The state-law privilege against discovery of tax returns is not absolute.  It can be overcome by showing the privilege was waived, the gravamen of the lawsuit is inconsistent with the privilege, or another public policy outweighs the policy favoring confidentiality of tax returns.  Here, the third exception was satisfied.  Plaintiff sought the tax returns during debtor examination proceedings to enforce a $500,000+ judgment against a defendant who had allegedly engaged in fraudulent transfers, who didn’t produce normal accounting documents, and who was otherwise obstructive of efforts to collect on the judgment.  The defendant also waived any objection to service of a subpoena requiring him to bring documents to his debtor’s examination.  A judgment debtor can be required to produce documents by a simple notice to produce as in pretrial discovery, and in any case, this defendant showed up for the debtor’s exam and did not object on the ground of improper service, so he waived that procedural objection.

California Court of Appeal, First District, Division 2 (Richman, J.); May 2, 2016; 2016 WL 1757282