H. B. 4007
(By Delegate Nichols)
[Introduced January 10, 1996; referred to the
Committee on Finance.]
A BILL to amend and reenact section five-d, article ten, chapter
eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to confidentiality
of tax returns and return information; permitting disclosure
of tax information upon subpoena issued by a state agency
authorized to conduct fraud investigations or investigations
of criminal wrongdoing by officers or employees of the
state.
Be it enacted by the Legislature of West Virginia:
That section five-d, article ten, chapter eleven of the code
of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 10. PROCEDURE AND ADMINISTRATION.
§11-10-5d. Confidentiality and disclosure of returns and return
information.
(a) General rule. -- Except when required in an official
investigation by the tax commissioner into the amount of tax due
under any article administered under this article or in any
official investigation conducted by any fraud unit of any state
agency wherein that unit has probable cause to believe that a
person has engaged in an act or activity which is subject to
prosecution under the law of this state or in any proceeding in
which the tax commissioner is a party before a court of competent
jurisdiction to collect or ascertain the amount of such tax and
except as provided in subsections (d) through (n) of this
section, it shall be unlawful for any officer or employee of this
state to divulge or make known in any manner the tax return, or
any part thereof, of any person or disclose information
concerning the personal affairs of any individual or the business
of any single firm or corporation, or disclose the amount of
income, or any particulars set forth or disclosed in any report,
declaration or return required to be filed with the tax
commissioner by any article of this chapter imposing any tax
administered under this article or by any rule or regulation of
the tax commissioner issued thereunder, or disclosed in any audit
or investigation conducted under this article.
(b) Definitions. -- For purposes of this section:
(1) Background file document. -- The term "background file
document," with respect to a written determination, includes the
request for that written determination, any written material
submitted in support of the request and any communication
(written or otherwise) between the state tax department and any
person outside the state tax department in connection with the
written determination received before issuance of the written
determination.
(2) Disclosure. -- The term "disclosure" means the making
known to any person in any manner whatsoever a return or return
information.
(3) Inspection. -- The terms "inspection" and "inspected"
mean any examination of a return or return information.
(4) Return. -- The term "return" means any tax or
information return or report, declaration of estimated tax, claim
or petition for refund or credit, or petition for reassessment
that is required by, or provided for, or permitted, under the
provisions of this article (or any article of this chapter
administered under this article) which is filed with the tax
commissioner by, on behalf of, or with respect to any person, and
any amendment or supplement thereto, including supporting schedules, attachments, or lists which are supplemental to, or
part of, the return so filed.
(5) Return information. -- The term "return information"
means:
(A) A taxpayer's identity; the nature, source or amount of
his income, payments, receipts, deductions, exemptions, credits,
assets, liabilities, net worth, tax liability, tax withheld,
deficiencies, overassessments or tax payments, whether the
taxpayer's return was, is being, or will be examined or subject
to other investigation or processing, or any other data received
by, recorded by, prepared by, furnished to or collected by the
tax commissioner with respect to a return or with respect to the
determination of the existence, or possible existence, of
liability (or the amount thereof) or by any person under the
provisions of this article (or any article of this chapter
administered under this article) for any tax, additions to tax,
penalty, interest, fine, forfeiture, or other imposition or
offense; and
(B) Any part of any written determination or any background
file document relating to such written determination. "Return
information" does not include, however, data in a form which
cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer. Nothing in the preceding
sentence, or in any other provision of this code, shall be
construed to require the disclosure of standards used or to be
used for the selection of returns for examination, or data used
or to be used for determining such standards.
(6) Tax administration. -- The term "tax administration"
means:
(A) The administration, management, conduct, direction and
supervision of the execution and application of the tax laws or
related statutes of this state, and the development and
formulation of state tax policy relating to existing or proposed
state tax laws, and related statutes of this state, and
(B) Includes assessment, collection, enforcement,
litigation, publication and statistical gathering functions under
the laws of this state.
(7) Taxpayer identity. -- The term "taxpayer identity" means
the name of a person with respect to whom a return is filed, his
mailing address, his taxpayer identifying number or a combination
thereof.
(8) Taxpayer return information. -- The term "taxpayer
return information" means return information as defined in
subdivision (5) of this subsection (b) which is filed with, or furnished to, the tax commissioner by or on behalf of the
taxpayer to whom such return information relates.
(9) Written determination. -- The term "written
determination" means a ruling, determination letter, technical
advice memorandum or letter or administrative decision issued by
the tax commissioner.
