Tax Analysts Blog

Enabling an Informed Debate

Posted on Dec 26, 2013

The topic of transparency is a recurring theme when I blog. In fact, this will be my third consecutive blog that addresses the issue. In my mind, that’s because it’s important and it’s something we live and breathe at Tax Analysts. The company was founded with the mission that an open and informed debate about taxes will lead to a better tax system. But you can’t have an informed debate about taxes if you don’t have information.

One area in which Tax Analysts has been particularly aggressive is in trying to get “working law” out of the shadows. We began that effort with the IRS back in the 1970s by seeking public release of private letter rulings and technical advice memorandums. And we won. We are now taking the effort to the states. And I am confident we will win again.

A win —an initial one, at least -- might be just around the corner. Tax Analysts joined in a suit in Kentucky that seeks to require the Department of Revenue to release redacted copies of its final letter rulings. The department should be releasing those rulings, but it has argued that the state’s confidentiality statutes require such significant redaction as to render the rulings useless. It has also argued that there is little benefit to releasing the documents when compared with the burden of preparing them for publication.

But at oral arguments on December 16, a Kentucky judge seemed unpersuaded by the department’s arguments. He went so far as to acknowledge that the letter rulings have “real and significant consequences for the taxpayer and the public,” and he expressed doubt that the burdens of publication were insurmountable. While nothing is certain yet (and a decision requiring the release of the documents would likely be appealed), it is encouraging.

In another acknowledgment of the importance of transparency, the Council On State Taxation (COST) released a score card on the “Best and Worst of State Tax Administration,” which includes an evaluation of states’ transparency regarding letter rulings and administrative decisions. The report wisely notes that “secret tax laws’ benefit neither the state in its administration of the statutes nor the public in complying with them.”

That is exactly the point. A transparent tax system, in which there are no “secret tax laws,” is a better tax system in that taxpayers more clearly understand the laws they are required to comply with, tax officials can more easily administer the law, and both sides can engage in a more informed debate about tax policy.

Tax Analysts has always been at the forefront in advocating for transparency in state tax administration, and we will continue to do so.

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