Document 1855904

.
.
"Sec.
408:
.
'!(a) Except
provided
in
otherwise
and
subdivisions
(b)
~:CI (c)
any
information
records
in
the
assessor‘s
office
which
are
not
requiredby
law to be kept
or prepared
by
the
assessor,
exemption
claims,
are
not
and homeowners'
public
documents
ana shall
not be open to public
inspection.
receiving
the
homeowners'
Property
exemption
shall
be
clearly
identified
on
the
assessment
roll.
maintain
The
assessor
shall
records
which shall be open to public inspection
ta
identify
those claimants
who have been granted
the
homeowners'
exemption.
,I
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
"(c) The assessor
shall disclose
jnformation,
furnish
abstracts
or permit'access
to all records
in
his
office
to law
enforcement
agencies,
tne
county
grand
jury,
the board
of supervisors
or
authorized
employees
or
their
duly
agents,
representatives
when conducting
an investigation
of
the assessor's
office
pursuant
to Section 25303 of
Controller,
the
Government
Code,
the
State
Board.
of
inheritance
tax
State
referees,
the
Equalization.
and other duly authorized
legislative
or administrative
bodies
of the state pursuant
to
their authorization
to examine
such records.
II
”
.
.
'Sec.
.
.
.
.
.
c.....,........
451:
"All information
requested
by the assessor
or
furnished
in the property
statement
shall be held
The statement
is not a
secret
by the assessor.
public
document
and
fs not open
to Inspection,
except
as provided
in Section 408."
'Sec.
481:
"All information
requested
by the assessor
or
the board pursuant, to this artfcle
or furnished
Sn
the
in ownership
statement
shall
be held
change
The statement
secret by the assessor
and the board.
is not
open
to
document
ana
is
not
a
public
408.";/
except as provided
in SectIon
inspection,
2.
the
records
Each
of
the
r’eferred
quoted
statutes
to are
not
3.
public
expressly
declares
that
Hence, It
documents.,
84-1104
.
In our
integral
collect
view,
these
aspect?/'
taxes.
confidentiality
of
state's
the
provisions
sovereign.
constitute
poweri/
an
.to
No single
clear
line
of authority
is found
in
the
federal
cases.
In
related
contexts,
for
example,
state.
were
officers
not
cornpe? 1 ed
to
disclose
official
communications
which
were
privileged
under
state
law,
in
In re Reid
(0.C.
Mich.
1906)
155 F. 933,
the court
held
that
a
city
assessor
Could
compelled
in
not
be
bankruptcy
proceedings
before
d referee
to disclose,
in uiolation
of a
prohibitory
Michigan
statute,
certain
tax
statements.
The
col;rt
noted
that
the purpose
of the state
statute
#as:
plainly
to promote
the collection
from
each
tixiaier
of his
just
share
of state,
caunty,
and
municipai
taxes,
and
to
that
end
ta require
from
each
property
owner
the-full
disclosure
of all
his
taxable
property
under
the state's
pledge
that
the statement
shall
be kept
inviolate,
save
to the
officials
for whose
informationand
guidance
r't was
To permit
that
information
to become
public
made.
wcuJJ
!cf&lt
the
pl;fn
p'!rpose
tf the
stzt?rre
by
aeterring
the
taxpayer
from
revealing
what
frequently
could
not
be
learned
from
any
other
source.”
at 935.)
(Id.,
I,
2.
(Continued.)
is clear
that
they
do not
fall
California
Public
Records
Act.
Homeowners,
subd.
(d);
S-tat ewide
Cal.App.3d
567,
569-570,)
within
the
purview
of
the
(Cf.
Gov.
Code,
5 6252,
Inc,
v. Uillfams
(1973)
30
under
made
confidential
All
of
documents
the
3.
and
481
are
sources
of information
the
sections
408,
451,
accuracy
of which
is essential
to the
fair'and
efficient
(Cf.
Roberts
v. Gulf
Oil
administration
of
the
tax
laws.
(1983)
147
Cal.App.3d
770,
785, n;Gr,.llagher
v.
Such
considerations
are
=i+
Bo
lr (1964)
231 Cal.App.2d
482.)
of
numerous
instances
in which
public
policy
and
typical
interest
require
the curtailing
of an open
and
unrestricted
(Cf. 15 Ops,Cal.Atty.Gen,
242,
244
inspection
of documents.
(19501.1
The
collection
of taxes
is not the
4.
but a sovereign
act of the state
of a debt,
(People
as prescribed
by the Legislature.
576,
588-589,
affd.
R.R.
Co. (1895)
105 Cal.
4.
mere
collection
to be exercised
Pac.
v. Central
162 U.S.
91.1
84-1104
.
.
(Similarly,
state
tax
In re Valecia
(7th
Cir.
1917)
240
F,
310
-comnsioner;
~7. Herman
Brothers
Pet Supply,
Inc.
1966r 360 F.Zd 176 -- unemployment
In a more
recent
case,
however,
United
States
v.
Martin
(D. Kan.
22, the government
brought
1982)
542 F.Supp.
an action
to enforce
a summons
issued
under section
7602 of
the
internal
valuation
-for
Kansas
directed
not
be
Revenue
Code on the
Director
of
Property
the State
of Kansas.
