 1999, the Sturgill firm notified Clinchfield
that it had been selected for an audit of the coal severance
taxes reported to Dickenson County for the year 1998 and that
the audit would be conducted by the Sturgill firm’s
representatives. The notice required Clinchfield to make
available to the Sturgill firm’s auditors a number of its
business records.
Clinchfield objected to the performance of the audit by the
Sturgill firm as being unauthorized. Robbins then certified to
the trial court his appointment of Larry D. Sturgill and four
other members of the Sturgill firm as deputy commissioners of
revenue and requested that they be allowed to qualify by taking
and subscribing the oath required by law. By orders entered
August 31, 1999, the trial court granted Robbins’ request and
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entered of record the appointments of the five members of the
Sturgill firm as deputy commissioners of revenue. In September
1999, each member took the oath prescribed by Code § 49-1, the
same oath required of “[e]very person before entering upon the
discharge of any function as an officer of this Commonwealth.”
In September 1999, a member of the Sturgill firm who
identified herself as a deputy of Robbins contacted Pittston to
reschedule a severance tax audit of Clinchfield’s records. In a
letter to the Dickenson County Attorney on October 22, 1999,
Pittston stated that it did not question the right of Robbins or
the employees of his office to conduct an audit of Clinchfield’s
records but asserted that Virginia law did not permit audits by
“independent accountants even if they purport to have been
‘deputized.’ ” Pittston asked the County Attorney to confirm
that the audit by the Sturgill firm “cannot proceed.”
The County Attorney responded to Pittston on October 26,
1999, that the audit would proceed and that a subpoena would be
issued for Clinchfield’s records. On November 5, 1999, Robbins
issued a summons requiring Clinchfield’s president to appear
before Robbins on November 15, 1999, and produce a number of
records for the severance tax audit. Robbins intended to
provide the records to the five members of the Sturgill firm for
their use in performing the audit. Clinchfield then filed its
bill of complaint for declaratory judgment seeking, as part of
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the requested relief, to have the summons quashed. After a
hearing, the trial court in its final decree refused to quash
the summons.
Clinchfield’s first assignment of error alleges that
Robbins lacked the authority to hire the Sturgill firm to
conduct a tax audit of Clinchfield’s confidential business
records. However, during oral argument, Robbins conceded that
“the law in this Commonwealth is that [a commissioner of
revenue] can’t hire a private firm, in and of itself,” to “audit
a private citizen.” Robbins then took the position that a
commissioner of revenue has the authority to “hire an
individual, as a statutory employee, from an accounting firm to
do the work.”
Clinchfield’s second assignment of error poses the question
whether a commissioner of revenue possesses the authority to
employ the members of a private accounting firm as deputy
commissioners to conduct confidential tax audits. This becomes
the dispositive question in the case.
Robbins maintains that the authority to appoint members of
a private accounting firm derives from Code §§ 15.2-408(C), -
1603, and –1605(A). Code § 15.2-408(C) provides that a
commissioner of revenue “may appoint such deputies, assistants
and employees as he may require in the exercise of the powers
conferred and in the performance of the duties imposed upon him
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by law.” Code § 15.2-1603 provides that a commissioner of
revenue may “appoint one or more deputies, who may discharge any
of the official duties of their principal during his continuance
in office.” Finally, Code § 15.2-1605(A) defines an
“[e]mployee” as “an employee or deputy” of, inter alia, a
commissioner of revenue.
Citing several opinions of the Attorney General, Robbins
argues that “a constitutional officer maintains exclusive
authority over personnel matters within his office[,] giving the
officer the discretionary power to appoint deputies.” See 1998
Op. Atty. Gen. 30; 1986-1987 Op. Atty. Gen. 69; 1982-1983 Op.
Atty. Gen. 105. Robbins references another opinion of the
Attorney General in aid of his position that a commissioner of
revenue may engage “part-time employees to conduct audits.”
1991 Op. Atty. Gen. 281.
Continuing, Robbins argues that when he “deputized [the]
five individuals,” they became part-time “statutory employees as
defined by Virginia Code § 15.2-1605, which allows them to
receive confidential tax information under Virginia Code § 58.1-
3(A)(2) in the line of duty to perform tax audits.” We disagree
with Robbins. 1
Code § 58.1-3(A) provides in pertinent part as follows:
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Except in accordance with a proper judicial order or as
otherwise provided by law, the . . . commissioner of the
revenue . . . or any other state or local tax or revenue
officer or employee . . . shall not divulge any information
acquired by him in the performance of his duties with
respect to the transactions, property, including personal
property, income or business of any person, firm or
corporation. . . . Any person violating the provisions of
this section shall be guilty of a Class 2 misdemeanor.
Subsection 2 excepts from the provisions of section A “[a]cts
performed or words spoken or published in the line of duty under
the law.”
Code § 58.1-3(A) was the subject of the 1991 opinion of the
Attorney General referenced above. In that instance, the
Attorney General was asked two questions, (1) whether a
commissioner of revenue could engage part-time employees to
conduct tax audits, and (2) whether a commissioner of revenue
may employ “private firms either to conduct the audits or to
provide personnel to work with a commissioner in conducting the
audits.” 1991 Op. Atty. Gen. 281. (Emphasis added.) The
Attorney General answered the first question by stating that
“the confidentiality provisions of § 58.1-3 . . . are not
violated by disseminating protected information to tax or
revenue employees, including part-time employees, for the
performance of their public duties.” 1991 Op. Atty. Gen. at
281-82.
