                      The Attorney General of Texas
                                           December      8,    1978

JOHN L. HILL
Attorney General


                   Honorable Joe Wyatt, Jr.                           Opinion No. H- 1274
                   Chairman
                   House Committee on Ways & Means                    Re: Administration   of article
                   State Capitol                                      VIII, section l-d of the Texas
                   Austin, Texas 78711                                Constitution.

                   Dear Representative    Wyatt:

                          You have requested       our opinion regarding the administration       of
                   article 8, section l-d of the Texas Constitution.    That provision governs the
                   assessment of lands for agricultural use. An applicant for the agricultural use
                   designation    must submit to the local tax assessor a sworn statement
                   “describing the use to which the land is devoted,” and the assessor is then
                   directed to “determine whether or not such land qualifies for the desig-
                   nation.” You state that certain local tax assessors require an applicant, as a
                   condition of filing the application for agricultural use designation, to furnish
                   a copy of his federal income tax return for the preceding year. Copies of the
                   returns are ordinarily duplicated by the assessor and retained as part of his
                   records. You ask whether, in light of federal law, a tax assessor may impose
                   this requirement.

                         Subsection (d) of article   8, section l-d empowers a local tax assessor to

                               inspect the land and require such evidence of use and
                               source of income as may be necessary or useful in
                               determining    whether or not the ~agrfcultural   use
                               provision of thisilrlicle~applies. .~_ .~~~~.

                   In our opinion, this provision furnishes sufficient authorization         for a tax
                   assessor to require the-submission      of relevant portions of an       applicant’s
                   federal tax return.   We are not aware of any provision of state         law which
                   would preclude the imposition of such a requirement.      With regard     to federal
                   law, 26 U.S.C. S 6103 provides, in pertinent part:

                                   (a) General rule. - Returns and return information
                               shall be confidential, and except as authorized by this
                               title -




                                                       P.     5038
Honorable Joe Wyatt, Jr.    -   Page 2      (H-1274)



                  (1) no officer or employee of the United States,
                  (2) no officer or employee of any State or of any
           local child support enforcement      agency who has or had
           access to returns or return information under this section

               .a..




               shall disclose any return or return information obtained
               by him in any manner in connection with this service as
               such an officer or any employee or otherwise under the
               provisions of this section.   For purposes of this sub-
               section, the term “officer or employee” includes a
               former officer or employee.

               . . . .

                Cd) Disclosure to State tax officials. - Returns and
           return information       with respect     to taxes imposed by
           chapters l, 2, 6, ll, 12, 21, 23, 24, 44, 51, and 52 of subchapter
           D of chapter 36, shall be open to inspection by or disclosure
           to any State agency, body, or commission, or its legal
            representative,   which is charged under the laws of such
           State with responsibility for the administration of State tax
           laws for the purpose of, and only to the extent necessary in,
           the administration     of such laws, including any procedures
           with respect to locating any person who may be entitled to a
           refund.       Such inspection     shall be permitted,      or such
           disclosure made, only upon written request by the head of
           such agency, body, or commission, and only to the represen-
            tatives of such agency, body, or commission designated in
           such written request as the individuals who are to inspect or
            to receive the return or return information on’behalf of such
           agency, body, or commission. Such representatives shall note
            include any individual who is the chief executive officer of
           such State or who is neither an employee or legal represen-
            tative of such agency, body, or commission nor a person
            described in subsection (n). However, such return informa-
            tion shall not be disclosed to the extent that the Secretary
            determines that such disclosure aould.identify a.confidential-    --- .-- .---.-   ;-
             informant or seriously impair any civil or crim,inal tax
            investigation.

Under the 1976 amendment to section 6103. returns and return information may not
be disclosed “to local tax authorities, either directly by the 1.R.S. or indirectly by
the State tax authorities.”




                                       p.   5039
Honorable Joe Wyatt, Jr.    -   Page 3 (H-1274)



Public Law 94-455, 1976 U.S. Code Cong. 61 Adm. News, at         3760. Section 7213
makes it unlawful for any federal or state officer or employee    to disclose returns
or return information “to any person, except as authorized       in this title.” The
penalty for such disclosure was increased from a misdemeanor     to a felony in 1976.
26 U.S.C. S 7213(a). See
                     -    1976 U.S. Code Cong. & Adm. News, at   3776-78.

