Closely Held Company Can’t Provide Shelter from Tax Audit
Following allegations of corporate tax fraud, the Department of Revenue sought an audit of a construction company. The closely held company’s principal officer and company shareholder served as president, secretary, treasurer and chairman of the board, while his wife was vice-president. He moved to suppress the request for the company's bank records citing personal privacy interests. This raised an issue of first impression: whether a shareholder or officer of a closely held company has a personal privacy interest in the corporation's financial information. The court held neither has a personal privacy interest in the corporation's bank records. Noting among other harbingers, taxpayers have been on notice since 1935 that their financial records could be subject to a random audit, the court concluded the officer/shareholder had no expectation of privacy.