When the Commercial Fishing License Moratorium Appeals Panel reviews tax forms submitted by license applicants, must the Panel keep the meeting open or can it (or must it) go into closed session to discuss state tax information?
Plain-English summary
The Commercial Fishing License Moratorium Appeals Panel was reviewing applications from people who wanted exceptions to the moratorium on new commercial fishing licenses. To establish that fishing had been a meaningful part of an applicant's income, the Panel collected tax returns. That collection raised an open-meetings problem: state tax returns are confidential under NC law, but the Panel's deliberations were presumptively open under the Open Meetings Law.
Senior Deputy Attorney General Daniel C. Oakley and Associate Attorney General Amy R. Gillespie worked through both layers:
State tax information is confidential, and a criminal disclosure prohibition still applies even after the information reaches the Panel. G.S. 105-259(b) prohibits any state officer or employee from disclosing state tax information except for one of eighteen listed purposes. Violation is a misdemeanor punishable by fine and dismissal from public employment. The opinion acknowledged that under the NC Supreme Court's decision in News and Observer Publishing Co. v. Poole, 330 N.C. 465 (1992), information otherwise confidential can become a "public record" once it lands in the hands of a public agency. But Poole did not override a separate criminal statute that imposes confidentiality on the state employees who handle the information. The combined reading was: state tax information held by the Panel is a public record but may not be disclosed.
Federal tax information is treated differently. 26 U.S.C. § 6103 prohibits state officials from disclosing federal tax information when they got it through federal officials or federal programs. The Panel was getting federal tax forms directly from applicants, not through the IRS, so § 6103's prohibition did not apply. Federal tax forms attached by the applicant could be discussed in open session.
The procedural rule for the Panel. Information found only on the state tax form had to be discussed in closed session. Information from the petition itself or from attached federal forms could be discussed in open session, even if it also appeared on the state form.
The closed-session motion procedure was changing on October 1, 1994. Before that date, the Open Meetings Law referred to "executive sessions." On and after October 1, 1994, the same provision was relabeled "closed sessions" with a new requirement that any motion to close cite the specific statutory basis. The AG laid out both versions because the Panel had conducted some business before October 1 and would conduct more after.
Currency note
This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
The state tax confidentiality statute (now G.S. 105-259) and the Open Meetings Law (Chapter 143, Article 33C) have both been amended several times since 1994. The Commercial Fishing License Moratorium itself has been replaced by a permanent licensing scheme. The general principle of this opinion (state tax information must be discussed in closed session by public bodies that lawfully receive it) remains sound, but the exact statutory cites and procedural mechanics should be checked against the current text.
Common questions
Q: Why was a state tax return needed for a fishing license appeal?
A: The moratorium appeal panels needed proof that fishing had been a meaningful source of income for the applicant during a qualifying period. Tax returns (specifically Schedule C and similar federal forms, alongside their state counterparts) are reliable evidence of that.
Q: What is G.S. 105-259's penalty for disclosing state tax information?
A: A misdemeanor, with a fine between $200 and $1,000, up to two years' imprisonment, dismissal from public office or employment, and a five-year ban on holding any NC public office or employment. The penalty applies to "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."
Q: Did the AG conclude the Panel could decide what to disclose?
A: No. The Panel had to follow G.S. 105-259's blanket prohibition. The only carve-outs are the eighteen specifically listed purposes in the statute, none of which gave the Panel discretion to disclose state tax information just because it had to make a decision based on it.
Q: What was Poole's role here?
A: News and Observer v. Poole held that SBI investigative records, otherwise confidential under G.S. 114-15, became public records when they were turned over to a special legislative commission. Read literally, that would mean tax returns become public records when turned over to the Panel. The 1994 opinion's careful move was to acknowledge that public-records status while pointing out that G.S. 105-259's criminal prohibition still operated independently as a restriction on what state employees could do with the information.
Q: What did the Open Meetings Law change on October 1, 1994?