Statutes
of the State
of
that
the information
sought
by the summons
disclosed.
"Defendant
relies
on
S
58-2223b
to
K.S.A.
satisfy
its burden.
Defendant
cannot
prevail
with
this
argument.
The
United
States
Constitution
provides
that
‘This
Constitution,
and the Laws of
the United
States
which shall
be made in Pursuance
shall
be
the
supreme
law of the Land
thereof;
. . .
I
U.S.
Const.
art.
VI, cl.
2,
State
taws
ihi’ch’ substantially
interfere
with the execution
of
federal
laws are preempted
by the ope.ration
of the
Supremacy
Ct ause.
Aronson
v. Quick Point Pencil
(1979)
440 u s
In qeneral
%s
in
conilic;
;i~~7’th2e62~xecutibn,
bf
>ei,"",,'T
internal
revenue
statutes
have been made to Yield.
Dalias
National
Bank,
152 F.2d
582
(5th
:;4 67-F
Greenvi lle,
118 F.2d
963 (4th
Ci’r.*41v)*.
0
v. Pettyjohn,
84 F.S 'UPP.
423 (W.0 . MO.
194b)?
State
the
laws impeding
enforcement
of IRS summons have not been excepted
from the operation
of. the Supremacy
Clause.
U.S.
76-l
U.S.T.C.
§ 9314 (E.D.
&a?. 197
Gard,
;*sYInterstate
Bank, 80-l U.S.T.C.
5 9272 (M.D.
+?
iSSO,.”
(Id.,
at 23.)
.
In our view,
however,
forth,
this
ultra
analytically
insufficient.
in January
the Feaeral
5.
Rules
It
is
of
to
F.2d
has
377,378;
been
of
Evidencei/,
reasons
supremacy
hereinafter
approach
provides:
assumed
for
purposes
investigations
under
the same testimonial
proceedings.
(See
at 738;
McMann v.
It
the
Rule 501 of title
28, United
States
Code,
1975 (Pub. L. 93-595,
88 Stat,
1933) as
the conduct
is subject
87
and for
simplistic
said
Falsone
v.
United
set
is
enacted
part
of
of this
analysis
that
the statute
in question
privileges
as judicial
States,
supra,
205
F.2d
Securities
& Exchange Corn..(2acir.
1937)
2 Am.Jur.2d
Administrati-ve
Law, 5 267.1
that
while
administrative
proceedings
are
5.
.
84-1104
,
“Except
Constitution
Act
of
Supreme
privilege
or
by
otherwise
_. . .,. .
the
required
by
shall
De governed
United
States
or provided
by
rules
prescribed
by
the
Congress
or
in
the
to statutory
authority,
Court
pursuant
of a witness,
person,
government,
State,
ofasth
e
poliricx
Tubdivision
the princiFm$
thereof
common
---
law as they
mal/
interpretea
D,Y the?o>?sofIheTrl!?ed-States
in
t&light.rreTon-~~~erlen,~.
HOWeVer,
in
actions
and
proceeclings,
with
respect
to an
element
of a claim
or defense
as to which
State
law
supplies
the rule
of decision,
the privilege
of a
person,
government,
State,
or
political
witness,
determined
in
subdivision
thereof
shall
be
(Emphasis
added.)6_/
accordance
with
State
law."
whether
state
the
issue
in
case
is
the
Thus,
any
statute
should
be recognized
as
a privilege
nondisclosure
'governed
by the principles
of the common
law as they may be
interpreted
by the courts
of the United
States
ifl the light
of reason
and experience."z/
5.
(Continued.)
not generally
governed
by the Federal
Rules
of Evidence,
the
rules
of privilege
probably
ancient
and
widely
recognized
(McMorrow
v. Schweikep
(1982)
561 F.Supp,
584,
586;
apply.
FTC
(1978)
462
F.Supp.
589,
vacated
as not
see
Nearly
v.
616 F.2d 662,(3rd
Cir.
19801,
cert.
den, 449 U.S. 822,
ripe,
503
F.Supp.
174
(1980);
and
see
rule
1101,
after
remand,
rule
with
respect
to privileges
applies
at
subd.
(cl - "The
all stages
of all,actions,
cases,
ana proceedings.")
second
sentence
is
desijneo
to
require
the
diversityn
cases
(28
application
of state
privilege
law in
9 1332)(;;;erned
by Erie
R.. Co.
v. Tompkins
(1938)
U.S.C.
Credit
Life
Ins. Co.
v. Uniworld
64.
304
U.S.
,
e.g.,
- state
law
F.R.D.
llf
Ins. Co.
(S.D.
Oh.,
W.D.
lm
appried-to
discovery
of tax returz:.)
6.
The
Rules
of Evidence,
rule
502,
not
Proposed
Federal
7.
Congress,
would
have
recognjzed
a
specific
accepted
by
for
records
required
by
local
law
not
to
be
privilege
has
no
compelling
significance
disclosed.
Its
rejection
more
the
general
under
since
the
courts.
remain
free
provisions
of rule
501 to recognize
a privilege
in a proper
(In re Hampers
(1st Cir.
