OPINION OF THE COURT

KATHRYN E. FREED, J.

This decision/order on the motion is as follows:

In this special proceeding, petitioner the Comptroller of the City of New York petitions this court, pursuant to CPLR 2308, to compel respondent the Department of Finance of the City of New York (the DOF) to respond to a subpoena served by the Comptroller on October 9, 2013. The subpoena sought data regarding the general corporation tax (GCT) collected by the City of New York for the years 2008-2012, as well as testimony by a representative of the DOF. The DOF counterclaims to quash the subpoena. After oral argument, and after a review of the parties' motion papers, all applicable statutes and case law, this court grants the petition and denies the DOF's counterclaim.

Factual and Procedural Background

In January of 2013, John Liu, then Comptroller of the City of New York, began an audit regarding the DOF's practices regarding its collection of the general corporation tax. In April of 2013, as part of the audit, the Comptroller requested GCT data for the years 2008-2012 and the DOF refused to produce the data.

On October 9, 2013, the Comptroller served the DOF with a subpoena for testimony and documents in furtherance of the audit. The subpoena directed that a representative of the DOF appear and give testimony on October 23, 2013. It also required the DOF to produce GCT data for the calendar years 2008-2012. The subpoena served by the Comptroller was accompanied by a proposed confidentiality agreement. (Petition exhibit A.)

On October 23, 2013, the DOF advised the Comptroller that it would not comply with the subpoena. (Petition exhibit B.) In refusing to comply, the DOF, relying on a 1991 opinion of the Corporation Counsel of the City of New York (1991 Ops Corp Counsel NY City No. 10-91, 1991 WL 786982) (Opinion 10-91), stated that "the tax secrecy laws prevent [the DOF] from producing the subpoenaed documents and giving testimony with respect thereto." (Petition exhibit B.)

In Opinion 10-91, Corporation Counsel wrote, inter alia, as follows:

"Sections 90 and 148 of Chapter 772 provide:

Thus, Corporation Counsel opined in Opinion 10-91 that the City Charter, as a local law, could not satisfy the "as otherwise provided by law" exception to tax secrecy set forth in sections 88 and 146 of chapter 772. Corporation Counsel reasoned that those sections should thus be construed as a controlling state law, and so a local law such as the City Charter could not be a "law" within the meaning of the phrase "as otherwise provided by law."

On November 21, 2013, after the DOF refused to comply with the subpoena, the Comptroller began this special proceeding by filing a notice of petition seeking an order, pursuant to CPLR 2308, compelling the DOF to respond to the same. In its verified petition dated November 19, 2013, the Comptroller argues that, pursuant to section 93 (c) of the New York City Charter, the Comptroller has the authority to audit all city agencies and "shall be entitled to obtain access to agency records required by law to be kept confidential."

In support of its petition, the Comptroller submits the affidavit of H. Tina Kim, the Deputy Comptroller for Audit. In her affidavit, Kim states that the information sought by the Comptroller is relevant to the audit of the DOF's collection procedures and is necessary to test the security and reliability of the DOF's collection of the GCT. With respect to security, Kim states that the audit seeks to ensure that the GCT information exists in a secure environment inaccessible to unauthorized users. The first test of reliability is designed to ensure that the DOF has properly calculated total liability for each filing corporation. The second test of reliability is designed to determine the thoroughness of the returns so that the Comptroller can ensure that all entities which should be filing GCT returns are in fact filing them.

In an affirmation in support of the petition, Valerie Budzik, Esq., Deputy Comptroller for Legal Affairs and the Comptroller's General Counsel, asserts that the DOF's refusal to comply with the Comptroller's subpoena "frustrates the Comptroller's ability" to exercise its authority under New York City Charter § 93 (c). Budzik stated that the DOF collected over $2.846 billion in GCT in fiscal year 2012 and $3.348 billion in fiscal year 2013. Further, she stated that any tax return information disclosed by the DOF to the Comptroller would not violate any secrecy laws since the subpoena served was accompanied by a confidentiality agreement.

In its verified answer, the DOF asserted, inter alia, that the materials subpoenaed by the Comptroller were not subject to disclosure pursuant to Administrative Code of the City of New York § 11-688. The DOF also asserts an affirmative defense based on section 11-688, asserting that it could be subject to criminal penalties for disclosing the materials demanded by the subpoena. Finally, the DOF asserts as a counterclaim that the subpoena should be quashed.

