There is no federal or state constitutional right to maintain the privacy of tax returns. However, California courts have interpreted state taxation statutes as creating a statutory privilege against the disclosure of tax returns. The purpose is to encourage voluntary filing of tax reporting of income and thus to facilitate tax collection.
The privilege is not absolute. It will not be upheld in three situations: when (1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved. This last exception is narrow and applies only “when warranted by a legislatively declared public policy.” Continue reading