Vt. Supreme Court holds property tax adjustment information confidential

In a January 5, 2012 message to Vermont Town Clerks, Bill Johnson, Director of Property Valuation and Review for the Department of Taxes wrote the following:

 You asked how the recent Vermont Supreme Court decision, In re HS-122, 2011 VT 138 that found  State property tax adjustment amounts confidential under 32 V.S.A. §3102, affects how you should deal with tax bills and the tax book for the present and prior years.

 Pursuant to this decision, both the adjustment amount and the net tax amount (total taxes to be paid after the adjustment) on current and past bills should be treated as confidential.  The bill that is mailed to the property owner should continue to show this information, but these two numbers should be redacted whenever a tax bill is given to person other than the property owner (or a person explicitly operating as the owner’s agent).  For immediate requests by persons other than the owner, the information can be redacted by using a black magic marker.   In addition, the HS-122 report from the Tax Department that contains tax adjustments amounts for all eligible homestead owners in a municipality should be treated as confidential and not provided to persons requesting that information.  The adjustment amount and net tax amount must also be redacted from any other documents maintained by a municipality, such as the tax book, before a copy of those documents can be provided to anyone in response to a public record or other request.

 The Tax Department is working with NEMRC to modify the grand list maintenance and tax billing software used by nearly all Vermont municipalities to provide the option of printing a tax bill without the State adjustment and net tax amounts.  We will attempt to make this option available with respect to prior year bills as well as bills for the current and future years.  We will make this option available to all NEMRC users as soon as possible.

 Another question that we have been asked is whether this confidentiality requirement extends to municipal officials and employees.  In its decision, the Supreme Court recognized that the statute requires the commissioner to transfer the HS-122 report to municipalities. Access to the HS-122 should be limited to town officials and employees with a legitimate reason to have it, such as Listers, Clerks and Treasurers, all of whom have an obvious need to work with this information as it concerns an individual owner’s tax assessment. These municipal employees are required to treat the information in the HS-122 as confidential and are subject to the same sanctions as tax department employees if they disclose the information.

 A number of municipalities in Vermont provide a public computer station where lawyers, fee appraisers and the general public can view property tax assessment information.  If State adjustment amounts and net tax amounts are accessible on a public computer, the municipality needs to take immediate steps to delete or somehow redact these two items so that this information is no longer accessible to the general public.

 Municipalities should proceed cautiously regarding release of net taxes information to escrow agencies.  A town can release information from the redacted bill (i.e., gross tax amounts before adjustments) to an escrow company but should consider only releasing net bill information after receiving documentation from an escrow company of authorization by the taxpayer to access that information.

 We understand that this decision will creates some difficult issues for you and how you administer the property tax.  In its decision the Court acknowledged that ultimately it is the Legislature that controls whether this information should be confidential.  It is likely the Vermont Legislature will consider this situation in its current session.

 For more information, please contact Bill Johnson, Director, Property Valuation and Review, (802) 828-5867, bill.johnson@state.vt.us