BILL NUMBER: AB 576 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member V. Manuel Pérez
FEBRUARY 20, 2013
An act to add and repeal Part 12.2 (commencing with Section 15910)
of Division 3 of Title 2 of the Government Code, relating to
underground operations.
LEGISLATIVE COUNSEL'S DIGEST
AB 576, as introduced, V. Manuel Pérez. Centralized Intelligence
Partnership Act: pilot program.
Existing law requires various state entities, including, but not
limited to, the State Board of Equalization, the Franchise Tax Board,
and the Department of Justice, to enforce laws relating to the
taxation and legal operation of businesses throughout the state under
their respective jurisdictions.
This bill would establish, until January 1, 2019, a pilot program
to create a multiagency partnership consisting of the Employment
Development Department, Franchise Tax Board, and State Board of
Equalization, to be known as the Centralized Intelligence
Partnership, to collaborate in combating illegal underground
operations by, among other activities, providing a central intake
process and organizational structure, with an administrator and
support staff, to document, review, and evaluate data and complaints.
The bill would authorize other specified state entities to
participate in the pilot program in an advisory capacity. The bill
would create an advisory committee, comprised of one representative
from each entity in the partnership, and those serving in an advisory
capacity, as specified, to provide guidance on the activities and
operations of the partnership. The bill would require the advisory
committee to the partnership to determine the appropriate agency to
house the processing center for the partnership. The bill would
authorize duly authorized representatives of members of the
partnership to exchange information for the purpose of investigating
illegal underground operations. The bill would require the
partnership, on or before July 1, 2015, to annually report to the
Legislature and entities participating in the partnership on its
activities. The bill would require an additional report to be filed
with the Legislature by December 1, 2017, to include the number of
complaints received by the partnership and cases investigated or
prosecuted, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) According to the Employment Development Department's analysis
of findings made by the Internal Revenue Service, the underground
economy in California is estimated to be between sixty billion
dollars ($60,000,000,000) and one hundred forty billion dollars
($140,000,000,000) each year.
(b) According to the State Board of Equalization, an estimate of
eight billion dollars ($8,000,000,000) in corporate, personal, and
sales and use taxes goes uncollected in California each year, with
unreported and underreported economic activity responsible for the
vast majority of that total.
(c) For purposes of this section, "underground economy" means the
activities of individuals, businesses, or other entities that
knowingly and intentionally use practices designed to conceal illegal
or fraudulent activities that negatively impact legitimate
businesses, workers, and consumers, as well as deprive the state and
local governments of vital resources.
(d) The underground economy hurts all Californians. Revenues to
support government services are lost, workers are forced to go
without basic employment protections, and legitimate businesses are
confronted with unfair competition.
(e) Since the activities of many operating in the underground
economy span across multiple jurisdictions, various joint agency
enforcement efforts have been undertaken to combat the underground
economy, including, but not limited to, the creation of the Joint
Enforcement Strike Force on the Underground Economy in 1993, and the
creation of the Economic and Employment Enforcement Coalition in
2005. Furthermore, various individual agency efforts have been
created, including, but not limited to, the State Board of
Equalization's Statewide Compliance and Outreach Program and the
Contractors' State License Board's Statewide Investigative Fraud
Team. Thus, investigative collaboration among state agencies is not a
new concept in California. Many collaborative efforts are already
under way, pursuant to which investigators periodically meet to
discuss current investigations, collaborate to conduct sting
operations, and develop best practices policies.
(f) Despite significant statewide efforts, California continues to
lose billions of dollars in annual revenue due to the underground
economy.
(g) The Legislature intends this act to enhance existing efforts
to combat the underground economy by institutionalizing collaboration
among state agencies through a Centralized Intelligence Partnership,
a pilot program that acquires relevant data for collaborative data
analysis, economic threat assessment, strategic planning, and
provides a referral tracking and value-added referral disbursement
process to monitor the progress and measure the success of the
partnership activities. This collaborative effort to combat the
underground economy will, in turn, further aid the state in its
progress toward preventing human trafficking. The Legislature
recognizes that the state needs to comprehensively address the
underground economy and capitalize on each agency's enforcement
efforts and investigative resources by creating the Centralized
Intelligence Partnership. A key element of this effort is to
authorize and facilitate data and intelligence sharing among the
Centralized Intelligence Partnership and state agencies. It is the
intent of the Legislature in enacting this act to focus on the
criminal and civil prosecution of those operating in the underground
economy in flagrant violation of the law. Businesses that are in
compliance with state employment, safety, licensing, and tax laws
that are found to have committed minor or inadvertent violations of
existing law are to be addressed through other administrative
procedures.
(h) It is the intent of the Legislature that this act be part of
ongoing efforts by the Legislature to combat the underground economy
in this state through legislation.
SEC. 2. Part 12.2 (commencing with Section 15910) is added to
Division 3 of Title 2 of the Government Code, to read:
PART 12.2. Centralized Intelligence Partnership Act
15910. This part shall be known, and may be cited, as the
Centralized Intelligence Partnership Act.
15912. (a) The Centralized Intelligence Partnership is hereby
established in state government as a pilot program.
(b) For purposes of this part, the term "partnership" shall refer
to the Centralized Intelligence Partnership.
