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AB-1296 Tax Recovery in the Underground Economy Criminal Enforcement Program.(2019-2020)

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Date Published: 04/24/2019 09:00 PM
AB1296:v98#DOCUMENT

Amended  IN  Assembly  April 24, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 1296


Introduced by Assembly Member Gonzalez

February 22, 2019


An act to add Part 12.3 (commencing with Section 15925) to Division 3 of Title 2 of, and to repeal Section 15929 of, the Government Code, relating to underground economy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1296, as amended, Gonzalez. Tax Recovery in the Underground Economy Criminal Enforcement Program.
Existing law, until January 1, 2019, established the Revenue Recovery and Collaborative Enforcement Team as a pilot program consisting of a team of agencies charged with specified duties that included developing a plan to document, review, and evaluate data and complaints, evaluating the benefits of a processing center to receive and analyze data, share complaints, and research leads, and providing agencies with investigative leads to combat criminal tax evasion associated with the underground economy.
This bill would establish the Tax Recovery in the Underground Economy Criminal Enforcement Program in the Department of Justice to combat underground economic activities through a multiagency collaboration to, among other things, pool resources, collaborate and share data, prosecute violations, and recover state revenue lost to the underground economy, as specified. The bill would require Tax Recovery in the Underground Economy Criminal Enforcement Program teams to be located in Sacramento, Los Angeles, San Diego, the San Francisco Bay area, and Fresno. The bill would establish a Tax Recovery in the Underground Economy Criminal Enforcement Program executive board and Tax Recovery in the Underground Economy Criminal Enforcement Program committees to ensure multiagency collaboration. The bill would require that information exchanged pursuant to these provisions retain its confidential status, as specified. The bill would require the Department of Justice, in consultation with the executive board of the program, to submit to the Legislature a report on March 31, 2020, or before July 1, 2021, and annually thereafter, that includes specific information relating to the program. The bill would require the Legislative Analyst’s Office to, on or before July 1, 2022, submit a report to the Legislature that includes an analysis of the effectiveness of the program, as specified, along with recommendations to improve the program.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) The underground economy has significant negative effects on Californians. Many workers go without basic rights and protections, law-abiding businesses are put at a competitive disadvantage, consumer protections are threatened, and tax revenues are lost that could otherwise fund programs in education, law enforcement, infrastructure, or fund tax reductions for the majority of Californians who play by the rules.
(2) According to a 2013 report by the University of California, Los Angeles (UCLA) Labor Center prepared for the State Board of Equalization (now the California Department of Tax and Fee Administration), the underground economy has more than doubled between 1970 and 2000. The state’s underground economy is estimated at $60 to $140 billion annually. An estimated $8.5 billion in corporate, personal, and sales and use taxes go uncollected each year.
(3) It is the intent of the Legislature in enacting this act to support the goals of the Tax Recovery in the Underground Economy Criminal Enforcement Program, which include all of the following:
(A) To protect workers, law-abiding businesses, and consumers by bringing justice to unscrupulous businesses operating in the state’s underground economy.
(B) To recover significant lost revenues to the state by prosecuting egregious, felony-level tax and fee evasion crimes in the state’s underground economy.
(C) To facilitate information sharing among participating agencies to assess leads, conduct investigations, and prosecute felony-level tax and fee evasion crimes in the underground economy.
(D) To support multiagency investigative teams in every region of the state.

SEC. 2.

 Part 12.3 (commencing with Section 15925) is added to Division 3 of Title 2 of the Government Code, to read:

PART 12.3. Tax Recovery in the Underground Economy Criminal Enforcement Act

15925.
 This part shall be known, and may be cited, as the Tax Recovery in the Underground Economy Criminal Enforcement Act.

