Using the California Public Records Act to obtain tax audit files.

• Author: Coffill, Eric J.

Introduction

One of the most important weapons in a tax representative's arsenal is the right to inspect and receive a copy of a client's file that has been compiled by the California Franchise Tax Board (in respect of the income and franchise tax) or the California State Board of Equalization (in respect of the business tax) during an audit of the taxpayer. These files provide valuable insight into how the audit was conducted, and reveal information not normally communicated to the taxpayer during the usual course of the audit.

This article reviews California law regarding the disclosure of documents and explores how taxpayers and their representatives may use these laws to obtain access to a taxpayer's files.(l) Although the laws concerning public access to records apply equally to all California state tax agencies, this article focuses upon obtaining taxpayer records from the FTB under the California Public Records Act (Gov't Code [section] 6250, et seq.). The Information Practices Act (Civ. Code [sections] 1798, et seq.) is also briefly mentioned. Finally, the article explores possible responses by the FTB to document requests, as well as a taxpayer's recourse where requested documents are improperly withheld.

Information Practices Act

The Information Practices Act (IPA) is one vehicle by which a taxpayer may obtain documents. The IPA permits a person to inspect or obtain copies of any personal information, with certain exceptions, maintained by a state agency.(2) The IPA defines "personal information" as "any information that is maintained by an agency that identifies or describes an individual,"(3) which is elsewhere defined to mean "a natural person."(4) Thus, the IPA is applicable only in those tax cases involving individual taxpayers rather than corporate taxpayers.

California Public Records Act

The principal means by which a corporate taxpayer may receive access to its files is through the California Public Records Act (CPRA). The California Legislature enacted the CPRA to balance the competing interests of an individual's right to privacy with every person's fundamental right to access information "concerning the conduct of the people's business."(5) The enactment of the CPRA reflected a "legislative impatience with secrecy in government."(6) As the California Supreme Court declared:

Implicit in the democratic process is the notion that

government should be accountable for its actions. In order

to verify accountability, individuals

must have access to

government files. Such

access permits checks

against the arbitrary

exercise of official power

and secrecy in the political

process.(7)

Like its federal counterpart, the Freedom of Information Act (FOIA)(8) upon which it is modeled, the CPRA "expresses a policy generally favoring disclosure of public records."(9) Because of the similarities between the provisions of FOIA and the CPRA, California courts may look to decisions interpreting FOIA in interpreting the CPRA.(l0)

Provisions of the CPRA

The CPRA states that "[p]ublic records are open to inspection at all times during the office hours of the state or local agency and every person has a right to inspect any public record," with certain exceptions.(11) "Public records" are defined to include any writing prepared or maintained by a state or local agency that relates "to the conduct of the public's business."(12) In addition to the right to inspect public records, the CPRA requires state agencies to make available copies of public records upon request.(13)

The CPRA provides little guidance regarding the form a request must take, and requires only that the request "reasonably describe an identifiable record."(14) Clearly, a record request does not have to contain "a complete description [of a record] down to the last detail of [its] title and file number."(15) Rather, a request must sufficiently describe a record in a manner to allow for the agency to locate the record with "reasonable effort." (16)

Upon receiving a request for copies of public records, the state agency has ten days in which to determine whether it will comply with the request and must immediately notify the person making the request of its decision.(17) If the agency decides to comply with the taxpayer's request, the requested copies must be made "promptly available" to the taxpayer.(18)

Exception to Disclosure

The FTB frequently refuses to disclose to a taxpayer a record or file that is requested under the CPRA. In such instances, it must justify its denial by "demonstrating that the record in question is exempt under express provisions of [the CPRA] or that on the facts of the particular case the public interest served by not making the record public clearly outweighs the public interest served by disclosure of the record."(19) The CPRA also allows a state agency to "edit" (or redact) requested records before disclosing them. Since an agency is allowed to edit a requested record when necessary, the fact that a public record may contain some confidential information does not justify withholding the entire document.(20) The CPRA expressly provides that "[a]ny reasonably segregable portion of a record shall be provided to any person requesting such record after the deletion of the portions which are exempt by law."(21)

The FTB has promulgated its own disclosure policies based upon a compilation of the statutory exceptions to disclosure which are discussed below, and a taxpayer's request for a copy of its...