1981)
651 F.2d 19, 21, n. 2;
case.
103,
1976)
73
F.R.0
United
States
N-J,
ine
vG;an%ry(E.D' Empan:i:id
Jan. 21, 1981
(6.
104-105;
1982)
535 F.Supp.
537,
540.)
6.
84-1104
"Finch,
supra,
at
1344;
Ott,'supra,
at
710.))
Specifically,
it remains
to be determined
whether
ievenue
and Taxation
Code
sections
408, 451,
and 481 present
a "proper
case'
for
the
reco.gnition
of a privilege
under
section
501- of
the
Federal
Rules
of
Eviuence.8/
In re
the
issu;nce
by
a
;;;~;,';,s,auucp;;,, 651
F:2d
l-9, involved
grand
jury
Investigating
an arson-insurance
fraud
scheme
of
a
tecum
subpoena
duces
directing
the
Commissioner
of
Revenue
Massachusetts
to
for
produce
documents
relating
to the sales
tax o'n meals
anu
beverages
to
the
commonwealth
at
the
time
of
fhe
fire
which
owed
destroyed
a restaurant.
A motion
to quashwas
predicated
stat2
statute
upon
a
the
disclosure
of
tax
pronibiting
return
information.
Approaching
whether
inquiry
fh2
the
state's
privilege
was
"intrinsically
meritorious
in our
independent
judgment"
(American
Civil
Liberties
Union
of
MSSS.
v. Finch
(5th
Cir.
F-26
13361,
tt?nampers
198338
court
adopted
the four part
test
(id.,
at 23):
-I)
asserted
M
The
first
is whether
the
communica-tions
briginate
in a confidence
that
they
wi'll not
The
answer
is and
for a Tong
time
be disclosed.
has been
'Yes'.
The second
is whether
this
element
of
confidentiality
is essential
to
'the
full
and
maintenance
of
the
relation
between
satisfactory
On
this
issue
each
the
parties.'
Id,
at
1344.
States
blithely
overargues.
United
side
The
asserts
that
criminal
and
other
sanctions
proviac
guarantee.
continued
than
enough
teeth
to
more
The
Commonwealth
with
the
compliance
tax
laws.
invokes
the
specter
of Doomsday
if the slightest
Inasmuch
as the state's
interest.in
confidentiality
federal
is
in
the
the
agency's
presented
context
of
interest
in disclosure,
it'should
be noted
at
the
outset
that
the
operative
federal
statute,
26 United
States
Code
section
7602,
does
not 'otherwise
require"
the disclosure
of
confidential
information
within
the meaning
of rule
501,
but
is silent
with
respect
to rules
of evidence
and
procedure.
"The
Franchise
Tax
(Compare
6 19254,
subd.
(c),
infra:
Board
may issue
. . . subpoenas
auces
tecum,
which
. . . may
Whit2
such
be
served
on
any- person
for
any
purpOs2.")
it
does
not
purport
to
statutory
language
is broad
in form,
It has been
held,
supersede
established
rules
of privilege..
that
rule
501
governs
over
the broad
subpoena
for
example,
(In re Grand Jury
Empanelled
authority
of
a
grand
jury.
see
and
su ra,
F.Supp.
at
539-540;
Jan.
21, 1981,
535
Branzburg
v. Hayes
-ST- 1972) 408 U.S. 665, 688.1
8.
a.
84-1104
of confide'nce
occurs,
Our view
is
disclosure
in
where
selective
cases
rigorous
criteria
have
been met would most
probably
have
little
or no effect
on the
state's
reporting
system,
easy
and
automatic
recourse
to tax return
information
by
federal
grand
juries
or--if
there
were
no
whatsoever--by
competitors,
privilege
credi tars,
purchasers
or
prospective
other
litigants
in federal
court
might
eventually
have
an
adverse
impact
on the state-taxpayer
relationship.
such
a relationship,
That
address
Wigmore's
to
third
test
briefly,
is a vital
one,
which
'ought
to
be sedulously
fostered',
id.
at 1344, would seem to
be beyond
dispute.
enforced
that
breach
while
'Wigmore's
Inquiry
is
'the
fourth
whether
that
would
inure
to
the *relation
by
the
disclosure
of the communicat!ons
CWOUTU
be] greater
than
the
benefit
thereby
gained
for
the
correct
disposalofatSon.'
Id. at 1344
(emphasl's
in
Finch).
This
is the query that
drives
us to seek
a
more
particularistic
answer
than
the
macrocosmic
one that effective
federal
criminal
law enforcement
inore
iinpoi‘tant
than
state
t&A
colltrctfon.
tie
iS
can easily
see that
if a state
tax return
contained
the only
key
to resolving
a serious
federal-crime,
the .balance
would
tilt
in
favor
of
the
federal
In re Grand
Jury
Subpoena
for
government.
See
N.Y.
State
Income
Tax,
468.. F.Supp.
575
(N.D.N.Y.
