California – Revenue Recovery and Collaborative Enforcement Team Act

SALT Report 2951 – The California Legislature introduced a Bill that if passed, would create a multi-agency program called the Revenue Recovery and Collaborative Enforcement Team.  According to the BOE, an estimated $9,000,000,000 in corporate, personal, and sales and use taxes go uncollected in California each year, largely because of unreported and underreported economic activity.

Therefore, the Team would be responsible for developing a program designed to combat the criminal tax evasion associated with the underground economy.  Specifically, this bill would:

  • Create a Team that consists of member of the Employment Development Department, Franchise Tax Board, Department of Revenue, and State Board of Equalization,
  • Require the Team to develop a plan for a central intake process and organizational structure to document, review, and evaluate data and complaints,
  • Evaluate the benefits of a processing center to receive and analyze data, share complaints, and research leads from the input of each impacted agency, and
  • Provide participating and nonparticipating agencies with investigative leads where collaboration opportunities exist for felony-level criminal investigations, including, referring leads to agencies with appropriate enforcement jurisdiction

Further, it is the intent of the Legislature to use the data collected to criminally and civilly prosecute anyone who operates in the underground economy.  Under existing Federal law any person who fails to collect, truthfully account for, and pay taxes shall, in addition to other penalties provided by law, is guilty of a felony and, will be fined up to $10,000, imprisoned for up to five years, or both.  This is in addition to any other penalties that may be statutorily imposed as well as the costs associated with prosecution.

For Further Information

California State Legislature – CA AB 576