Franchise Tax Board v. Firestone Tire & Rubber Co.

Opinion

KINGSLEY, Acting P. J.

The case now before us is act II of the dispute between Firestone Tire & Rubber Company (Firestone) and the Franchise Tax Board (Board) over the Board’s attempt to audit Firestone’s tax returns for the years 1964 through 1976. It is admitted that the Board has statutory authority to make such an audit and to issue a notice of deficiency or of overpayment based on such audit. The dispute arises because the Board claims that Firestone is, to say the least, uncooperative in the audit. In

Franchise Tax Board

v.

Firestone Tire & Rubber Co.

(1978) 87 Cal.App.3d 878 [151 Cal.Rptr. 460], it was held that the Board was entitled to a “prohibitory” injunction to restrain Firestone from interfering with the audit. That decision has long since become the law of the case. Pursuant to that holding, the Board sought from the superior court, and secured, the injunction now before us. We affirm the grant of the injunction.

Firestone attacks the injunction on two grounds: (1) that, although cast in prohibitory terms, it is in fact mandatory and thus not meeting the requirement of the earlier case; and (2) that the injunction is overly broad in permitting the Board to photostat the documents which it examines in the course of the audit. We reject both contentions.

I

We have read the injunction herein attacked. Contrary to Firestone’s argument, we can find in it nothing that requires any affirmative action by

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Firestone. It is merely enjoined from permitting its employees and agents to drag their heels or to refuse the Board’s auditors access to documents essential to the audit. The injunction itself contains provision for a court hearing in case there is a dispute over the propriety of the Board examining any particular document.

II

Firestone and the Board both attack the provision in the injunction requiring Firestone to permit the Board’s auditors to photostat documents examined by them. A series of federal cases involving the powers of the comparable federal agencies, have supported such a requirement.