Bill to Crack Down on Criminal Tax Evasion Headed to Governor’s Desk

By Staff Reports

(Victor Valley)– A bill that will codify a partnership made up of the California State Board of Equalization (BOE), Franchise Tax Board (FTB), Employment Development Department (EDD), and Department of Justice (DOJ) is headed to the Governor’s desk. Legislation unanimously supported by the BOE (Assembly Bill 576, V. Manuel Pérez) would strategically target sales, income, and employment tax evasion using existing resources from the partners’ respective departments.

“The underground economy costs California billions of dollars every year and makes it even more difficult for legitimate businesses to operate in our state,” said Board of Equalization Member George Runner. “This strategic bi-partisan effort will better coordinate state efforts to combat criminals who by avoiding their tax obligations effectively impose a tax increase on the rest of California.”

Criminal tax evasion in California’s underground economy deprives the state of approximately $9 billion annually through a spectrum of illegal activities such as selling counterfeit goods like “knock off” designer items, exploiting victims of human trafficking, and smuggling tobacco products and other goods into California without paying the required taxes. A report issued by the UCLA Labor Center this year pegs this loss at 11 percent of the total tax revenues owed to the state.

AB 576 creates the Revenue Recovery and Collaborative Enforcement (RRACE) Team to formalize data sharing and communication among the BOE, FTB, EDD, and DOJ. The legislation enables these agencies to strategically collaborate and criminally prosecute those who evade state sales, use, excise, income, and employment taxes, with no added cost to state taxpayers. The team’s efforts will benefit Californians through its likely recovery of tax dollars which are vital to providing state services, such as public schools, highways, public safety, and health care programs.

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