GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

S	3 

SENATE BILL 109
Judiciary II Committee Substitute Adopted 3/4/91
Third Edition Engrossed 3/6/91

Short Title:  Modify Tax Secrecy Provision.	(Public)
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Sponsors:
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Referred to:  
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February 20, 1991

A BILL TO BE ENTITLED
AN ACT TO CLARIFY THE PROHIBITION AGAINST DISCLOSING TAX INFORMATION, TO MODIFY THE PROHIBITION TO PERMIT THE EXCHANGE OF CERTAIN INFORMATION BETWEEN DESIGNATED AGENCIES, AND TO EXCLUDE INFORMATION SUBMITTED ON A MASTER TAX APPLICATION FORM FROM THE PROHIBITION.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-259 reads as rewritten:
"§ 105-259.  Secrecy required of officials; penalty for violation.
	(a)	Disclosure Prohibited. –  An officer, an employee, or an agent of the State who has access to tax information in the course of service to or employment by the State may not disclose the information to any other person unless the disclosure is made for one of the following purposes:
(1)	To comply with a court order or a law.
(2)	To give a husband or wife who elects to file a joint individual income tax return information concerning the income tax liability of the other spouse.
(3)	Review by the Governor or the Attorney General or a representative of the Governor or the Attorney General.
(4)	To provide an officer of an organized association of taxpayers with a list of taxpayers who are liable for or have paid a privilege license tax under Article 2 of this Chapter.
(5)	Review by a representative of another state or the United States to aid the state or the United States in collecting a tax imposed by this State, the other state, or the United States if the laws of the other state or the United States allow the state or the United States to provide similar tax information to a representative of this State.
(6)	To receive, process, or deliver tax information on behalf of the Department of Revenue.
(7)	To exchange information with the Division of Motor Vehicles of the Department of Transportation when the information is needed to fulfill a duty imposed on the Department of Revenue or the Division of Motor Vehicles.
(8)	To exchange information concerning a tax imposed by Subchapter V of this Chapter with the Standards Division of the Department of Agriculture when the information is needed to administer the Gasoline and Oil Inspection Act, Article 3 of Chapter 119 of the General Statutes.
(9)	To exchange information concerning a tax imposed by Article 2, 2A, 2B, 2C, or 2D of this Chapter with one of the following agencies when the information is needed to fulfill a duty imposed on the agency:
a.	The North Carolina Alcoholic Beverage Control Commission.
b.	The Division  of Alcohol Law Enforcement of the Department of Crime Control and Public Safety.
c.	The Bureau of Alcohol, Tobacco, and Firearms of the United States Treasury Department.
(10)	To furnish to the Department of State Treasurer the name, address, and account and identification numbers of a taxpayer who may be entitled to property held in the Escheat Fund.
(11)	To furnish to the Employment Security Commission the name, address, and account and identification numbers of a taxpayer when the information is needed to enable the Commission to fulfill a duty imposed under Article 2 of Chapter 96 of the General Statutes.
(12)	To furnish to the Department of Secretary of State the name and address of a corporation liable for corporate income and franchise taxes to enable the Secretary of State to notify the corporation of the requirement to file an annual report with the Secretary of State.
(13)	To inform the Business License Information Office of the Department of Secretary of State of the status of an application for a license for which a tax is imposed and of any information needed to process the application.
(14)	To furnish to a county or city finance officer of a county or city that levies a local transient occupancy tax a list of taxpayers who are liable for or have paid a privilege license tax under G.S. 105-61.
(b)	Punishment. –A person who violates this section is guilty of a misdemeanor and may be fined not less than two hundred dollars ($200.00) nor more than one thousand dollars ($1,000), imprisoned for up to two years, or both.  If the person committing the violation is an officer or employee, that person shall be dismissed from office or employment, and may not hold any public office or employment in this State for a period of five years thereafter.
	(c)	Definitions. –  The following definitions apply in this section:
(1)	Employee or officer.  The term includes a former employee, a former officer, and a current or former member of a State board or commission.