But
if a return
contained
information
that
1979).
elsewhereand
at
best
would be easily
ob ta.ined
cumulative
evidence
would
constitute
only
impeaching
one of several
witnesses,
we- might
have
second
or third
thoughts.
injury
"Being
charged
as
we
are
under
Rule
501. to
look
to reason
and experience
in'chartfng.
a federal
has
evidentiary
the
key
common
law,
we
think
already
been
forged
by the Congress
fn legislating
in
26
U.S.C.
I
6103(i) (1)
the
conditions
under
which
federal
tax information
may be made available
to federal
officials
for non-tax
criminal
purposes.
The
deliberate
judgment
of the legislature
on the
balancing
of
the
societal
interests
iri detecting,
preventing,
and
punishing
Criminal
activity,
in
safeguarding
individuals'
interests
fn privacy,
and
with
revenue
compliance
in
fostering
v_oluntary
seems
to us a legitimate
if
reporting
requirements,
in the formation
of federal
not
compelling
datum
See Mora ne v, State
common law in this
area.
Lancli 5
Clarine Lines
(1970)
398 U.S. 375, T&Tl
Harvakd
tegai
Statutes
and the Source
of Law,
in
Essays
213, 226-27 (in.
9.
84-1104
"\1e see no reason
why,
if federal
prosecutions
are
not
unduly
hindered
by
the
,restraints
of
4 6103,
they
would
be so hindered
by appl,ying
the
same
rules
to state
tax returns.
We see a positive
virtue
in
avoioing
either
circumvention
of
any
S 6103
or
rules
inconsistency
in
of
access
to
federal
and
state
tax
information.
And
we
see
value
.in preserving
in this small
area
the postures
of comity
and deference
arising
from
federalism."
The
court
held
that
the
Revenue
enjoyed
a qualified
of the
state
nondisclosure
showing
by
the
federal
contravening
interes.t.
Massachusetts
Commissioner
of
privilege
under
rule
501 because
statute,
subject
to an adequate
jury
of
an
overriding
grand
In re Grand
Jury
Empanelled
Jan. 21, 1981,
supra,
involved
the
Issuance
by a federal
grand
535
F.Supp.
537,
jury
investigating
racketeering
of a subpoena
duces
tecum
the
New
Jersey
Division
of' Taxation
to deliver
directing
copies
of certain
franchise
tax returns
of a named
company.
A
motion
to
quash
was
predicated
upon
a
State
statute
division
of its
records
and
proribitirg
disclosure
b:r the
files.
at
541)
'ih e
court
observed
that
the
[id.,
motivating
factor
underlying
New Jersey's
legislation
was a
complete
reporting
by
desire
to
encourage
accurate
and
providing
a measure
of
quali*fied
confidentiality
for the
information
submitted,
th.at this
was a laudable
legislative
and
that
chosen
were
reasonably
objective-,
the
means
'the
principles
calculated
to achieve
that
goal.
Moreover,
of comity
suggest
generally
that
the
federal
courts
should
'where
this
can
be accomplished
recognize
state
privileges
at no substantial
cost
to federal
substantive
and procedural
policy.'
(Citation.)"
The
court
adopted,
as
a
(Id.)
matter
of
federal
common
law
under
rule
501
a qualified
privilege
for
the disclosure
of state
tax returns
patterned
on
26
United
States
Code
section
6103(1)(I)
respecting
proceedings
to
enforce
federal
laws
not
relating
to
tax
administration.
at 542.1
(Id,,
where
an asserted
state
privilege
is based
on
Thus,
of tax returns,
26 United
States
Code
the
confidentiality
standard
where
information
is
section
6103(i)(l)
sets
the
It is
sought
in connection
with
non-tax
criminal
matters,
assumed
for purposes
of
this
analysis,
on the
other
hand,
the
Interna?
issued
by
that
the
summons
administrative
present
the
subject
of
Revenue
Service,
which
is
the
inquiry,
would
be in connection
with
a civil or criminal
tax
related
investigation.
10.
84-1104
.
73
F'.R.D.
103,
supra,
taxpayer
for. failure
to
of extortion
from high-level
narcotics
The
United
States
Attorney
issued
a
dealers.
subpoena
duces
tecum
directing
the Department
of Finance
of
the
City
of New York
to furnish
city
income
tax
returns
A motion
to quash
reflecting
filing
records
and payments.
was
predicated
upon
a
provision
of
the
New
York
City
Administrative
Code
(having
the force and effect
of state
law) prohibiting
the disclosure
of any report or return.
United
States
v.
investigation
concerned
an
declare
as income
the proceeds
that
rule
501
The
court
observed
preliminarily
"does
not rigidly
circumscribe
the form or extent
of the
in federal
criminal
cases.
rules
of privilege
applicable
Courts
may continue
to develop
accepted
privileges,
as well
on a case by case basis."
as to formulate
new privileges
generally
Applying
the four part test, the court described
_
the federal interest:
"Of the four
factors
to be weighed,
the need
for full revelation
of pertinent
evidence
to the
trier is the most powerful
and least variable.
II
‘.
.
.
.
.
.
.
.
.
.
.
*
._.
*
.
c
.
.
.
.-
.
"Only
recently
the Supreme
Court
emphasized
'strong policy
in favor of full development
of
the facts
in federal
litigations
to the end that
It observed
in United States
v.
justice
be served.