15926.
 (a) The Tax Recovery in the Underground Economy Criminal Enforcement Program is hereby established in the Department of Justice to combat underground economic activities through a multiagency collaboration to do, to the extent practicable, the following:
(1) Pool resources and leverage enforcement efforts.
(2) Collaborate and share data with state and federal partners.
(3) Efficiently prosecute violations covering jurisdictions of multiple agencies to address the severity of the crimes and impose appropriate penalties on convicted violators.
(4) Recover state revenue lost to the underground economy.
(b) The Tax Recovery in the Underground Economy Criminal Enforcement Program shall include an executive board to ensure efficient and effective multiagency collaboration in furtherance of this act. The executive board shall consist of the following voting members:
(1) A representative from the Division of Law Enforcement at the Department of Justice.
(2) A representative from the Criminal Law Division at the Department of Justice.
(3) A representative from the Investigations and Special Operations Bureau at the California Department of Tax and Fee Administration.
(4) A representative from the Criminal Investigation Bureau at the Franchise Tax Board.
(5) A representative from the Investigation Division at the Employment Development Department.
(c) The Tax Recovery in the Underground Economy Criminal Enforcement Program may, as the executive board deems appropriate, invite the following state agencies to join the executive board in an advisory capacity:
(1) The California Health and Human Services Agency.
(2) The Department of Consumer Affairs.
(3) The Department of Industrial Relations.
(4) The Department of Insurance.
(5) The Department of Motor Vehicles.
(6) The Department of the California Highway Patrol.
(7) The Department of Alcoholic Beverage Control.
(8) The Bureau of Cannabis Control.
(9) The Contractors’ State License Board.
(d) The Tax Recovery in the Underground Economy Criminal Enforcement Program may, as the executive board deems appropriate, invite other state and federal agencies to join the executive board in an advisory capacity subject to paragraph (2) of subdivision (b) of Section 15928.
(e) The addition of an advisory agency to the Tax Recovery in the Underground Economy Criminal Enforcement Program executive board shall be by written agreement between the voting members of the executive board and the agency joining the executive board. The written agreement shall govern the participation of the agency joining the executive board. The written agreement shall include provisions ensuring that confidential information is shared only when necessary to assess leads, conduct an investigation, or prosecute a case.

15927.
 (a) The Tax Recovery in the Underground Economy Criminal Enforcement Program shall include investigative teams located in Sacramento, Los Angeles, San Diego, the San Francisco Bay area, and Fresno under the direct oversight of the Department of Justice. The investigative teams shall include, but are not limited to, duly authorized representatives of the agencies listed in subdivision (b) of Section 15926. The addition of an agency to an investigative team shall be by written agreement between the Tax Recovery in the Underground Economy Criminal Enforcement Program’s executive board and the agency joining the investigative team. The written agreement shall govern the participation of the agency joining the investigative team.
(b) Each investigative team shall have a committee established by the Tax Recovery in the Underground Economy Criminal Enforcement Program’s executive board to ensure efficient and effective multi agency collaboration in each region in furtherance of this act.
(c) The Tax Recovery in the Underground Economy Criminal Enforcement Program’s executive board and each investigative team’s committee shall meet as needed, but shall meet at least quarterly, to conduct its business.