(2)	Tax information.  Any information from any source concerning the liability of a taxpayer for a tax imposed by the State.  The term includes the following:
a.	Information contained on a tax return, a tax report, or an application for a license for which a tax is imposed.
b.	Information obtained through an audit of a taxpayer or by correspondence with a taxpayer.
c.	Information on whether a taxpayer has filed a tax return or a tax report.
d.	A list or other compilation of the names, addresses, social security numbers, or similar information concerning taxpayers.
	The term does not include information submitted to the Business License Information Office of the Department of Secretary of State on a master application form for various business licenses."
Sec. 2.  G.S. 75-28 reads as rewritten:
"§ 75-28. Unauthorized disclosure of tax information; violation a misdemeanor.
Except in accordance with proper judicial order, or as otherwise provided by law, it shall be unlawful for any person, firm or corporation employed or engaged to prepare, or who or which prepares or undertakes to prepare, for any other person or taxpayer any tax form, report or return, to disclose, divulge or make known in any manner or use for any purpose or in any manner other than in the preparation of such form, report or return, without the express consent of the taxpayer or person for whom the form or return is prepared, the name or address of the taxpayer or such other person, the amount of income, income tax or other taxes, or any other information shown on or included in such form, report or return, or any information which may be or may have been furnished by the taxpayer or such other person to the preparer of such form, report or return or to the person, firm or corporation so employed or engaged.
	Nothing in this section shall be construed to prohibit the examination of any person, books, papers, records or other data in accordance with the authority  provided in G.S. 105-258.
Any person, firm or corporation, or any officer, agent, clerk, employee, or former officer or employee, of any firm or corporation engaged or formerly engaged in the preparation of tax forms, reports or returns for others, whether acting for himself or as agent for such corporation, who or which shall violate the provisions of this section shall be guilty of a misdemeanor and shall be fined or imprisoned in the discretion of the court."
Sec. 3.  G.S. 105-251.1(e) reads as rewritten:
"(e)	The North Carolina State Bureau of Investigation may inspect and copy any reports filed with the Department pursuant to this section."
Sec. 4.  G.S. 105-282.1 is amended by adding a new subsection to read:
"( f)	A local tax official may not disclose to the public information about the amount of a taxpayer's income given on an application for taxation of land on the basis of its present-use value or on an application for the ‘homestead exemption' granted in G.S. 105-277.1.  A local tax official who discloses information in violation of this subsection is guilty of a misdemeanor and is punishable by a fine not to exceed one thousand dollars ($1,000), imprisonment for up to two years, or both.
This subsection does not prohibit publication under subsection (d)	of the roster of property granted tax relief.  The roster, however, may not include information about the amount of a taxpayer's income."
Sec. 5.  G.S. 105-289(e) reads as rewritten:
"(e)	The Department of Revenue may furnish the following information to a local tax official:
(1)	Information contained in a report to it or to any other State department; and
(2)	Information the Department has in its possession that may assist a local tax official in securing complete tax listings, appraising or assessing taxable property, collecting taxes, or presenting information in administrative or judicial proceedings involving the listing, appraisal, or assessment of property.
A local tax official may use information obtained from the Department under this subsection only for the purposes stated in subdivision (2).  A local tax official may not divulge or make public this information except as required in administrative or judicial proceedings under this Subchapter.  A local tax official who makes improper use of or discloses information obtained from the Department under this subsection is guilty of a misdemeanor and is punishable by a fine not to exceed one thousand dollars ($1,000), imprisonment for up to two years, or both.
The Department may not furnish information to a local tax official pursuant to this subsection unless it has obtained a written certification from the official stating that the official is familiar with the provisions of this subsection and that information obtained from the Department under this subsection will be used only for the purposes stated in subdivision (2)."
Sec. 6.  G.S. 105-449.57 reads as rewritten:
"§ 105-449.57.  Cooperative agreements between states.