Nixon (1974) 418 U.S. 683,'709:
the
adversary
"We
employ
an
have
elected
to
in which
the parties
system
of criminal
justice
The need
contest
all issues before a court of law.
relevant
facts
in
the adversary
to develop
all
The
system
is both fundamental
and comprehensive.
would
be defeated
if
criminal
ends
of
justice
were
to
be
founded
on
a partial
or
judgments
The very
speculative
presentation
of the facts.
public
and
system
integrity
of
the
judicial
confidence
in the system depend
on full disclosure
the framework
of the+ rules
of all,.the facts, within
To ensure
that justice
is done, it is
of evidence.
that
courts
function
of
imperative
to
the
compulsory
process
be available
for the production
of evidence
needed
either
by the prosecution
or by
.
the defense."'
With
respect'to
the
state
interest
the
court
observed:
involved
in this case is
and
enactments
thousand
one
of
several
but
'make
States
which
United
regulations'
in
the
"The
secrecy
statute
11.
84-1104
_
confidential
in
.sundry
varying
degree
matters
required
by law to be recorded
or to be reported
orally
or
in writing
administrative
to
various
officials.'
8 Wigmore,
Evidence
§ 2377
at 781
(McNaughton
rev. 1951).
These statutes,
both state
and
fed-eral,
generally
represent
legislative
polici.es
of significant
dimension.
See Advisory
Commi t-tee ‘ s
Federal
Notes
to
Rule
of
Proposed
Evidence
502,
56
F.R.D.
235
(1972)).
In
183,
effect,
government
promises
secrecy
as
an
the
inducement
for the creation, of the communication
to
the state
on the assumption
that the communicator
will be motivated
to make a more honest afld candid
revelation.
As Wigmore
points out:
"Where
the government
needs
information
for
the
conduct
of
its
and
the
persons
functions
possessing
the information
need
the encouragement
of an-onymity
in order
to be induced
to make
full
disclosure,
the protection
of a privilege
will be
accorded.
. . .
[tiany]
situations
exist
where
information
can best be obtained
only' from
;hG ierson
himself
whose affairs
are desired
to be
known by the government.
An attempt,to
get it by
might
be tedious
and ineffective;
mere
compulsion
and-a concession
of anonymity
in this context would
be meaningless.
Thus where alternative
methods
of
impracticable
getting
needed
information
are
enough,
it is expedient
fbr government
to promise
to cloak the informat,ion
in some special
degree
of
truthful
and
secrecy
in
exchange
for
ready
disclosure."'
part
as
The court
follows:
interrelated
the
respective
interests
in
"A strong
policy
of comity
between
state
and
courts
to
federal
sovereignties
impels
federal
this
can
be
where
privileges
recognize
state
cost
to
federal
at
no
substantial
accomplished
Cf. Apicella
v.
substantive
and'procedural
policy.
McNeil Laboratories,
Inc. (E.D.N.Y.
1975) 66 F.R.D.
recognize
that
the
In
/a.
this
connection
we
benefit
of a state's
promise
of protection
from
attenuated
when
those
who
divulgence
is greatly
not
in
communicate
or
must
choose
whether
to
local
privilege
know
that
the
the
reliance
on
federal
authorities
may force public
revelation
at
will.
The imperative
need of the states and their
administer
their
own
subdivisions
to efficiently
fiscal
operations
militate
strongly
a'gainst action
that might
interfere
with
a
by a district
court
in the absence
of a showing
of
state
tax program,
12.
84-1104
need
for subpoenaed
material.
genuine
government
v. Griffin
Inc. (1976)
429 U.S. 68, 73
Cf. Tully
for challenging
(recognition
of state
procedures
state tax decisions
as reason for federal
courts
to
abstain
from granting
injunction).'?/
It is apparent,
in view of the necessary
balancing
that a categorical
of respective
interests
in each
case,
to
abstractly
wfthout
reference
answer
not
be given
may
St is not clear
Moreover,
specific
facts and circumstances.
case
analyze
a
whether
a
federal
cou'rt would
appeals
involving
a tax related
investigation
without
reference
to
the correlative
standards
of 26 United
States
Code section'
it is not immediately
apparent
why the corresponding
6103;
fn
non-taxcriteria
would
be
sfgnificant
Only
federal
Subdivision
(h)
of
that
section
related
proceedings.
pertains
to the disclosure
of federal
tax fnformation
for
Subparagraph
(4) concerns
purposes
of tax administration.
disclosure
in judicial
and administrative
proceedings:
--A
return
or
return
information
may
disclosed
in
a
Federal
.or
State
judicial.
administrative
per!afnfng
to
proceeding
,
auminisrr&tion,
but ortly-II
be
or
tax
“(A)
if
the
taxpayer
is
a
party
.to
the
or the proceeding
arose out of, or in
proceeding,
connection
with, determining
the taxpayers
civil or
or the collection
of such civil
criminal
liability,
in respect
of a6y tax imposed
under this
liability,
title;
"(B) if the t reatment
of an item reflected
on
such return
is directly
related
to the resolution
of an issue
in the proceeding;
"(Cl if
such
return
or
return
information
to a transactional
relationship
directly
relates
between
a person
who is a party to the proceeding
affects
the
directly
and
the
taxpayer
which
the
proceeding;
or
resolution
of
an
issue
in
the
pertinent
tests
to
the
particular
9.
