There could be a new collaborative team between government agencies to catch tax evaders, if Gov. Jerry Brown signs a bill that was sent to his desk on Sept. 25.
Assembly Bill 576, authored by Assemblymember V. Manuel Pérez, would call for a Revenue Recovery and Collaborative Enforcement Team pilot program. The team would be composed of the Franchise Tax Board, the Department of Justice (DOJ), the State Board of Equalization (BOE) and the Employment Development Department.
The team would be able to share data and intelligence among the participating state agencies and would focus on criminal and civil prosecution of those in the underground economy. The bill would also allow the team to determine if there should be a separate processing center to analyze data, share complains and research leads would be beneficial.
"While the impact of the underground economy on the state is extensive, the state lacks a coordinated effort among its various agencies to tackle the underground economy," Pérez said in a statement.
"A collaborative, strategic, targeted and focused effort to combat the underground economy would create a synergy among the various enforcement agencies, increasing the state’s effectiveness in recapturing revenue lost to businesses operating illegally in the State of California," he continued.
Also included in an advisory role by forwarding tips to the team would be the California Health and Human Services Agency, the Department of Consumer Affairs, the Department of Industrial Relations, the Department of Insurance and the Department of Motor Vehicles.
Currently, the Labor Enforcement Task Force (LETF) and the Joint Enforcement Strike Force (JESF) are responsible for enforcing tax laws. However, according to Pérez in AB 576, these programs focus more on labor violations than criminal tax evasion.
According to the BOE, approximately $9 billion in corporate, personal, sales and use taxes go uncollected in California every year, mostly due to unreported and underreported economic activity.
The team will be funded by existing money in the Department of Justice, the Franchise Tax Board, the State Board of Equalization and the Employment Development Department. They will not be able to ask for more funding until after it makes a report to the Legislature by Dec. 1, 2017 on the cases investigated and any changes needed to the law.
According to the Senate Floor Analysis from the Senate Rules Committee, "Proponents argue that, by unlawfully reducing their expenses, these businesses undercut legitimate businesses that in good faith comply with required laws&hellip proponents believe that this bill will help coordinate governmental efforts in the fight against the underground economy."
More than 30 organizations have declared their support for this bill, including the BOE, the California Chamber of Commerce, the League of California Cities and the University of California, Los Angeles, as well as numerous trade organizations.
