From the Editor

Drescher: Little sunshine in Revenue Department's stonewall

Executive EditorOctober 9, 2010 

"I'm going to open the windows wide in the state capital, and we're going to let the sunshine in."

-Gov.-elect Bev Perdue, Nov. 4, 2008.

Perdue's revenue secretary, Ken Lay, resigned last week. In August, The News & Observer revealed a policy that prevented taxpayers who had unknowingly overpaid their taxes from getting refunds if the overpayments were more than three years old.

Here's the chronology of events that led to Lay's resignation:

Early May: N&O reporter Dan Kane gets tip about overpayment of taxes.

May 12: Kane contacts the N.C. Revenue Department for all records and correspondence about tax overpayments. Department spokesman questions whether this is public information, citing taxpayer privacy. Kane says he's not asking about individual taxpayers; he wants information about whether overpayments are being refunded.

May 14: Lay knows of Kane's request and tells the Governor's Office that Kane doesn't know "protocol" for making information requests.

June 7: Revenue Department provides Kane with information. It has nothing to do with his request.

June 22: Kane interviews Lay. He tells Kane his information from the tipster is wrong and there is no story.

June 25: Kane again requests records and correspondence about tax overpayments. He also asks if the data can be scrubbed to give the number of taxpayers who might be due refunds because of overpayment. The Revenue Department says a lawyer is reviewing his request.

July 1: A spokesman in the Governor's Office starts tracking Kane's request.

July 14: Kane has not heard from the Revenue Department about his request or the documents. He notifies Revenue spokeswoman that he plans to write a story about what he knows. She says his request has gone to the state Attorney General's Office.

July 15: Opinion from lawyer on the attorney general's staff says the information is not public. Kane contacts spokeswoman for Attorney General Roy Cooper and points out General Statute 105.259(d), which allows for the release of statistical information that does not directly identify specific taxpayers.

July 18: Linda Millsaps, deputy revenue secretary, tells Kane the department is working on his request. She gives Kane several phone numbers for reaching her but never provides any information.

July 30: Revenue sends letter to Kane, saying it might have misunderstood his request. Kane sends e-mail again requesting information: "I would like to see records and correspondence pertaining to a backlog" in handling overpayments.

Aug. 10: Revenue Department faxes Kane internale-mails about the backlog of overpayments and a new policy that would allow the department to not refund overpayments more than three years old. Lay says his letter marks the "final response" from the department.

Aug. 15: N&O publishes front-page story about a backlog of 230,000 unresolved items in tax returns that include cases in which taxpayers are owed money but are unlikely to get it. A Perdue spokeswoman says the governor is "incensed" about the backlog and the policy change that keeps some taxpayers from getting a refund.

Aug. 17: Perdue says backlog will be cleared and overpayments refunded.

Sept. 26: In an N&O story, Lay contradicts his boss, Perdue, and says her attorneys signed off on the policy of not returning tax overpayments more than three years old.

Sept. 29: Perdue accepts Lay's resignation and issues a frosty statement about his departure.

Lay, who wanted the final word on Aug. 10, didn't get it.

As for whether Perdue's Revenue Department opened the windows wide and let the sunshine in, you be the judge. or 919-829-4515

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