       In the situation you pose, however, the local tax assessor does not obtain the
tax returns from any state or federal officer or employee, but rather from the
taxpayer himself. In United States ex rel. Carthan v. Sheriff, City of New York,
330 F.2d 100 (2d Cir.), cert. denied, 379 U.S. 929 (1964), a state court in New York
had jailed an individual for criminal contempt because he refused to produce his
federal income tax returns that had been requested by a grand jury. On petition for
habeas corpus, the federal court rejected the applicability of section 6103:

           The disclosure of tax returns which is forbidden by both
           federal and state law to protect the integrity of the tax
           reporting and collecting system is an unauthorized disclosure
           of the filed returns, directed primarily against employees of
           government in the taxing departments.         Disclosure by a
           taxpayer himself of his copies of returns is not an
           unauthorized disclosure, even though it is made by reason of
           legal compulsion.

330 F.2d at 101. Thus, when it is the taxpayer himself who makes his return
available, even though he is compelled to do so in order to obtain the agricultural
use designation, federal law does not intervene.     We conclude that a local tax
assessor is not prohibited from imposing a requirement        that applicants for
agricultural use designation furnish him with copies of relevant portions of their
federal income tax returns.

       You also ask whether tax returns so furnished constitute a public record under
the Open Records Act, article 6252-17a, V.T.C.S. Section 3(a)(l) of the Act excepts
from disclosure “information deemed confidential by law, either Constitutional,
statutory, or by judicial decision.”

       This orovision aoolies
                       . .    to information the disclosure of which would constitute
an invasion of an individual’s constitutional     or common law right of privacy.
Industrial Foundation of the South v. Texas Industrial Accident Board, 540 S.W.2d
668 (Tex. 1976). An individual does not waive his privacy interest in information
merely because he has disclosed it to a governmental body.. rd, at ,679, 685.

       The United States Supreme Court has not ruled that personal financial
 information   is within a constitutionally  protected zone of privacy, but it has
indicated that unrestricted public disclosure of such information would raise serious
constitutional   questions. In Whalen v. Roe, 429 U.S. 589, 605 (1977), the Court said
it was “not unaware of the threat to privacy implicit in the accumulation of vast
amounts of personal information ” by. the government in connection with the




                                    p.   5040
Honorable Joe Wyatt, Jr.     -    Page 4 (H-1274 1



collection of taxes, distribution of welfare and social security benefits and other
governmental activities.      The Court pointed out that the collection of such personal
and potentially      embarrassing   information is typically accompanied by a con-
comitant     statutory  or regulatory duty to avoid unwarranted         dixlosure,   and
recognized “that in some circumstances that duty arguably has its roots in the
Constitution. . . .”

       In an earlier case, the Court upheld certain regulations requiring record
keeping and reporting by banks of personal financial information.     Three justices
dissented, and two concurred in the decision while expressing doubt as follows:

                A significant      extention of the regulations’ reporting
            requirements, however, would pose substantial and difficult
            constitutional     questions for me. In their full reach, the
            reports apparently authorized by the openended language of
            the Act touch upon intimate areas of an individual’s personal
             affairs.    Financial transactions can reveal much about a
            person’s activities, associations, and beliefs. At some point,
            government       intrusion upon these areas would implicate
            legitimate expectations of privacy. . . .

ClalLfo;rn; Bankers Assn. v. Shultz, 416 U.S. 21, 78-79 (1974) (Powell, J., joined by
     k     , J., concurrmg).