A: Three things. First, "executive session" was relabeled "closed session." Second, the policy preamble was tightened ("closed sessions shall be held only when required to permit a public body to act in the public interest"). Third, any motion to close a meeting under the new G.S. 143-318.11(a)(1) (confidentiality of information) had to cite the specific statute making the information confidential. The Appeals Panel was advised that motions made on and after October 1 should cite G.S. 105-259.
Q: Does this rule apply to other licensing boards that collect tax returns?
A: Yes, the same logic applies to any public body whose state employees lawfully receive state tax information. The confidentiality and criminal-disclosure provisions of G.S. 105-259 are not specific to the Fishing License Panel; they govern all state officers, employees, and agents.
Background and statutory framework
In the early 1990s, North Carolina's commercial fishing licensing system was overhauled to limit the number of active commercial licenses. The Commercial Fishing License Moratorium Appeals Panel was created to review individual hardship appeals from people who could show they relied on commercial fishing income but did not qualify under the standard moratorium rules. Income documentation, including tax returns, was central to the proof.
NC has a robust statutory framework protecting tax information. G.S. 105-228.90 defines "tax" broadly to cover most state revenue articles. G.S. 105-259(a)(2) defines "tax information" to include tax returns, tax reports, license applications under any tax statute, audit information, correspondence with taxpayers, and lists or compilations of taxpayer names and identifying information. G.S. 105-259(b) imposes a flat disclosure prohibition on any state officer, employee, or agent, subject to eighteen narrowly defined exceptions.
The Open Meetings Law, codified at Article 33C of Chapter 143 of the General Statutes, presumes that meetings of public bodies are open. The exceptions are listed in G.S. 143-318.11. Both the pre-October 1994 and post-October 1994 versions allow a public body to close a meeting to consider information that state or federal law makes confidential, but the procedural mechanics differ. The October 1994 amendments tightened the closed-session machinery and added the requirement to cite the specific confidentiality statute.
The AG threaded the open-meetings principle and the criminal-confidentiality principle by directing the Panel to call a closed session only when it would actually discuss material that came from the state tax form. Anything available in the open record (the petition itself, attached federal returns, the applicant's own testimony) could be discussed in open session.
Citations
- N.C.G.S. § 132-1.1(b) (public records exemption for tax information)
- N.C.G.S. § 105-228.90 (definition of "tax")
- N.C.G.S. § 105-259(a)(2) (definition of state tax information)
- N.C.G.S. § 105-259(b) (general disclosure prohibition)
- N.C.G.S. § 105-259(c) (criminal penalty for disclosure)
- N.C.G.S. § 143-318.11 (pre-Oct. 1, 1994 "Executive sessions" version)
- N.C.G.S. § 143-318.11 (post-Oct. 1, 1994 "Closed sessions" version)
- 26 U.S.C. § 6103 (federal tax information confidentiality)
- News and Observer Publishing Co. v. Poole, 330 N.C. 465 (1992) (confidential information can become public records once held by a public agency)
Source
Original opinion text
The text reproduced from the NCDOJ landing page begins with statutory analysis. The salutation, summary of the question, and opening framing are not in the rendered HTML on the landing page.
G.S. § 132-1.1(b). State tax information is defined in G.S. § 105-259(a)(2) as: Any information from any source concerning the liability of a taxpayer for a tax, as defined in G.S. 105-228.90. G.S. 105-228.90 defines a tax as "A tax levied under Subchapter I, V, or VIII of this Chapter or an inspection fee levied under Article 3 of Chapter 119 of the General Statutes." 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.
G.S. § 105-259(a)(2). This definition encompasses the types of state tax information that the Appeals Panel can expect to receive.
The North Carolina Supreme Court recently held that information expressly exempted from the Public Records Act can lose this exemption when it becomes part of the records of a public agency subject to the Public Records Act. News and Observer Publishing Co. v. Poole, 330 N.C. 465, 412 S.E.2d 7 (1992), involved SBI records prepared for the Poole Commission, a commission that was established to investigate improprieties relating to the men's basketball program at North Carolina State University. Although G.S. § 114-15 expressly exempted SBI records and evidence from the public records law, the Court held that this exemption was lost when the records became part of the records of the Commission.