15914. (a) The partnership shall include all of the following
state entities:
(1) Employment Development Department.
(2) Franchise Tax Board.
(3) State Board of Equalization.
(b) In addition to the agencies listed in subdivision (a), the
following agencies may participate in the pilot program in an
advisory capacity to the partnership:
(1) California Health and Human Services Agency.
(2) Department of Consumer Affairs.
(3) Department of Industrial Relations.
(4) Department of Insurance.
(5) Department of Justice.
(6) Department of Motor Vehicles.
(c) If, in its normal course of investigation, an agency listed in
subdivision (b) discovers a violation of law that would result in
increased tax revenues to the state, that agency shall notify the
appropriate tax agency listed in subdivision (a).
15916. (a) The advisory committee to the Centralized Intelligence
Partnership is hereby established to provide guidance to, and advice
on, the activities and operations of the partnership.
(b) The advisory committee shall be comprised of one
representative from each of the entities in the partnership listed
under subdivision (a) of Section 15914. Each representative shall be
appointed by the head of the entity in the partnership and serve at
the pleasure of the appointing authority. An agency participating in
an advisory capacity may provide a representative to the advisory
committee to offer guidance and advice to the partnership.
(c) The advisory committee shall meet as needed, but at least
quarterly, to conduct its business.
15918. (a) To serve the best interests of the state by combating
the underground economy, the partnership shall do all of the
following to combat illegal underground operations:
(1) Provide a central intake process and organizational structure
to document, review, and evaluate data and complaints.
(2) Establish a processing center to receive and analyze data,
share complaints, and research leads from the input of each impacted
agency.
(3) Provide participating and nonparticipating agencies with
value-added investigative leads where collaboration opportunities
exist for felony-level criminal investigations, including, but not
limited to, referring leads to agencies with appropriate enforcement
jurisdiction.
(4) Provide that each participating and nonparticipating agency
retain jurisdictional authority over whether to pursue partnership
strategies or collaborative investigative leads based upon the
direction of their respective governing structures or available
resources.
(5) Document and provide intake data analysis, analytic data
findings, referrals, collaborative opportunities, outcomes, emerging
evasion trends, lessons learned, as well as additional enforcement,
administrative, and legislative opportunities.
(b) The scope of activities and projects undertaken by the
partnership shall be consistent with the amount of funds appropriated
by the Legislature.
(c) The advisory committee to the partnership shall determine the
appropriate agency to house the processing center for the
partnership.
(d) The partnership may hire an administrator and staff.
15920. Duly authorized representatives of members of the
partnership, and agencies participating in an advisory capacity, may
exchange intelligence, data, documents, information, complaints, or
lead referrals for the purpose of investigating illegal underground
operations. Any member or ex-member of the partnership, any agent
employed by any member of the partnership, or any person who has at
any time obtained such knowledge from any of the foregoing partners
or 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 partnership. Information exchanged pursuant to this
section shall retain its confidential status and shall remain subject
to the confidentiality provisions contained in the following
provisions:
(a) California Health and Human Services Agency: Subdivision (c)
of Section 6254 of this code and Section 14100.2 of the Welfare and
Institutions Code.
(b) Department of Consumer Affairs: Section 30 of the Business and
Professions Code and Section 56.29 of the Civil Code.
(c) Department of Industrial Relations: Sections 11181, 11183, and
15553 of this code, Article 7 (commencing with Section 1877) of
Chapter 12 of Part 2 of Division 1 of the Insurance Code, and
Sections 92, 138.7, 1026, 3762, 6309, 6322, 6396, and 6412 of the
Labor Code.
(d) Department of Insurance: Section 11180 of this code and
Sections 1872.6, 1873, 1874.2, 1875.1, 1877.1, 1877.3, 1877.4, and
1877.5 of the Insurance Code.
(e) Department of Justice: Section 11183.
(f) Department of Motor Vehicles: Sections 1808.2, 1808.4, 1808.5,
1808.6, 1808.21, 1808.24, and 12800.5 of the Vehicle Code.
(g) Employment Development Department: Sections 1094 and 1095 of
the Unemployment Insurance Code.
(h) Franchise Tax Board: Sections 19542, 19542.1, and 19542.3 of
the Revenue and Taxation Code.
(i) State Board of Equalization: Section 15619 of this code,
Section 42464.8 of the Public Resources Code, and Sections 7056,
7056.5, 8255, 9255, 9255.1, 30455, 38705, 38706, 43651, 45981, 45982,
45983, 45984, 46751, 50159, 50160, 50161, 55381, 60608, and 60609 of
the Revenue and Taxation Code.
15922. On or before July 1, 2015, and annually thereafter, the
partnership shall report on its activities and accomplishments to the
Legislature in compliance with Section 9795, and to each entity in
the partnership.
15923. The partnership shall submit to the Legislature on or
before December 1, 2017, and in compliance with Section 9795, a
report of the pilot program that includes, but is not limited to, the
following information:
(a) The number of leads or complaints received by the partnership.
(b) The number of cases investigated or prosecuted through civil
action or criminal prosecution.
(c) Recommendations for modifying, eliminating, or continuing the
operation of any or all of the provisions of this part.
15924. This part shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.