Applying
the court ruled in favor of disclosure.
facts
of the case,
Primary
among the considerations
was the fndfcation
that the
principal
objective
of the New York nondisclosure
provf'sion
was
not to ,foster
secrecy
so as to encourage
candor
and
but to fnduce
other
taxing
cooperation
by the taxpayers,
furnish
States,
to
United
authorities,
the
including
information
upon the basis for selective
reCiprOCi.ty.
13.
84-1104
"(0)
the
extent
re.quired
by order
of a
to section
3500 of title 18, United
States
Code,
or rule
16 of the Federal
Rules
of
Criminal
Procedure,
such court being authorized
in
the
of
issuance
such
order
to
give
due
consideration
to congressional
policy
favoring
the
confidentiality
of returns
and return
information'
as set-forth
in this title.
court
to
pursuant
.
"However,
such retur.n or return
information
shall not be disclosed
as provided
in subparagraph
(A), (B), or (C) if the Secretary
determines
that
such
disclosure
would
identify
a
confidential
informant
or
seriously
impair
a civil or criminal
tax investigation."
While
we
make
no
prediction
as
to
the
future
federal
judicial
determinations
in the premises,
it is at least a
reasoned
hypothesis
that
if disclosure
for
tax
related
purposes'of
federal
tax information
is not, in the federal
view,
a significant
impairment
of the general
policy
of
Confidentiality
(see
$ 6103,
subd.
(a)),
a similar
view
hou’ld
bz
&dJ;,tr!C Vi -;h resc2:t
loctl
t3
nondisclcsure
provisions.
A
corresponding
in
variable
lies
the
state
nondisclosure
policy
which
is propounded
as the basis
for
the asserted
privilege.
It f,s a reasonable
inference
that
if such state
policy
itself
contains
an exception
for tax
related
purposes,
concomitant
federal
disclosures
for
purposes
are less likely
to be viewed as such an increased
impairment
of
general
override
a
state
policy
as
to
where
countervailing
federal
especially
such
interest,
and
sufficiently
interest
is
found
to
be
substantial
It remains
to be examined,
therefore,
the extent
supported.
to which the nondisclosure
policy of this State
provides
for
tax related
disclosures
to outside
agencies.
In our view,
such an exception
would
constitute
a strong
factor
in the
whether
or
n.0t
balance
of
state-federal
equation
the
reference
is made in the total analysis
to the provisions
of
26 United States Code section 6103.
Of the three statutes
prescribing
the nondisclosure
policy
of this state with
respect
to the county
assessor,
sections
408,
451,
and 481 which
are the subject
of this
discussion
and set_ forth
at the outset,
each
is expressly
section
subject
to
408.
exceptions
contained
in
the
Subdivision
(c) of section
408 provides
for disclosure
to
law enforcement
agencies,
the county
grand jury,
the board
inheritance
of
supervisors,
the
State
Controller,
tax
Department
of
the
referees,
staff
appraisers
of
Transportation,
the State Board of Equalization,.
and "other
administrative
bodies
of the state
duly
authorized
. . .
14.
84-1103
pursuant
to
With respect
examine
such
their
authorization
to examine
such records."
to the authority
of the Franchise
Tax Board to
records,
section
19254 provides:
"(a) The Franchise
Tax Board,
for the purpose
of
administering
its
under
this
duties
part,
including
-ascertaining
correctness
of
the
any
return;
making
a return
where
none has been made;
determjning
or
collecting
the
liability
of
any
person
in respect
of any liability
imposed by this
part (or the liability
at law or in equity of any
transferee
'in respect
of such
liability);
shall
have
power
to
the
examine
a.ny books,
papers,
records,
or other
data,
which
may be relevant
to
such purpose.
'(b) The Fr anchise
Tax Board may requfre
the
attendance
of the taxpayer
or of any ,other person
knowledge
having
in
the
premises
and
may
take
testimony
and
require
material
proof
for
its
information
and administer
oaths to carry out the
provisions
of this part.
Board
"(cl The
Franchise
Tax
issue
may
subpoenas
or subpoenas
duces tecum, which subpoenas
must be signed
by any member
of the Franchise
Tax
Board
atI,d may
be served
on any
person
for
any
purpose.
..
Thus,
the state
policy
provides
for disclosure
to another
state
tax
agency
for
tax
related
purposes.
It
is not
significant
that the state
statute
makes
no provision
for
The salient
factor
is
disclosure
to a federal
tax agency,
rather
that the state does not view its own policy
to be so
disclosure
for
that
type
of
compelling
as
to
preclude
designated
purpose
for which
disclosure
is sought
by the
federal agency.
In any
event
it is clear
that all of the four
established
factors
should
be weighed
In the balance.
