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Business Taxes Law Guide—Revision 2024

Sales And Use Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 8. Administration

Article 1. Administration

Section 7056


7056. Divulging of information forbidden. (a) (1) Excepting the information set forth on permits issued under Article 2 (commencing with Section 6066) of Chapter 2, the information set forth on certificates of registration issued pursuant to Section 6226, and the terms of any settlement made pursuant to Section 19442 (as amended by Chapter 138 of the Statutes of 1994), it is unlawful for the board, any person having an administrative duty under this part or any person who obtains access to information contained in, or derived from, sales or transactions and use tax records of the board pursuant to subdivision (b), to make known in any manner whatever the business affairs, operations, or any other information pertaining to any retailer or any other person required to report to the board or pay a tax pursuant to this part, or the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any return, or to permit any return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person.

(2) It is also unlawful for any person, other than an officer or employee of a county, city and county, city, or district, who obtains access to information contained in, or derived from, sales or transactions and use tax records of the board pursuant to subdivision (b), to retain that information after that person's contract with the county, city and county, city, or district has expired.

(3) Notwithstanding paragraphs (1) and (2), the Governor may, by general or special order, authorize examination by other state officers, by tax officers of another state, by the federal government, if a reciprocal arrangement exists, by the tax officials of Mexico, if a reciprocal agreement exists, or by any other person of the records maintained by the board under this part. The information so obtained pursuant to the order of the Governor shall not be made public except to the extent and in the manner that the order may authorize that it be made public.

(b) When requested by resolution of the legislative body of any county, city and county, city, or district, the board shall permit any duly authorized officer or employee of the county, city and county, city, or district, or other person designated by that resolution, to examine all of the sales or transactions and use tax records of the board pertaining to the ascertainment of those sales or transactions and use taxes to be collected for the county, city and county, city, or district by the board pursuant to contract entered into between the board and the county, city and county, city, or district under the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)). Except as otherwise provided herein, this subdivision shall not be construed to allow any officer, employee, or other person authorized or designated by a county, city and county, city, or district to examine any sales or transactions and use tax records of any taxpayer. The costs that are incurred by the board in complying with a request made pursuant to this subdivision shall be deducted by the board from those revenues collected by the board on behalf of the county, city and county, city, or district making the request.

(1) The resolution shall certify that any person designated by the resolution, other than an officer or employee, meets all of the following conditions:

(A) Has an existing contract with the county, city and county, city, or district to examine those sales and use tax records.

(B) Is required by that contract to disclose information contained in, or derived from, those sales or transactions and use tax records only to an officer or employee of the county, city and county, city, or district who is authorized by the resolution to examine the information.

(C) Is prohibited by that contract from performing consulting services for a retailer during the term of that contract.

(D) Is prohibited by that contract from retaining the information contained in, or derived from, those sales or transactions and use tax records, after that contract has expired.

(2) Information obtained by examination of board records as permitted in this subdivision shall be used only for purposes related to the collection of local sales or transactions and use taxes by the board pursuant to the contract, or for purposes related to other governmental functions of the county, city and county, city, or district set forth in the resolution.

(c) If the board believes that any information obtained pursuant to subdivision (b) has been disclosed to any person not authorized or designated by the resolution of the legislative body of the county, city and county, city, or district, or has been used for purposes not permitted by subdivision (b), then notwithstanding subdivision (b), the board may impose conditions on access to its sales and use tax records which the board considers reasonable, in order to protect the confidentiality of those records.

(d) Predecessors, successors, receivers, trustees, executors, administrators, assignees, and guarantors, if directly interested, may be given information as to the items included in the measure and amounts of any unpaid tax or amounts of tax required to be collected, interest, and penalties.

(e) For purposes of this section, "reciprocal agreement" means a formal agreement to exchange information between national taxing officials of Mexico and taxing authorities of the State Board of Equalization, the Franchise Tax Board, and the Employment Development Department. Furthermore, the reciprocal agreement shall be limited to the exchange of information which is essential for tax administration purposes only. Taxing authorities of the State of California shall be granted tax information only on California residents. Taxing authorities of Mexico shall be granted tax information only on Mexican nationals.