(c) Criminal penalty. -- Any officer or employee (or former
officer or employee) of this state who violates this section
shall be guilty of a misdemeanor, and, upon conviction thereof,
shall be fined not more than one thousand dollars or imprisoned
for not more than one year, or both, together with costs of
prosecution.
(d) Disclosure to designee of taxpayer. -- Any person
protected by the provisions of this article may, in writing,
waive the secrecy provisions of this section for such purpose and
such period as he shall therein state. The tax commissioner may,
subject to such requirements and conditions as he may prescribe,
thereupon release to designated recipients such taxpayer's return
or other particulars filed under the provisions of the tax
articles administered under the provisions of this article, but
only to the extent necessary to comply with a request for
information or assistance made by the taxpayer to such other person. However, return information shall not be disclosed to
such person or persons if the tax commissioner determines that
such disclosure would seriously impair administration of this
state's tax laws.
(e) Disclosure of returns and return information for use in
criminal investigations.
(1) In general. -- Except as provided in subdivision (3) of
this subsection, any return or return information with respect to
any specified taxable period or periods shall, pursuant to and
upon the grant of an ex parte order by a federal district court
judge, federal magistrate or circuit court judge of this state,
under subdivision (2) of this subsection, be open (but only to
the extent necessary as provided in such order) to inspection by,
or disclosure to, officers and employees of any federal agency,
or of any agency of this state, who personally and directly
engaged in:
(A) Preparation for any judicial or administrative
proceeding pertaining to the enforcement of a specifically
designated state or federal criminal statute to which this state,
the United States or such agency is or may be a party;
(B) Any investigation which may result in such a proceeding;
or
(C) Any state or federal grand jury proceeding pertaining to
enforcement of such a criminal statute to which this state, the
United States or such agency is or may be a party.
Such inspection or disclosure shall be solely for the use of
such officers and employees in such preparation, investigation,
or grand jury proceeding.
(2) Application of order. -- Any United States attorney, any
special prosecutor appointed under Section 593 of Title 28,
United States Code, or any attorney in charge of a United States
justice department criminal division organized crime strike force
established pursuant to Section 510 of Title 28, United States
Code, may authorize an application to a circuit court judge or
magistrate, as appropriate, for the order referred to in
subdivision (1) of this subsection. Any prosecuting attorney of
this state may authorize an application to a circuit court judge
of this state for the order referred to in subdivision (1) of
this subsection. Upon such application, such judge or magistrate
may grant such order if he determines on the basis of the facts
submitted by the applicant that:
(A) There is reasonable cause to believe, based upon
information believed to be reliable, that a specific criminal act
has been committed;
(B) There is reasonable cause to believe that the return or
return information is or may be relevant to a matter relating to
the commission of such act; and
(C) The return or return information is sought exclusively
for use in a state or federal criminal investigation or
proceeding concerning such act, and the information sought to be
disclosed cannot reasonably be obtained, under the circumstances,
from another source.
(3) The tax commissioner shall not disclose any return or
return information under subdivision (1) of this subsection if he
determines and certifies to the court that such disclosure would
identify a confidential informant or seriously impair a civil or
criminal tax investigation.
(4) The tax commissioner may disclose return or return
information pursuant to a subpoena or subpoena duces tecum issued
by a state agency having authority under this code to conduct
fraud investigations or investigations of criminal wrongdoing,
malfeasance or misfeasance in office by an employee or officer of
the state wherein the fraud unit or agency certifies to the tax
commissioner in writing that there is probable cause:
(A) To believe, based upon information believed to be
reliable, that a specific criminal act has been or is being
committed,
(B) There is reasonable cause to believe that the return or
return information is or may be relevant to a matter relating to
the commission of such act; and
(C) The return or return information is sought exclusively
for use in a state or federal criminal investigation or
proceeding concerning such act, and the information sought to be
disclosed cannot reasonably be obtained, under the circumstances,
from another source.
(f) Disclosure to person having a material interest. -- The
tax commissioner may, pursuant to legislative regulations
promulgated by him, and upon such terms as he may require,
disclose a return or return information to a person having a
material interest therein: Provided, That such disclosure shall
only be made if the tax commissioner determines, in his
discretion, that such disclosure would not seriously impair
administration of this state's tax laws.
(g) Statistical use. -- This section shall not be construed
to prohibit the publication or release of statistics so
classified as to prevent the identification of particular returns
and the items thereof.
(h) Disclosure of amount of outstanding lien. -- If notice
of lien has been recorded pursuant to section twelve of this article, the amount of the outstanding obligation secured by such
lien may be disclosed to any person who furnishes written
evidence satisfactory to the tax commissioner that such person
has a right in the property subject to such lien or intends to
obtain a right in such property.
