California lawmakers are considering Senate Bill 799 (SB 799), introduced by Sen. Ben Allen, which proposes amending the California False Claims Act (CFCA) to encompass tax-related claims under the Revenue and Taxation Code.
The CFCA currently encourages employees, contractors, or agents to report false or fraudulent claims made to the state or political subdivisions, offering protection against retaliation. Under the CFCA, civil actions may be initiated by the attorney general, local prosecuting authorities, or qui tam plaintiffs on behalf of the state or political subdivisions. The statute also permits treble damages and civil penalties.
At present, tax claims are excluded from the scope of the CFCA. SB 799 aims to amend the law by explicitly allowing tax-related false claims actions under the Revenue and Taxation Code, subject to the following conditions:
1. The damages pleaded in the action exceed $200,000.
2. The taxable income, gross receipts, or total sales of the individual or entity against whom the action is brought exceed $500,000 per taxable year.
Further, SB 799 would authorize the attorney general and prosecuting authorities to access confidential tax-related records necessary to investigate or prosecute suspected violations. This information would remain confidential, and unauthorized disclosure would be subject to existing legal penalties. The bill also seeks to broaden the definition of “prosecuting authority” to include counsel retained by a political...
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