History—Stats. 1951, p. 2390, operative July 1, 1951, authorized Governor to permit examination of board's records
in addition to returns; added provision limiting publicity of information obtained pursuant to Governor's order; and rearranged wording for clarity. Stats. 1957, p. 2802, in effect July 4, 1957, added second paragraph, added "or the resolution of the local legislative body" and "or resolution" to third paragraph, and divided section into paragraphs. Stats. 1963, p. 2611, in effect September 20, 1963, added last sentence in paragraph one; changed wording in paragraph two; and added last sentence in paragraph two in place of former paragraph three. Stats. 1965, p. 2465, in effect September 17, 1965, added all before "it is unlawful for the board" in the first paragraph, and deleted "information obtained by an investigation of records and equipment of any retailer or any other person visited or examined in the discharge of official duty" and substituted "any other information pertaining to any retailer or any other person required to pay to the board or pay a tax pursuant to this part." Stats. 1969, p. 459, in effect June 12, 1969, added the third paragraph. Stats. 1985, Ch. 211, effective July 12, 1985, added subdivision designations (a) through (e), deleted "of this part" after "Chapter 2" and added "any person … subdivision (b) or (c)" in the first paragraph after "board" in subdivision (a) (1), added subdivision (a) (2), added paragraph designation and language "(3) Notwithstanding … and
(2)" in subdivision (a), added subdivision "(b)", designation, added subdivision (b) (1), added paragraph "(2)" before "Information", and added "in this subdivision", and "or for … resolution" in subdivision (b) (2), added subdivision "c" designation, substituted "the" for "such", deleted "herein" before "permitted" and added "in this subdivision" after "permitted," and, added subdivision (e) designation. Stats. 1986, Ch. 308, effective January 1, 1987, added "Predecessors" to (e). Stats. 1991, Ch. 236, in effect July 29, 1991, added "the information set … to Section 7093," in paragraph (1) of subdivision (a). Stats. 1991, Ch. 479, in effect October 2, 1991, deleted "or (c)" after "subdivision" in paragraph (1) of subdivision (a) and twice in subdivision (c); deleted "or" after "city or county" twice in paragraph 2 of subdivision (a), three times in subdivision (b), in subparagraphs (A) and (B) of paragraph (1) of subdivision (b), and in paragraph (2) of subdivision (b); added "or district," after "city," in paragraph (2) of subdivision (a), and in subdivision (b); added "or transactions" after "sales" in paragraph (2) of subdivision (a), twice in subdivision (b), in subparagraphs (B) and (D) of paragraph (1) of subdivision (b), and in paragraph (2) of subdivision (b); added ", or district" after "city" in paragraph (2) of subdivision (a), twice in subdivision (b), in subparagraphs (A) and (B) of paragraph (1) of subdivision (b), and in paragraph (2) of subdivision (b); added "or district" after "city," in subdivision (b), and in subparagraph (A) of paragraph (1) of subdivision (b); added "or the Transactions … Section 7251))" after "Section 7200))" in subdivision (b); deleted former subdivision (c) which provided, "When requested by resolution of the legislative body of a district, the board shall permit any duly authorized officer or employee of the district to examine the records of the board pertaining to transactions and use taxes collected for the district by the board pursuant to contract entered into between the board and the district. Information obtained by examination of the board records as permitted in this subdivision shall be used only for purposes related to the collection of district transactions and use taxes by the board pursuant to the contract."; and relettered former subdivisions (d) and (e) as subdivisions (c) and (d). Stats. 1993, Ch. 891, in effect January 1, 1994, added "by the tax … agreement exists" after "exists" in the first sentence of paragraph (3) of subdivision (a), and added subdivision (e). Stats. 1997, Ch. 702 (SB 110), in effect January 1, 1998, substituted "19442 (as … of 1994)" for "7093" after "pursuant to Section", and added "or transactions" after "from, sales" in paragraph (1) of subdivision (a); added "the ascertainment of those" after "pertaining to" and added "to be" after "use taxes" in the first sentence, and added the second and third sentences in subdivision (b).

Information on tax returns not subject to discovery.—It is the clear legislative intent that disclosures made in tax returns shall not be indiscriminately exposed to public scrutiny. The purpose is to facilitate tax enforcement by encouraging full and truthful declarations on returns. A taxpayer is therefore privileged to refuse to furnish information concerning specific entries on his return when such information is sought by means of an interrogatory. Sav-On Drugs, Inc. v. Superior Court (1975) 15 Cal.3d 1.

Public Records Act.—The Board cannot avoid a Public Records Act request for disclosure of documents merely because the documents contain confidential information that may identify a taxpayer if such information can be excised without destroying the utility of the documents. State Board of Equalization v. Superior Court (Associated Sales Tax Consultants) (1992) 10 Cal.App. 4th 1177.