(i) Reciprocal exchange. -- The tax commissioner may,
pursuant to written agreement, permit the proper officer of the
United States, or the District of Columbia or any other state, or
any political subdivision of this state, or his authorized
representative, who is charged by law with responsibility for
administration of a similar tax, to inspect reports, declarations
or returns filed with the tax commissioner or may furnish to such
officer or representative a copy of any such document, provided
such other jurisdiction grants substantially similar privileges
to the tax commissioner or to the attorney general of this state.
Such disclosure shall be only for the purpose of, and only to the
extent necessary in, the administration of tax laws: Provided,
That such information shall not be disclosed to the extent that
the tax commissioner determines that such disclosure would
identify a confidential informant or seriously impair any civil
or criminal tax investigation.
(j) Inspection of business and occupation tax returns by municipalities. -- The tax commissioner shall, upon the written
request of the mayor of any West Virginia municipality having a
business and occupation tax or privilege tax, allow the duly
authorized agent of such municipality to inspect and make copies
of the state business and occupation tax return filed by
taxpayers of such municipality. Such inspection or copying shall
only be for the purposes of securing information for municipal
tax purposes and shall only be allowed if such municipality
allows the tax commissioner the right to inspect or make copies
of the municipal business and occupation tax returns of such
municipality.
(k) Release of administrative decisions. -- The tax
commissioner shall release to the public his administrative
decisions, or a summary thereof: Provided, That unless the
taxpayer appeals the administrative decision to circuit court or
waives in writing his rights to confidentiality, any identifying
characteristics or facts about the taxpayer shall be omitted or
modified to such an extent so as to not disclose the name or
identity of the taxpayer.
(l) Release of taxpayer information.
(1) If the tax commissioner believes that enforcement of the
tax laws administered under this article will be facilitated and enhanced thereby, he shall disclose, upon request, the names and
address of persons:
(A) Who have a current business registration certificate.
(B) Who are licensed employment agencies.
(C) Who are licensed collection agencies.
(D) Who are licensed to sell drug paraphernalia.
(E) Who are distributors of gasoline or special fuel.
(F) Who are contractors.
(G) Who are transient vendors.
(H) Who are authorized by law to issue a sales or use tax
exemption certificate.
(I) Who are required by law to collect sales or use taxes.
(J) Who are foreign vendors authorized to collect use tax.
(K) Whose business registration certificate has been
suspended or canceled or not renewed by the tax commissioner.
(L) Against whom a tax lien has been recorded under section
twelve of this article (including any particulars stated in the
recorded lien).
(M) Against whom criminal warrants have been issued for a
criminal violation of this state's tax laws.
(N) Who have been convicted of a criminal violation of this
state's tax laws.
(m) Disclosure of return information to child support
enforcement division.
(1) State return information. -- The tax commissioner may,
upon written request, disclose to the child support enforcement
division created by article two, chapter forty-eight-a of this
code:
(A) Available return information from the master files of
the tax department relating to the social security account
number, address, filing status, amounts and nature of income,
and the number of dependents reported on any return filed by or
with respect to, any individual with respect to whom child
support obligations are sought to be enforced, and
(B) Available state return information reflected on any
state return filed by, or with respect to any individual
described in paragraph (A) of this subdivision (1) relating to
the amount of such individual's gross income, but only if such
information is not reasonably available from any other source.
(2) Restrictions on disclosure. -- The tax commissioner
shall disclose return information under subdivision (1) of this
subsection only for purposes of, and to the extent necessary in,
collecting child support obligations from, and locating
individuals owing such obligations.
(n) Disclosure of names and addresses for purposes of jury
selection.
The tax commissioner shall, at the written request of a
circuit court or the chief judge thereof, provide to the circuit
court within thirty calendar days a list of the names and
addresses of individuals residing in the county or counties
comprising the circuit who have filed a state personal income tax
return for the preceding tax year. The list provided shall set
forth names and addresses only. The request shall be limited to
counties within the jurisdiction of the requesting court.
The court, upon receiving the list or lists, shall direct
the jury commission of the appropriate county to merge the names
and addresses with other lists used in compiling a master list of
residents of the county from which prospective jurors are to be
chosen. Immediately after the master list is compiled, the jury
commission shall cause the list provided by the tax commissioner
and all copies thereof to be destroyed and shall certify to the
circuit court and to the tax commissioner that the lists have
been destroyed.
NOTE: The purpose of this bill is to permit the tax
commissioner to disclose return and return information pursuant
to a state agency that is investigating fraud and has issued a
subpoena for the requested information.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.