Positions of the Parties

The Comptroller argues that New York City Charter § 93 (c) bestows upon him the authority to audit all city agencies and provides that he "shall be entitled to obtain access to agency records required by law to be kept confidential."

In a memorandum of law in support of the petition, the Comptroller argues that New York City Charter § 93 (c) specifically provides that he is "entitled to obtain access to agency records required by law to be kept confidential." He maintains that there are no confidentiality provisions in any New York State law which apply to the GCT and that the only applicable tax confidentiality provisions are set forth in the New York City Administrative Code, a local law.

The Comptroller argues that, although chapter 772 of the Laws of 1966 authorized the City to impose the GCT, that tax was not established by state law but rather by local law, codified as Administrative Code of the City of New York § 11-603, and that the confidentiality provision applicable to the GCT is set forth at Administrative Code § 11-688. Thus, asserts the Comptroller, state law does not require that tax returns be kept confidential but that the Administrative Code alone imposes that requirement. Thus, argues the Comptroller, the citations in Opinion 10-91 to the confidentiality requirements of sections 88 and 146 of chapter 772 are citations to a state law, and not to the law which actually imposes the confidentiality requirement.

In an affirmation in opposition to the petition and in support of its counterclaim, the DOF argues that the specific secrecy provisions of Administrative Code § 11-688 require the denial of the petition. The DOF further asserts that, when the state legislature amended the tax secrecy statute in the New York State franchise tax, it expressly provided for an exception to secrecy for the New York State Comptroller to access tax information for audit purposes but did not allow the same power to the City's Comptroller.

The DOF further asserts that the petition must be denied for public policy reasons, since tax secrecy encourages "voluntary and truthful tax reporting."

In a memorandum of law in opposition to the petition, the DOF argues that when the legislature enacted enabling legislation in 1966 (L 1966, ch 772) authorizing the City to impose the GCT and providing a model act for the City to follow, there was no provision allowing the City Comptroller to examine tax returns. (See Model Act § 88, as set forth in L 1966, ch 772.) The DOF asserts that, when the GCT was initially authorized, the City was required to enact a law "substantially" similar to the Model Act and that the City enacted legislation in 1966 following the Model Act which did not contain a provision allowing the City Comptroller to examine tax returns. In 1967, the legislature amended the enabling legislation (L 1967, ch 699) to authorize the City to conform to the Model Act or to conform to article 9-A of the Tax Law and the City chose to conform to the Model Act rather than to article 9-A, which contains the exception. Further, asserts the DOF, the legislature subsequently amended the secrecy provisions in Administrative Code § 11-688 but did not amend that statute to carve out an exception for the City Comptroller.

The DOF also maintains that, in order to obtain access to information contained in tax returns relating to the GCT, the Comptroller must demonstrate that his request falls within an exception to the secrecy laws, such as an audit permitted by the enabling legislation or the local law imposing the tax. However, asserts the DOF, nothing in sections 88 or 146 of chapter 772 authorizes the Comptroller to obtain such tax returns.

The DOF further argues that regardless of whether Administrative Code § 11-688 is a state statute or city statute, the legislature did not intend to make New York City Charter § 93 (c) an "otherwise provided by law" exception to secrecy. It further argues that it does not operate without oversight, as the State Comptroller is empowered to review secret tax return information.

Further, the DOF asserts that the Comptroller has acquiesced to the enforcement of Opinion 10-91 since it has not challenged it until now.

The DOF further asserts that the secrecy provisions are intended to protect the privacy of the reporting entities while facilitating the collection of taxes by encouraging truthful self-reporting.

In a reply memorandum of law in further support of the petition, the Comptroller argues that it is entitled to subpoena tax returns relating to the GCT pursuant to its broad power to investigate the City's finances, and that it is entitled to obtain such documents unless they are subject to privilege.

The Comptroller reiterates its argument that the records are necessary for him to conduct an audit of the security and reliability, as well as the accuracy and thoroughness, of the DOF's assessment and collection of the GCT. It further asserts that New York City Charter § 93 (c) is a "law" which otherwise provides for disclosure pursuant to Administrative Code § 11-688.