      The Supreme Court of Texas has expressed the view that federal tax returns
are protected by a right of privacy. In Maresca v. Marks, 362 S.W.2d 299 (Tex.
19621, the court reversed a trial court’s order that two individuals permit opposing
counsel to inspect and copy their entire income tax returns for certain years. The
court, holding that the order to produce should have been limited to those portions
of the returns which were relevant and material to the matter in controversy,
observed:

            The protectionof       privacy is of fundamental - ,indeed, of
            constitutional    -- importance. Subjecting federal income tax
            returns of our citizens to discovery is sustainable only
            because the pursuit of ‘justice between~ litigants outweighs
            protection     of their privacy.    But sacrifice of the latter
            should be kept to the minimum, and this requires scrupulous
            limitation     of discovery to ~~information ~-~furthering justices
            between the parties which, in turn, can only be information
            of relevancy and materiality to the matters in controversy.

362 S.W.2d at 301. The court has referred to this case as dealing with “certain
highly confidential information.”  Allen v. Humphreys, 559 S.W.2d 798, 801 (Tex.
1977). See atso Crane v. Tunks, 328 S. W.2d 434, 440 (Tex. 1959).




                                         p.   5041
Honorable Joe Wyatt, Jr.    -   Page 5        (H-1274)



       Although, as has been noted, section 6103 is “directed primarily against
employees of government,” and is not strictly applicable where the taxpayer
himself makes hts return available, the statute does evince a strong federal policy
that tax returns are to be accorded a high degree of confidentiality.     The severe
penalties attached to unwarranted disclosure are applicable even to a person “who
prints or publishes any return information which he knows was disclosed to him in
violation of the law.. . . ” 26 U.S.C. S 7213(a)(3); 1976 U.S. Code Cong. & Adm.
 News, at 3777. The federal statute additionally prohibits the disclosure of any
return, after December 31, 1978, to an officer or employee of any state which
requires its taxpayers to submit copies of their federal tax returns when filing their
state returns, unless that state has enacted “provisions of law which protect the
confidentiality  of the copy of the Federal return . . . attached.”      26 U.S.C. S
6103(pX8MA).

       In light of the cautionary language of the United States Supreme Court, the,
statement by the Texas Supreme Court that federal income tax returns are
protected by a right of privacy in the context of discovery, and the federal
statute’s strict protection of this information when held by or obtained through the
federal government, we believe that the federal income tax return submitted to a
tax assessor-ollector     by an applicant for the agricultural use designation would be
within the section 3(a)(l) exception of the Open Records Act as information deemed
confidential by judicial decisions protecting privacy.

        The submission of a federal income tax return by a private citizen in
connection with the assessment and collection of taxes is distinguishable from the
situation where similar information is required to be submitted by public officials
or employees under a financial disclosure statute or ordinance.          In Attorney
General Opinion H-1070 (1977), we said that we did not believe that portions of
income tax returns filed with a city secretary under a proposed financial disclosure
ordinance would be deemed confidential by law under section 3(a)(l). The criteria
for determining whether information is excepted from disclosure as confidential by
judicial decisions concerning privacy are whether publication of the information
would be highly objectionable to a reasonable person, and whether the information
is of legitimate public concern.      Industrial Foundation of the South v. Texas
Industrial Accident Board, m,         at 686.    Financial disclosure statutes have
frequently been upheld on the basis that the public’s interest in efficient, ethical
government predominates over the privacy interest of governmental officials and
employees.     See cases cited in Attorney General Opinion H-1070, p. 2 (1977).
 Ordinarily, nosuch legitimate public interest would exist in regard to the federal
inrome tax return of a private citizen.

                                    SUMMARY

            A local tax assessor is not prohibited from imposing a
            requirement that applicants for the agricultural use desig-
            nation,   under article   8, section   l-d of the Texas




                                         p.   5042
         Honorable Joe Wyatt, Jr.   -   Page 6     (H-1274)       ’



                    Constitution, furnish him with copies of relevant Portions of
                    their federal income tax returns,       but tax returns so
                    furnished are excepted from disclosure under the Open
                    Records Act, article 6252-l7a, V.T.C.S.

                                                    Very truT=G



                                                         N L. HILL
                                                    Attorney General of Texas
         APPROVED:
                                          P


sLJ2-f
                       NDALL, First Assistant




         C. ROBERT HEATH,-Chairman
         Opinion Committee

         isn




                                              p.   5043