In
the absence
of a compJete
recitation
of all of the material
whether
actual
or
averments
of
a
particular
case,
hypothetical,
it must be concluded
generally
that the county
assessor
may
or
not
be
required,
pursuant
to
an
may
to produce
information
contained
fn
administrative
summons,
property
tax
which
are
subject
to
the
state
records
the
balance
of
-nondisclosure
depending
upon
statutes,
state
and federal
interests
in any given
case.
respective
Such a determination
may,
of course,
be made by a federal
But where the motion
court
pursuant
to a motion
to quash.
is
the
assessor
with
neither
an
simply
denied,
leaving
nor
a
the
summons
.express
court
comply
with
order
to
determination
of an appellate
court, or where the'balance
in
15.
84-1104
-
of disclosure
is not within
the realm of dispute
and
such
motion
is
made,
no
remains
whether
the
the question
assessor
is
required,
even
without
the
issuance
of
an
express
court order pursuant
to an enforcement
action
by the
Internal
Revenue
Service,=/
to produce
such
information.
favor
Article
III,
section
3.5,
of
the
California
Constitution
provides
that an administrative
agency
has no
power
to refuse
to enforce
a statute
on the. basis
that
federal
law prohibits
the enforcement
of such statute
unless
appellate
has
made
determination
that
the
tiforcement
of 41zltstatute
is przhibited
by federal
law.ll/
Compliance
Witha
Section
3.5 does not operate
to preclude
direct
order of a lower court.
been held that
Thus, it'has
when
a
superior
court
writ
directed
to
an
issues
a
administrative
agency
to not enforce
a statute
because
it is
unconstitutional,
the administrative
agency
must
obey
that
mandate
with
resoect
to
the .individual
Detitioner
or
specific
class of petitioners
to which it pertains,
(Fenske
(1980) 103 Cal.App.3d
530,'m
v. Board of Administration
We are now concerned,
however,
with the assessor's
duty in
where
no privilege
exists
the absence
of such
an order,
under rule 501.
The
assessor
may
elect
to await
such
.an order
10.
determination
by
an
particularly
an
independent
where
interests
is
respective
assessor
as
to
the
balance.*of
practicably
infeasible.
11.
That
section
provides
in its
entirety:
including
an
"An
administrative
agency,
administrative
agency
created
by the Constitution
or an initiative
statute,
has no power:
"(a) To
declare
a statute
unenforceable,
or
refuse
to enforce
a statute,
on the basis
of it
unless
an appellate
court
being
unconstitutional
a determination
that
such
statute
is
has
made
unconstitutional;
"(b)
To
declare
a statute
unconstitutional;
"(c) To declare
a statute
unenforceable,
or to
the
basis
that
refuse
to enforce
a statute
on
federal
law
or federal
regulations
pronibit
the
appellate
statute
unless
an
enforcement
of such
Court has made a determination
that the enforcement
of such
statute
is prohibited
by federal
law or
federal
regulations.'
16.
84-1104
.
Where
no
against'
such
disclosure
is
privilege
available,
481
sections
and
would
clearly
408,
451,
conflict
with
title
26 United
States
Code. section
7602.
Article
III,
to
preclude
the
would
operate
section
3.5,
assessor
administrative
from
complying
summons
with
an
iSSUt?d
pursuant
to that federal
statute,
Since
no appellate
court
has determined
that
enforcement
of the conflicting
state restrictive
statutes
is prohibited
by federal
law.
Article
VI,
Constitution
provides:
section
2,
of
the
United
States
"This Constitution,
and the laws of the United
States
which
shall
be made
in pursuance
thereof;
or which
shalt
be made,
and
all
treaties
made,
under
the authority
of the United States,
shall be
the
supreme
law of the land;
and the Judges
in
every State shall be bound thereby,
anything
in the
Constitution
or laws of any-State
to the contrary
notwithstanding."
Similarly,
artkle
section
I,
III,
the
Cafifornia
Constitution
that
"[t]he
StOafte
of
provides
CaiifJrni;
is an inseparable
part of the UniZd
States ,cf
America,
and, the United
States
Constitution
is
the supreme
law of the land."
Thus,
the
Constitution
and
laws
of
the
United
States
are the supreme
law of,.the land, and to these every
citizen
of every
state
owes
allegiance,
whether
tn his
individual
or official
capacity.
[Ex parte Siebold
(1879)
100
U.S.
371,
392.)
The
supremacy
clause
requires
that
every state provision,
including
those enacted by ballot and
accorded
state
constitutional
Stature,
Conform
to federal
constitutional
standards.
(Mulkqy
v~ot",'i,'h","",o,':9$j~ti~;
Cal.'2d 529, 533, 542.)
Consequent
y,
and
laws of a state,
so far as they are repugnant
to the
Constitution
and laws of the United
States,
are absolutely
void.
(Chae Chan Ping v. United States
(1889) 130 U.S. 581,
605; Ex parte Siebold,
supra, at 376.1
To the extent,
there,fore, that the federal
statute,
title
26 United
States
Code
section
7602,
conflicts
with
sections
408,
451,
and 481,
it is the obligation
of the
county
assessor
to act in accordance
with the federal
law
constitutional
and
and
to
state
disregard
conflicting
Such
action
provides
no basis
for
statutory
provisions.
state
law sanction,- (In re Hampers,
supra, 651 F.Zd at 21;
In re Grand Jury Subpoena,
May, 1978 at Baltimore
(4th
Cir.
section
3.5
of
the
1979)
596 F.2d 630, 632.1
Article
III,
state
constitution,
on the contrary,
would
by its express
terms interpose
a material
condition
precedent
to compliance
court determination
‘with the supreme
law, i.e;, an appellate
\
17.
