ETHICS: CONFIDENTIALITY OF IFTA DATA

IFTA ATTORNEYS’ SECTION MEETING

October 7, 2015

9:30-10:00 a.m.

Jim ClarkMotor Carrier Services AttorneyIndiana Department of Revenue

317.232.2299jwclark@dor.in.gov

Q: Why does he explain things like he’s talking to an eight-year-old? A: Because that’s how it was explained to him.

LAWYERS ARE INSTILLED WITH THE IMPORTANCE OF MAINTAINING THE CONFIDENTIALITY OF SENSITIVE INFORMATION

LAWYERS ARE TRAINED IN THE EXCEPTIONAL IMPORTANCE OF MAINTAINING THE CONFIDENTIALITY OF SENSITIVE INFORMATION

LAWYERS’ GENERAL DUTY OF CONFIDENTIALITY – ABA MODEL RULES OF PROFESSIONAL CONDUCT

Rule 1.6 Confidentiality of Information(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).

(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:

(1) to prevent reasonably certain death or substantial bodily harm;(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;

(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;(4) to secure legal advice about the lawyer's compliance with these Rules;

(5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client; (6) to comply with other law or a court order; or

(7) to detect and resolve conflicts of interest arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.

STATUTORY OBLIGATION TO MAINTAIN CONFIDENTIALITY OF TAXPAYER INFORMATION – INDIANA CODE EXAMPLE

Ind. Code § 6-8.1-7-1Confidentiality of tax information; court orders; persons eligible toreceive tax information (a) Unless in accordance with a judicial order . . . [no one] may . . . divulge the amount of tax paid by any taxpayer, terms of a settlement agreement executed between a taxpayer and the department, investigation records, investigation reports, or any other information disclosed by the reports filed under the provisions of the law relating to any of the listed taxes . . . except to:

(1) employees of the department;(2) the governor;(3) a member of the general assembly;(4) the attorney general or any other legal representative of the state in any action in respect to the amount of tax due; or(5) any authorized officers of the United States;

when it is agreed that the information is to be confidential and to be used solely for official purposes.

Ind. Code § 6-8.1-7-3Violation; offense A person who violates the provisions of this chapter commits a Class C misdemeanor. In addition, if the person is an officer or employee of the state, he shall be immediately dismissed from his office or employment.

THROUGH IFTA, JURISDICTIONS OBTAIN CONFIDENTIAL TAXPAYER INFORMATION THAT MUST BE PROTECTED

R910 REPORTING REQUIREMENTThe licensee shall file a tax return for the tax reporting period with the base jurisdiction and shall pay all taxes due to all member jurisdictions with the remittance payable to the base jurisdiction by the due date. Jurisdictions may only require payment by guaranteed funds for the same reasons a bond may be required under R340.

R1310 LICENSEE AUDITSThe base jurisdiction shall audit its licensees on behalf of all member jurisdictions. This shall not preclude another jurisdiction from also auditing a licensee. In that event, that jurisdiction shall pay all its audit expenses.

THE SHARING OF CONFIDENTIAL TAXPAYER INFORMATION AMONG IFTA JURISDICTIONS POTENTIALLY CONFLICTS WITH A JURISDICTION’S CONFIDENTIALITY LAWS: HOW TO RECONCILE THE POTENTIAL CONFLICT (INDIANA LAW EXAMPLES)?

R140 COOPERATIVE ADMINISTRATIONIt is the purpose of this Agreement to enable participating jurisdictions to act cooperatively and provide mutual assistance in the administration and collection of motor fuels use taxes.

R1310 LICENSEE AUDITSThe base jurisdiction shall audit its licensees on behalf of all member jurisdictions.

R1360 RE-AUDIT AND RE-EXAMINATION.100 A member jurisdiction may re-examine a base jurisdiction's audit findings if the member jurisdiction reviews the audit work papers and, within 45 days of receipt of the Interjurisdictional Audit Report by the member jurisdiction, notifies the base jurisdiction of any errors found during such review and of its intention to conduct the re-examination.

R1370 JOINT AUDITSIn the event that the base jurisdiction requests assistance from other member jurisdictions in the conduct of an audit, all members participating in the audit shall receive credit toward achieving their audit requirements. In that event, the jurisdictions shall pay all the audit expenses.

R2110 IFTA, INC. CLEARINGHOUSEThere is established the IFTA, Inc. Clearinghouse (hereafter referred to as the “clearinghouse”) which is responsible for the maintenance and administration of licensee demographic and transmittal data transmitted by participating members. The clearinghouse is also responsible for providing a mechanism for the exchange of Interjurisdictional Audit Reports. The participating members may electronically view and retrieve the clearinghouse data.

STATE LAW MUST ACCOMMODATE MEMBER JURISDICTIONS’ OBLIGATION TOO SHARE CONFIDENTIAL TAXPAYER INFORMATION

Ind. Code § 9-28-4-6Registration of vehicles on apportionment or allocation basis; implementation of chapter; International Registration Plan; membership; adoption of rules; conflict of law

(d) If the state enters into the International Registration Plan or into any other agreement under this chapter, and if the provisions set forth in the plan or other agreements are different from provisions prescribed by law, then the agreement provisions prevail.

Ind. Code § 6-8.1-3-14Motor fuel taxes; apportionment of allocation basis; reciprocal agreements; International Fuel Tax Agreement

(c) If the department enters into the International Fuel Tax Agreement or into any other agreement under this chapter, and if the provisions set forth in that agreement or other agreements:

(1) are different from provisions prescribed by an Indiana statute, then the provisions of the Indiana statute prevail; and(2) are different from provisions prescribed by the Indiana Administrative Code, then the provisions of the agreement prevail.

Ind. Code § 6-6-4.1-16Agreements for cooperative audit of reports and returns The department may enter into the International Fuel Tax Agreement or any other agreements for:

(1) furnishing information to and receiving information from other states, jurisdictions, or the International Fuel Tax Agreement clearinghouse, except as prohibited by IC 6-8.1-3-7 [federal tax info]; and(2) the cooperative audit of the reports and returns of carriers with the appropriate authorities of any other state or jurisdiction that imposes a tax similar to the tax imposed under this chapter.

An officer or employee of another state or jurisdiction who audits reports and returns under an agreement made under this chapter or IC 6-8.1-3-12 is considered an authorized agent of this state for the purpose of the audit. A cooperative audit conducted under an agreement made under this section has the same effect as an audit conducted by the department.

Ind. Code § 6-6-4.1-14.5Limitations (a) The International Fuel Tax Agreement

and any other agreement authorized under IC 6-6, IC 6-8.1, or IC 9-28 shall be limited to the following matters:

(3) Specifying audit procedures.(4) Exchanging information.

SINCE I DON’T ACTUALLY HAVE A CONCLUSION . . .