February 27, 1981
Subject:
Taxation; Secrecy required of officials; Exceptions; Audits by State Auditor; G.S. 105-259; G.S. 147-58.
Requested By:
B. W. Brown, Director Individual Income Tax Division North Carolina Department of Revenue
Question:
Does the Director of the Individual Income Tax Division have the authority to permit access to income tax records to the State Auditor, as they relate to handling of State funds?
Conclusion:
Yes.
Each year, the State Auditor audits the Individual Income Tax Division. His agents customarily request permission to inspect approximately 300 tax returns relative to that audit. At other times, the Auditor will request specific returns of individuals being audited, usually in an embezzlement situation, or a case involving claims for excessive expenses. In the former instance, State funds in question are those revenues received by the Department of Revenue. In the latter, State funds in question are those embezzled or in some fashion wrongfully appropriated or obtained.
G.S. 105-259 provides in part that, with respect to officers and employees of the Revenue Department, and "except in accordance with proper judicial order or as otherwise provided by law", it shall be unlawful for such person to divulge in any manner any information about a taxpayer. Violation of the statute is made a misdemeanor, and further requires the discharge of the offending employee, who then may not hold any public office or employment for five years. The possibility of such violation is therefore a matter of considerable concern to employees who may be called upon for such information.
However, G.S. 147-58(16) specifically provides that "the Auditor and his authorized agents shall have access to and may examine all books, accounts, reports, vouchers, correspondence, files, records, money, investments, and property of any State department . . . as it relates to the handling of State funds." Further, "every officer or employee of any such agency having such records or property in his possession or under his control shall permit access to and examination of them upon the request of the Auditor or any agent authorized to make such request." (Emphasis added) Failure to cooperate with the Auditor is a misdemeanor.
A Revenue employee receiving such a request is subject to a "Catch-22" dilemma, if his compliance is subject to the secrecy law, for to comply is a misdemeanor, and not to comply is a misdemeanor. However, the specificity with which G.S. 147-58(16) addresses the Auditor’s authority seems clearly to bring the furnishing of such information within the "as otherwise provided by law" exception in G.S. 105-259, and it is our opinion that the furnishing of income tax information to the Auditor or his authorized agents for purposes that relate to the handling of State funds is entirely proper, and not violative of G.S. 105-259.
Rufus L. Edmisten Attorney General
Myron C. Banks Special Deputy Attorney General