15928.
 (a) For cases that involve tax or fee administration associated with underground economic activities, duly authorized members of the Tax Recovery in the Underground Economy Criminal Enforcement Program employed by an agency listed in subdivision (b) of Section 15926 or employed by an agency that joined the Tax Recovery in the Underground Economy Criminal Enforcement Program pursuant to subdivision (c) of Section 15926 shall exchange intelligence, data, including confidential tax and fee information, documents, information, complaints, or lead referrals for the purposes listed in subdivision (c).
(b) (1) Notwithstanding subdivision (a), no person employed by an agency listed in subdivision (b) or (c) of Section 15926 shall disclose confidential tax or fee information to a person employed by an agency invited to join the executive board pursuant to subdivision (d) of Section 15926, except as set forth in paragraph (2).
(2) For cases that involve a known or suspected felony level tax or fee evasion crime, voting members and advisory members may share confidential tax or fee information with other members of an investigatory team of the Tax Recovery in the Underground Economy Criminal Enforcement Program if all of the following criteria are met:
(A) The confidential tax or fee information is obtained by a voting member or advisory member of the Tax Recovery in the Underground Economy Criminal Enforcement Program pursuant to existing law, agreements authorized by existing law, or order by the Governor.
(B) The person who receives the confidential tax or fee information is a peace officer.
(C) The confidential tax or fee information is for one of the purposes listed in subdivision (c) related to a felony level tax or fee evasion crime.
(D) The person receiving the confidential tax or fee information has a legitimate need to know to assess leads, conduct an investigation, or prosecute a case.
(E) There is a nondisclosure agreement that prohibits the person receiving the confidential tax or fee information from disclosing the information to any person that is not part of the Tax Recovery in the Underground Economy Criminal Enforcement Program or disclosing the information to any other unauthorized person.
(c) The intelligence, data, including confidential tax or fee information, documents, information, complaints, and lead referrals exchanged pursuant to this section shall be used for the following purposes:
(1) To assess leads or referrals in order to determine if an investigation is warranted.
(2) To conduct investigations.
(3) To prosecute violations.
(4) To conduct data analytics.
(5) To enforce judgments.
(d) Any person who was or has been involved in the Tax Recovery in the Underground Economy Criminal Enforcement Program pursuant to Section 15926 or 15927 or any person who has at any time obtained that knowledge from any of the foregoing persons shall not divulge, or make known in any manner not provided by law, any of the confidential information received by or reported to the Tax Recovery in the Underground Economy Criminal Enforcement Program. Confidential information authorized to be exchanged pursuant to this section shall retain its confidential status and shall otherwise remain subject to the confidentiality provisions contained in, but not limited to, all of the following provisions:
(1) Section 11183 as that section pertains to the Department of Justice.
(2) Sections 1094 and 1095 of the Unemployment Insurance Code as those sections pertain to the Employment Development Department.
(3) Sections 19542, 19542.1, and 19542.3 of the Revenue and Taxation Code as those Sections pertain to the Franchise Tax Board.
(4) Section 15619 of this code, Section 42464.8 of the Public Resources Code, and Sections 7056, 7056.5, 8255, 9255, 9255.1, 30455, 32455, 32457, 38705, 38706, 43651, 45981, 45982, 45983, 45984, 46751, 50159, 50160, 50161, 55381, 60608, and 60609 of the Revenue and Taxation Code, as those sections pertain to the California Department of Tax and Fee Administration.
(5) Any other information confidentiality provisions in state law.
(6) Any information confidentiality provisions that are applicable to any agency that is added to the Tax Recovery in the Underground Economy Criminal Enforcement Program pursuant to subdivision (c) or (d) of Section 15926.
(e) A member of the Tax Recovery in the Underground Economy Criminal Enforcement Program shall not exchange federal tax data without authorization from the Internal Revenue Service.
(f) The Tax Recovery in the Underground Economy Criminal Enforcement Program’s executive board shall oversee the Tax Recovery in the Underground Economy Criminal Enforcement Program to ensure the protection of confidential tax and fee information pursuant to this part.
(g) The Tax Recovery in the Underground Economy Criminal Enforcement Program shall, to the extent the Legislature appropriates funds for purposes of this section, develop a data analytics system that enhances the efficiency and effectiveness of the multi agency collaboration set forth by this act.

15929.
 (a) On or before March 31, 2020, July 1, 2021, and annually thereafter, the Department of Justice, in consultation with the executive board of the Tax Recovery in the Underground Economy Criminal Enforcement Program, shall submit a report to the Legislature that includes, but is not limited to, the following information:
(1) The number of leads or complaints received by the Tax Recovery in the Underground Economy Criminal Enforcement Program during the reporting period.
(2) The number of cases investigated or prosecuted through civil action or criminal prosecution as a result of the work of the Tax Recovery in the Underground Economy Criminal Enforcement Program.
(3) The amount and final disposition of moneys collected through Tax Recovery in the Underground Economy Criminal Enforcement Program’s enforcement efforts.
(4) The status of the multiagency collaboration required by this act.
(5) A list of the agencies that received confidential tax or fee information pursuant to subdivision (b) of Section 15928.
(6) The number of instances, if any, of unauthorized or suspected unauthorized access, use, or disclosure of confidential tax or fee information. The report shall include the number of instances, if any, of unauthorized or suspected unauthorized access, use, or disclosure of confidential tax or fee information dating back to the inception of the Tax Recovery in the Underground Economy Criminal Enforcement Program and its predecessor programs.
(7) The status of any efforts to plan for, develop, and implement a data analytics system that enhances the efficiency and effectiveness of the multiagency collaboration set forth in this act.

(8)Policy considerations, if any, to help advance the purpose of the Tax Recovery in the Underground Economy Criminal Enforcement Program.

(b) The Legislative Analyst’s Office, on or before July 1, 2022, shall submit a report to the Legislature that includes an analysis of the effectiveness of the Tax Recovery in the Underground Economy Criminal Enforcement Program in accomplishing the purposes specified in subdivision (a) of Section 15926 along with recommendations to improve the program.

(b)

(c) (1) A report required to be submitted pursuant to subdivision subdivisions (a) and (b) shall be submitted in compliance with Section 9795 of the Government Code.
(2) Pursuant to Section 10231.5, this section is repealed on January 1, 2024.