The Secretary may enter into cooperative agreements with other states for exchange of information in administering the tax imposed by this Article.  No agreement, arrangement, declaration, or amendment to an agreement is effective until stated in writing and approved by the Secretary.
An agreement may provide for determining the base state for motor carriers, records requirements, audit procedures, exchange of information, persons eligible for tax licensing, defining qualified motor vehicles, determining if bonding is required, specifying reporting requirements and periods, including defining uniform penalty and interest rates for late reporting, determining methods for collecting and forwarding of gasoline or other motor fuel taxes and penalties to another jurisdiction, and such other provisions as will facilitate the administration of the agreement.
In accordance with G.S. 105-259, the Secretary may, as required by the terms of an agreement, forward to officials of another state any information in the Department's possession relative to the use of gasoline or other motor fuels by any motor carrier.  The Secretary may disclose to officials of another state the location of offices, motor vehicles, and other real and personal property of motor carriers.
An agreement may provide for each state to audit the records of motor carriers based in the state to determine if the gasoline or other motor fuel taxes due each state are properly reported and paid.  Each state shall forward the findings of the audits performed on motor carriers based in the state to each state in which the carrier has taxable use of gasoline or other motor fuels.  For motor carriers not based in this State who have taxable use of gasoline or other motor fuels in this State, the Secretary may utilize the audit findings received from another state as the basis upon which to propose assessments of gasoline or other motor fuel taxes against the carrier as though the audit had been conducted by the Secretary.  Penalties and interest shall be assessed at the rates provided in the agreement.
No agreement entered into pursuant to this section may preclude the Department from auditing the records of any motor carrier covered by this Chapter.
The provisions of Article 9 of this Chapter apply to any assessment or order made under this section.
The Secretary may not enter into any agreement that would increase or decrease taxes and fees imposed under Subchapter V of Chapter 105 of the General Statutes, and any provision to the contrary is void."
Sec. 7.  G.S. 132-1.1 reads as rewritten:
"§ 132-1.1. Confidential communications by legal counsel to public board or agency; State tax information.
(a)	Confidential Communications. – Public records, as defined in G.S. 132-1, shall not include written communications (and copies thereof) to any public board, council, commission or other governmental body of the State or of any county, municipality or other political subdivision or unit of government, made within the scope of the attorney-client relationship by any attorney-at-law serving any such governmental body, concerning any claim against or on behalf of the governmental body or the governmental entity for which such body acts, or concerning the prosecution, defense, settlement or litigation of any judicial action, or any administrative or other type of proceeding to which the governmental body is a party or by which it is or may be directly affected. Such written communication and copies thereof shall not be open to public inspection, examination or copying unless specifically made public by the governmental body receiving such written communications; provided, however, that such written communications and copies thereof shall become public records as defined in G.S. 132-1 three years from the date such communication was received by such public board, council, commission or other governmental body.
(b)	State Tax Information. –  Tax information may not be disclosed except as provided in G.S. 105-259.  As used in this subsection, ‘tax information' has the same meaning as in G.S. 105-259."
Sec. 8.  G.S. 132-3 reads as rewritten:
"§ 132-3. Destruction of records regulated.
(a)	Prohibition. –  No public official may destroy, sell, loan, or otherwise dispose of any public record, except in accordance with G.S. 121-5, without the consent of the Department of Cultural Resources. Whoever unlawfully removes a public record from the office where it is usually kept, or alters, defaces, mutilates or destroys it shall be guilty of a misdemeanor and upon conviction fined not less than ten dollars ($10.00) nor more than five hundred dollars ($500.00).
(b)	Revenue Records. –  Notwithstanding subsection (a) and G.S. 121-5, when a record of the Department of Revenue has been photographed, photocopied, or microphotocopied, the original record may be destroyed upon the order of the Secretary of Revenue.  If a record of the Department of Revenue has not been photographed, photocopied, or microphotocopied, the original record shall be preserved for at least three years.  After three years the original record may be destroyed upon the order of the Secretary of Revenue."
¨	Sec. 9.  This act is effective upon ratification.