84-lIO4
_
The Constitution
which
may
require
years
to transpire.
Hence,
in
the United
States
permits
no such
inipediment.
the
section
itself
falls,
to
extent
view,
3.5
inconsistency,
upon
the bedrock
of federal
supremacy.
of
our
of
It Is recognized
that
some
state
appellate
courts
have
referred
to section
3.5
in the
context
of d federal
constitcttonal
However,
the
matter
of
federa'l
issue.121
supremacy
in connecti?G
with
executive
compliance
with
an
unconstitutional
state
statute
has not been
examined
in any
supreme
court
decision,
perhaps
due
to
the
or
appellate
relative
insignificance
of
the
issue
once
the statute
has
been
declared
unconstitutional
by
appellate
the
court
deciding
the case.
cases
in which
section
3.5
has been
In any
event,
noted
generally
concerned
a constitutional
challenge
to a
administrative
course
of
an
statute
in
the
state
Public
adjudicatory
proceeding.
(1983)
1042
Employment
Relations
Board
- PER6
properly
declined
to-decide
the question
whethkr
the
claimed
statutory
right
to use
the
internat
mail
system
is
unenforceable
hy reascn
/?f preemp?ive
federr?
nostaf
law;
(1982)
Lewis-Westco
& co.
v.
Alcoholic
8ev. Cont.
App.
Bd,
1'6
Cal.App.3d
829,
840,
n. 12 - assumed,
arguendo,
that
section
3:s would
prohibit
an adjudication
by the board
that'
Chev.
a
violated
the
federal
Sherman
Act;
state
statute
(1983)
146 Cal.App.3d-53
Motor
Div.
v. New Motor
Veh.
Bd.
could
not have granted
relief
from a statute
335 - the board
in
violation
of
procedural
due
prescribing
its
cqmpositfon
also
Dep.
Ale.
Bev. Cant,
v.
Alcoholic
Bev.
process;
see
Leek
v.
118
Cal.App.3d
720,
725;
Cont.
App.
Bd.
(1981)
Washington
Unified
Sch.
Dist.
(,1981) 124 Cal.App.3d
c53.1
section
3.5 does
not affect
the
powers
Of course,
of the California
courts
to consider
constitutional
Claims.
(Dash,
Inc. v. Alcoholic
Bev. Cont.
App
Bd. (9th
Cir.
1982)
It
has
been
uiiversally
hefd
that
683
F.2d
1229,
1234
)
while
a constitutionH1
issue
as to the validity
of a state
not
be
cognizable
under
SectiOn
3.5
in an
statute
may
it may
either
be raised
for the
administrative
proceeding,
first
time on judicial
Owners'
Assn.
v. City
In Valdes-v.
court
noxsmrnarm
12.
review
(Westminster
Mobile
Home Park
of Westminster
(19851
167 Cal.AppJd
Cory
(1983)
139 Cal.App.3d
773,
780,
the
as a supplemental
basis
for its
determination
that
an action
was
properly
initiated
in the
that
the
named
respondents
were
under
a
appellate
court,
3.5
to comply
with
a
constituduty
imposed
by
section
appellate.
court
.had
until
an
statute
contested
tionally
declared
it invalid.
18.
84-1104
.__. _-.__ _._ . __..-__.
similar
circumstances,
disclosure
by
of
federal
tax
information
would
the
be
under
similar
circumstances,
disclosure
by
4)
to another
state
taxing
agency
would
be, permitted
law;
the
by
federal
permitted;
state
state
under
3)
government
Si
disclosed
is
investigative
the
taxpayer
or
party
proceeding.
a
whose
records
is
directly
are
sought
interested
to be
in
the
However,
the
county
assessor
is
prohibited
from
such
information
where
the
state
interest,
in
confidentiality
outweighs
federal
interest
the
disclosure.
Considerations
which
would
weigh
in favor
i?
nondisclosure
would
include,
but
are
not
limited
to,
the
following:
producing
from
other
1)
another
2)
competent
the information
source;
sought
the information
sought
evidence
acquired
or
may
be
readily
would
be
available;
acquired
of
Cvfnu’ative
the disclosure
of information
not otherwise
3)
matter
of
publ-ic
record
or
know?edge
would
constitute
substantial
invasion
of privacy
or impairment
of competitive
.*
advantage:
disclosure
'of
information
4)
substantial
adverse
effect
upon
voluntary
revenue
reporting
requirements:
51
confidential
progress.
disclosure
informant
or
of
information
impair
a state
a
a
would
have
a
compliance
with
would
identify
investigation
a
in
Such
information
must
be produced
jn any
case
in
compliance
with
a specific
court
order.
It is, of course,
the responsibility
of the assessor
to proffer
Sn connection
with
any
such
judicial
proceeding
any
state
interest
in
interest
in
nondisclosure
which
may
outweigh
the
federal
disclosure.
*
*
*
20.
*
84-1104