Proving Retaliation Case For Reporting Tax Fraud in California

proving retaliation case for reporting tax fraud in CaliforniaA accountant, auditor or any other finance professional needs to know a few critical things about proving retaliation case for reporting tax fraud. In those types of cases, you may want to obtain through discovery copies of the relevant tax returns to show fraud. However, the company can avoid producing these tax returns by claiming taxpayer privilege. This privilege precludes the forced disclosure of tax returns and of the information contained in those returns. (See
Schnabel v. Superior Court (1993) 5 Cal.4th 704, 719-721; Sav-On Drugs, Inc. v. Superior Court (1975) 15 Cal.3d 1, 6-7; Brown v. Superior Court (1977) 71 Cal.App.3d 141.) However this does not prevent a claimant from speaking up when he discovers that employer is filing incorrect or fraudulent returns. This privilege also doesn’t preclude a wrongful termination claim if the employee is discharged for this type of activity.

Proving this type of retaliation case doesn’t require that the employer be forced to produce such tax returns or their content. The reporting employee’s ability to prove his retaliation case only turns on whether he was discharged for communicating his reasonable belief that the employer was not properly reporting its tax obligation. Haney v. Aramark Uniform Services, Inc. (2004) 121 Cal.App.4th 623, 641.) The elements of the case can be proved without violating the implied taxpayer privilege. Although it would of course strengthen his case, the employee doesn’t have to present the contents of tax returns in order to prove this retaliation case. After all, the crux of this type of case is not in whether the tax impropriety took place, but whether the employee was retaliated or fired for reporting this issue in good faith.

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