Tax-Return Privilege Law and Legal Definition

Tax-return privilege is a privilege to refuse to divulge the contents of a tax return or certain related documents. This privilege is to facilitate tax enforcement by encouraging a taxpayer to make full and truthful declarations in his/her return, without fear that his/her statements will be revealed or used against him for other purposes.[ Webb v. Standard Oil (1957),49 Cal.2d 509 513]

There is no recognized 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 disclosing tax returns. Therefore this privilege is sometimes described as "judicially created.”