California – New Law to Fight Criminal Tax Evasion

SALT Report 3086 – On October 7, 2013, California Governor Jerry Brown signed legislation that will help the State fight criminal tax evasion that results from underground economies. Assembly Bill 576 creates the Revenue Recovery and Collaborative Enforcement Team, which will be comprised of representatives from the Franchise Tax Board, the Department of Justice, the State Board of Equalization, and the Employment Development Department.

The partnership will enable these agencies to share information that can be used to prosecute those who underpay or do not pay their sales, use, or income taxes, which, according to the California Economic Development Department costs the State approximately $6.5 billion annually.

To facilitate this, AB 576 will 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 that will receive and analyze data, share complaints, and research leads from each Department or advisor agency, and
  • Provide other state agencies with investigative leads where collaboration opportunities exist for felony-level criminal investigations

In addition, the Team must submit a report to the Legislature by December 1, 2017, that includes:

  • The number of leads or complaints received by the team
  • The number of cases investigated or prosecuted through civil action or criminal prosecution as a result of team collaboration, and
  • Recommendations for modifying, eliminating, or continuing the operation of the Revenue Recovery and Collaborative Enforcement Team

The provisions in Assembly Bill 576 are effective January 1, 2014.

For Further Information

California State Legislature – Assembly Bill 576, Laws 2013

California State Board of Equalization – News Release

SALT Report 2973 – Bill to Crack Down on Criminal Tax Evasion Sent to Governor