The Comptroller further asserts that the 1989 amendment to section 11-688 further establishes that it was a local statute since that amendment

Further, the Comptroller asserts that, if the subpoena is not enforced, then it will not be able to exercise its powers, including the audit of each city agency at least once every four years.

Next, the Comptroller asserts that Opinion 10-91 is of no moment herein since the opinion of a municipal attorney is purely advisory and has no binding effect on the court. The Comptroller also asserts that it is not estopped from arguing that it is entitled to the records demanded by the subpoena simply because it has not previously challenged Opinion 10-91.

Legal Conclusions

Section 93 (a) of the New York City Charter allows the Comptroller to advise the Mayor and City Council "on the financial condition of the [C]ity or any phase thereof and make such recommendations, comments and criticisms in regard to the operations, fiscal policies and financial transactions of the [C]ity as he or she may deem advisable in the public interest."

Section 93 (c) of the New York City Charter provides that

In addition to the ability to audit city agencies pursuant to section 93 (c), the Comptroller has the "power to audit and investigate all matters relating to or affecting the finances of the [C]ity, including without limitation the ... receipt and expenditure of [C]ity funds ... and take the testimony under oath of such persons as the comptroller may deem necessary." (NY City Charter § 93 [b].) The power to take testimony pursuant to section 93 (b) includes the power to subpoena documents. (See Matter of New York World's Fair 1964-1965 Corp. v Beame, 22 A.D.2d 611, 617 [1st Dept 1965].)

The City Charter further provides that the Comptroller "shall... audit all official accounts and the accrual and collection annually of all revenues and receipts" (NY City Charter § 93 [d] [2]) and "shall audit the operations and programs of [C]ity agencies to determine whether funds are being expended or utilized efficiently and economically and whether the desired goals, results or benefits of agency programs are being achieved." (NY City Charter § 93 [e].)

Section 93 (l) of the New York City Charter requires the Comptroller, within four months after the close of each fiscal year, to publish a statement for that year including, inter alia, "all taxes due and uncollected at the close of the fiscal year."

Since the DOF is an "agency" as defined by New York City Charter § 1150 (2), the Comptroller has the authority to audit it. Indeed, Corporation Counsel acknowledges in Opinion 10-91 that it has such authority.*

Administrative Code of the City of New York § 11-688 (1) provides:

As the Comptroller asserts, New York City Charter § 93 (c) is a "law" that "otherwise provide[s]" for the disclosure of information contained in GCT returns to the Comptroller in connection with an audit. Thus, under the plain language of section 11-688, the DOF must respond to the subpoena served by the Comptroller.

Although the DOF relies on Opinion 10-91 in asserting that it cannot turn over such returns to the Comptroller, that opinion has no precedential value. "[A] legal opinion by a municipal attorney is purely advisory and, right or wrong, it is the opinion of the issuing attorney." (Matter of Slevin v Siegel, 65 Misc.2d 3, 5 [Sup Ct, Nassau County 1970].) To hold the Comptroller "bound by all opinions of the Corporation Counsel would ... be unwise as a matter of public policy [and] would elevate the Corporation Counsel ... to a position of supremacy among ... officials." (Matter of City of New York [Beame], NYLJ, Dec. 3, 1970 at 2, col 5 [Sup Ct, NY County 1970].)

The parties have failed to cite, and this court's research has failed to reveal, any case law addressing the issue of whether the Comptroller may obtain from the DOF tax reports or returns in connection with an audit. However, Matter of McCall v Barrios-Paoli (93 N.Y.2d 99 [1999]), a case cited by the Comptroller, supports his position that he should be permitted to obtain the tax information requested. In that case, the Court of Appeals held that the state legislature "authorized the State Comptroller to conduct performance audits of political subdivisions of the State, including the City." (Id. at 109.) Importantly, however, it stated in dicta that "the City concedes that the State Comptroller is authorized to conduct financial audits of City agencies — a duty similarly assigned by the City Charter to the City Comptroller." (Id.) Thus, the Court of Appeals acknowledges that the Comptroller may conduct a financial audit of a city agency such as the DOF, and it is difficult to imagine how such an audit could be conducted without the tax return information sought by the Comptroller. The said decision also refers to the "coextensive powers" of the City and State Comptrollers. (Id.)

