Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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Sav-On Drugs, Inc. v. Superior Court . . . (1975)

Taxpayer Cannot Be Compelled to Disclose Information Concerning Specific Entries on His Sales Tax Return

Taxpayer was a defendant in a class action suit in which it was alleged that taxpayer had collected excess sales taxes from retail customers. Plaintiff submitted an interrogatory to taxpayer seeking disclosure of information concerning specific entries in taxpayer's sales tax return. Taxpayer objected to this interrogatory and refused to answer. The Superior Court granted plaintiff's motion for an order compelling taxpayer to answer the interrogatory. Taxpayer then sought a writ of prohibition.

The Supreme Court, in issuing the writ, held that Section 7056 of the Revenue and Taxation Code, which makes it unlawful for the Board to disclose any information that a retailer is required to furnish to the Board, including any return, manifests a clear legislative intent that disclosures made in tax returns shall not be indiscriminately exposed to public scrutiny. The court noted that the purpose of provisions such as Section 7056 is to facilitate tax enforcement by encouraging a taxpayer to make full and truthful declarations in his return without fear that his statements will be revealed or used against him for other purposes, and held that the returns are privileged. To require a taxpayer to furnish information concerning specific entries in the return would render the privilege meaningless. Sav-On Drugs, Inc. v. Superior Court (1975) 15 Cal.3d 1.