1
Robbins argued on brief that the five individuals would be
considered as employees even under the common law. However,
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With respect to the second question, the Attorney General
noted that prior opinions of her office had reached different
conclusions when addressing whether a commissioner of revenue
could disclose confidential tax information to third parties.
The Attorney General then explained as follows:
The different conclusions reached by these prior
Opinions are based on the existence or nonexistence of the
statutory authority for the third party to perform duties
which require access to the tax information. If such
statutory authority exists, the information is disclosed
“in the line of duty under the law,” as provided in § 58.1-
3(A)(2). As a result, a commissioner of the revenue may
disclose confidential tax information to a local tax
collector employed by a county board of supervisors
pursuant to the authority granted in § 58.1-3934 . . . .
Likewise, a commissioner may provide confidential tax
information to a local board of equalization pursuant to a
statute, § 58.1-3379 . . . , requiring such boards to
equalize assessments in the county and requiring local
commissioners to call inequalities to the attention of the
board. . . .
In contrast, a commissioner of the revenue may not
disclose confidential tax information to outside assessors
engaged to audit taxpayers, to verify returns and to make
statutory assessments for omitted items. See 1976-1977
Att’y Gen. Ann. Rep. 34 (the “1976 Opinion”). The function
of an outside assessor would be limited to appraising
property voluntarily exhibited by the taxpayer and to
submitting his appraised value to the commissioner. Id. at
35. Based on the conclusion in the 1976 Opinion, it is my
opinion that, because there is no statute that authorizes a
commissioner of the revenue to engage outside auditors and
thus to disclose confidential tax information pursuant to
the commissioner’s or the auditor’s performance of his
statutory duties, a commissioner is prohibited by § 58.1-3
from granting an outside auditing firm access to such
information.
1991 Op. Atty. Gen. at 282 (footnote omitted) (emphasis added).
Robbins abandoned this position during oral argument.
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Although the construction of a statute by the Attorney
General is not binding upon this Court, it is of “persuasive
character.” Barber v. City of Danville, 149 Va. 418, 424, 141
S.E. 126, 127 (1928). We find the Attorney General’s 1991
opinion most persuasive on the question whether there is
statutory authority for a commissioner of revenue to engage a
private accounting firm to conduct audits or to provide
personnel to do the work. And it is worthy of note that,
although the opinion quoted above has been on the books since
1991, the General Assembly has not seen fit to alter it in any
way. The General Assembly “is presumed to have knowledge of the
Attorney General’s interpretation of statutes, and the General
Assembly’s failure to make corrective amendments evinces
legislative acquiescence in the Attorney General’s
interpretation.” City of Winchester v. American Woodmark Corp.,
250 Va. 451, 458, 464 S.E.2d 148, 153 (1995).
Here, as noted supra, Robbins has conceded he lacks the
authority to employ a private accounting firm to perform tax
audits. He maintains, however, that Code §§ 15.2-408(C) and –
1603 evince the legislative intent to allow commissioners of
revenue to appoint deputies who become a commissioner’s
statutory employees and to whom confidential information may be
divulged “in the line of duty,” consonant with Code § 58.1-
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3(A)(2). But we cannot find the legislative intent Robbins
ascribes to Code §§ 15.2-408(C) and –1603. Indeed, given the
circumstances of this case and the confidentiality provisions of
Code § 58.1-3(A), we cannot perceive that the General Assembly
intended to allow a commissioner of revenue to overcome the lack
of authority to hire a private accounting firm by appointing the
members of such a firm as deputy commissioners to conduct
confidential tax audits.
The circumstances of this case are undisputed. During oral
argument, Robbins acknowledged that his “Auditing Agreement”
with the Sturgill firm was “still in effect,” that it “never was
set aside or altered or amended in any fashion.” And, when
Robbins was asked during his testimony below, “does your
agreement run to [Larry Sturgill’s] firm or does it run to these
individuals,” Robbins stated that the agreement “basically
covers him or his employees.”
Thus, pursuant to the agreement, the Sturgill firm and its
members, in the performance of services for Robbins, “shall
operate as and have the status” of independent contractors and
“shall not act or be” employees of Robbins “for any purpose.”
The Sturgill firm’s members are not entitled to workers’
compensation or other benefits provided to Robbins’ regular
employees. Robbins does not pay the salaries of the Sturgill
firm’s members. Instead, he pays the firm an hourly rate for
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audit services based upon monthly bills submitted by the firm
and the firm compensates the members. 2 When Robbins was asked
below whether the five people he had named as his deputies were
“full-time employees” of the Sturgill firm and “on [the firm’s]
payroll,” he replied in the affirmative.
This case requires application of the well-known maxim that
a person may not do indirectly what he cannot do directly,
Phillips v. Schools, 211 Va. 19, 22-23, 175 S.E.2d 279, 281
(1970). Accordingly, we will reverse the judgment of the trial
court and enter final judgment in favor of Clinchfield declaring
that Robbins lacked the authority to appoint the members of the
Sturgill firm as deputy commissioners of revenue. Our judgment
will also quash the summons requiring Clinchfield to produce its
business tax records for use by the members of the Sturgill
firm.
Reversed and final judgment.
2
Robbins testified below that he secured funds from the "Coal
Road Committee" to finance his coal severance tax audits. He
said there is such a committee "in all the coalfield counties,"
and the committees distribute funds derived from "the coal and
gas severance" tax.
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