Although the DOF correctly cites Matter of New York State Dept. of Taxation & Fin. v New York State Dept. of Law, Statewide Organized Crime Task Force (44 N.Y.2d 575, 580 [1978]) for the proposition that

In Matter of New York State Dept. of Taxation & Fin. v New York State Dept. of Law, Statewide Organized Crime Task Force, the Court of Appeals refused to allow the New York State Department of Taxation and Finance to turn over individual tax returns to the Statewide Organized Crime Task Force ("OCTF"). Although the Court of Appeals agreed that OCTF had broad investigatory powers, it found that the public purpose served by protecting individual tax returns was of greater importance, especially where there was no relation to tax matters.

The Court of Appeals goes on to note the very limited exceptions to this rule are "those related to the marshaling of revenues." (Id. at 581.) The Court of Appeals makes it clear that the strict limits on disclosure relate to protecting individuals from self-incrimination in order to facilitate full disclosure on returns. However, those same restrictions do not apply in this matter, where we are dealing with another agency, under the same disclosure restrictions and whose only purpose relates to the "marshaling of revenues."

Additionally, it is clear that there are very strong public policy arguments militating in favor of disclosure of the GCT return information to the Comptroller. Specifically, as Kim stated in her affidavit in support of the petition, the information sought by the Comptroller is relevant to the audit of the DOF's collection procedures and is necessary to test the security and reliability of the DOF's collection of the GCT.

With respect to security, Kim explained that the audit seeks to ensure that the GCT information exists in a secure environment inaccessible to unauthorized users. The first test of reliability is designed to ensure that the DOF has properly calculated total liability for each filing corporation. The second test of reliability is designed to determine the thoroughness of the information included in the returns so that the Comptroller can ensure that all entities which should be filing GCT returns are in fact filing them.

Additionally, as Budzik stated in her affirmation in support of the petition, the DOF's refusal to comply with the Comptroller's subpoena "frustrates the Comptroller's ability" to exercise its authority under New York City Charter § 93 (c). Budzik stated that the DOF collected over $2.846 billion in GCT in fiscal year 2012 and $3.348 billion in fiscal year 2013.

Therefore, Kim and Budzik have established that there are strong policy reasons militating in favor of compelling the DOF to respond to the subpoena. The information demanded would actually help to ensure that all steps possible are being taken to keep the information in the GCT returns private. It would also help to ensure that all entities which should be paying the GCT are paying it and providing all information necessary to confirm that they are paying the amounts they actually owe. It is surely in the best interests of the City to ensure that the DOF's tax collection efforts are being conducted in a thorough manner since this could potentially assist the City's revenue raising efforts by allowing it to identify entities which should be, but are not, paying taxes, as well as entities which are not paying all taxes owed.

Public policy also dictates that the Comptroller have the ability to review GCT returns since he is an official elected by, and is thus accountable to, the citizens of the City. Therefore, the Comptroller has been selected by the people of the City to carry out the broad powers assigned to him by the City Charter.

Further, the DOF's concerns regarding breaches of secrecy are unfounded. As noted above, the subpoena served by the Comptroller was accompanied by a confidentiality agreement setting forth in detail the numerous precautions to be taken by the Comptroller to avoid the disclosure of private information. These include redaction and encryption, as well as the destruction of flash drives, on which tax return information is to be stored, at the end of the audit.

Although the City Charter vests the DOF with the responsibility for the collection and administration of taxes imposed by the City Charter (see NY City Charter § 1504), there is no question that New York City Charter § 93 provides the Comptroller with broad authority to audit city agencies. Indeed, it is difficult to imagine how the Comptroller can publish a statement regarding "all taxes due and uncollected at the close of [each] fiscal year" (NY City Charter § 93 [l]) without obtaining access to the information demanded in the subpoena served on the DOF. Additionally, it would ill behoove the City if the City Comptroller were unable to fulfill his charter-mandated responsibilities based on a somewhat convoluted interpretation of the impact of the state enabling legislation.

Therefore, in light of the foregoing, it is hereby ordered that the petitioner's motion to compel respondent to comply with the subpoena served by petitioner on October 9, 2013 is granted; and it is further, ordered that the respondent's counterclaim seeking to quash petitioner's subpoena is denied.