Under Poole, it could be argued that G.S. § 132-1.1(b)'s exemption of state tax information from the public records law is lost upon the Appeals Panel's acquisition of such information. State income tax information in the hands of the Appeals Panel are public records. However, the analysis does not stop with this determination. G.S. § 132-1.1, as interpreted by Poole, must be read in pari materia with other parts of the General Statutes. Unlike the Poole Commission, the Appeals Panel is subject to a statute imposing criminal penalties on public officials for disclosing the subject information. The state revenue law imposes misdemeanor charges and dismissal from state employment for state officials who disclose state tax information:
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….
G.S. § 105-259(b). The statute also lists eighteen different purposes authorizing disclosure and provides for misdemeanor charges and dismissal from employment for those violating this law:
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 public office or public employment and may not hold any public office or public employment in this State for five years after the violation. G.S. § 105-259(c).
Reading the public records provision together with this revenue provision reveals that, although state income tax information in the hands of the Appeals Panel are public records, they are public records which may not be subject to disclosure by the Appeals Panel.
Note that the disclosure prohibition is limited to state tax information. There is no corresponding provision of state or federal law prohibiting state officials from disclosing federal tax information. 26 U.S.C. § 6103 et seq. prohibits state officials from disclosing federal tax information where they received the information through federal officials or federal programs. However, since the Appeals Panel is receiving the information directly from the taxpayer, this law does not prevent the Appeals Panel from discussing and disclosing federal tax information.
Application
The prohibition against disclosing state tax information plainly applies to instances where the information being discussed is presented only in the petitioner's attached state tax forms. However, any information provided in other ways, e.g., on the petition form or on attached federal tax forms, may be discussed and disclosed as a matter of public record, even where that information is also on the state tax form.
Where the Panel wishes to discuss information found only on the state tax form, a closed session must be called. Under the Open Meetings Law, a closed session, formerly called an executive session, may be called "to prevent the disclosure of information that is privileged or confidential pursuant to the law of this State . . . or not considered a public record." G.S. § 143-318.11 (1993 Supp.). State tax information is considered confidential because its disclosure is prohibited under threat of criminal penalty.
The Open Meetings Law was recently amended, effective October 1, 1994. Because the Appeals Panel conducted some business before October 1, the relevant provisions of both versions are set forth below.
Version effective until October 1, 1994:
G.S. § 143-318.11 Executive sessions. (a) Permitted Purposes. A public body may hold an executive session and exclude the public: . . . .
- (12) To consider information, when State or federal law (i) directs that the information be kept confidential or (ii) makes the confidentiality of the information a condition of State or federal aid. . . . .
- (c) Calling an Executive Session. A public body may hold an executive session only upon a motion made and adopted at an open meeting. The motion shall state the general purpose of the executive session and must be approved by the vote of a majority of those present and voting.
Version effective on October 1, 1994:
G.S. §143-318.11 Closed sessions. (a) Permitted purposes. It is the policy of this State that closed sessions shall be held only when required to permit a public body to act in the public interest as permitted in this section. A public body may hold a closed session and exclude the public only when a closed session is required: (1) To prevent the disclosure of information that is privileged or confidential pursuant to the law of this State or of the United States, or not considered a public record within the meaning of Chapter 132 of the General Statutes.
. . . . (c) Calling a Closed Session. A public body may hold a closed session only upon a motion duly made and adopted at an open meeting. Every motion to close a meeting shall cite one or more of the permissible purposes listed in subsection (a) of this section. A motion based on subdivision (a)(1) of this section shall also state the name or citation of the law that renders the information to be discussed privileged or confidential.
Note that a closed meeting may only be called upon a motion duly made and adopted at an open meeting. As of October 1, 1994, any motion to close a meeting must include a citation to the law rendering the information confidential. Thus, the motion should cite G.S. § 105-259.
We trust this fully answers your question. If you have the need for further assistance, please feel free to contact us.
Daniel C. Oakley Senior Deputy Attorney General
Amy R. Gillespie
Associate Attorney General