Advisory Opinion No. 1997-11

Restrictions on Outside Work for Tax Return Preparation
Businesses by Department of Revenue Services Employees

Brenda Bergeron, State Ethics Commission Principal Attorney, has asked how the requirements of The Code Of Ethics For Public Officials, Conn. Gen. Stat. Chapter 10, Part I (Code), apply to certain outside employment of Department of Revenue Services (DRS) employees.

Pursuant to Conn. Gen. Stat. §§1-84(b) and (c ), no public official or state employee may accept outside employment which will impair independence of judgment as to state duties or require or induce disclosure of confidential state information; nor may such an individual use his or her state position or confidential information acquired through state service to obtain personal financial gain. Generally, §§1-84(b) and (c ) are violated when the public official or state employee accepts outside employment with an individual or entity which can benefit from the state servant’s official actions. Regulations of Conn. State Agencies Sec. 1-81-17.

In Advisory Opinion No. 87-7, 48 Conn. L.J. No. 52, p. 2C (6/23/87), prior to the institution of a state income tax in Connecticut, the State Ethics Commission considered whether employees of DRS may prepare federal tax returns for clients on their own time without violating the Code. In the words of Advisory Opinion 87-7, the mission of the tax preparer is to compute the minimum amount of tax due under the law, while the goal of DRS is to collect the maximum amount of tax due under the law. Accordingly, a DRS employee has a clear conflict of interest if engaged in the private business of preparing federal tax returns that will determine the amount of tax due to the state of Connecticut. The Commission also ruled that a DRS employee may not maintain the books and records upon which Connecticut tax returns will be based directly, or indirectly via a federal tax return, as the amount of tax owed by a taxpayer is significantly or completely determined from, and validated by, the books and records of the taxpayer. Obviously, these basic tenets of Advisory Opinion 87-7 have applied to DRS employees with equal force since the subsequent passage of a state income tax in Connecticut.

A recent review of outside employment practices by DRS employees raised an additional issue not considered by the Commission in its 1987 opinion. Specifically, the Commission has been asked for further clarification regarding whether the Code permits an individual employed by DRS to be simultaneously employed in any capacity whatsoever (e.g., computer programmer) by a private tax preparation service doing business in Connecticut.

Employees of DRS have access to a plethora of confidential information concerning all Connecticut taxpayers. Clearly, members of the public are entitled to the assurance that their confidential tax-related information can in no way be compromised.

An underlying principle upon which the Code is based is to provide public confidence that state employees consider only the best interests of the state when they take official action. A DRS employee is in a position to benefit financially through the use of confidential tax-payer information, such as for the purpose of seeking out clients for their private employers. Naturally, this very access to confidential information also puts the rare, less scrupulous public servant in a position to personally benefit to the especial disadvantage of the State. The opportunity for Code violations on the part of a DRS employee working for a private tax-preparation business includes accepting employment which impairs independence of judgment, Conn. Gen. Stat. §1-84(b); disclosing confidential information gained in the course of duty, Conn. Gen. Stat. §§1-84(b) and 1-84(c ); and using one’s office for financial gain, Conn. Gen. Stat. §1-84(c ).

The provisions of the Code do not prevent a public official or state employee from using his or her expertise, including expertise gained in state service, for personal gain, as long as no Code provision is violated. Regulations of Conn. State Agencies Sec. 1-81-17. Therefore, a DRS employee with computer expertise, for example, can use that expertise on behalf of an outside business that does not provide tax preparation services.

In summary, a DRS employee should not accept simultaneous employment in any capacity with a tax preparation service doing business in this state. To the extent that this Advisory Opinion conflicts with Advisory Opinion 87-7, the earlier opinion is overruled.

By order of the Commission,

Maurice FitzMaurice
Chairperson