A judgment debtor (he essentially acted as an attorney even before passing the bar exam, and thought nothing of preventing a conflict of interest with his client) was ordered to produce his tax returns as to a half a million dollar judgment against him. The Court of Appeal stated the purpose of a judgment debtor examination is to leave no stone unturned, and the debtor must produce his tax returns. (Li v. Yan (2016) 247 Cal. App. 4th 56.) http://www.courts.ca.gov/opinions/documents/A144994.DOC
The Court also discussed the background as to tax returns stating: “The law was collected in Weingarten v. Superior Court (2002) 102 Cal.App.4th 268, 274 (Weingarten): “There is no recognized federal or state constitutional right to maintain the privacy of tax returns. (See Couch v. United States (1973) 409 U.S. 322, 336-337; Deary v. Superior Court (2001) 87 Cal. App. 4th 1072, 1075, fn. 2, 1077-1078.) California courts, however, have interpreted state taxation statutes as creating a statutory privilege against disclosing tax returns. (Schnabel v. Superior Court (1993) 5 Cal.4th 704, 718-721 (Schnabel); Webb v. Standard Oil Co. (1957) 49 Cal.2d 509, 513.) The purpose of the privilege is to encourage voluntary filing of tax returns and truthful reporting of income, and thus to facilitate tax collection. (Webb v. Standard Oil Co., supra, 49 Cal.2d at p. 513.)”
However, as Schnabel held, and Weingarten confirmed, the “privilege is not absolute.” (Schnabel, supra, 5 Cal.4th at p. 721.) Rather, the privilege “will not be upheld” in three situations: when (1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved. This last exception is narrow and “applies only ‘when warranted by a legislatively declared public policy.’ ” (Weingarten, supra, 102 Cal.App.4th at p. 274.)
Finding the third situation applicable there (where defendant had been held liable for punitive damages)