BILL NUMBER: AB 576 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 1, 2013
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
the underground operations economy
.
LEGISLATIVE COUNSEL'S DIGEST
AB 576, as amended, V. Manuel Pérez. Centralized
Intelligence Partnership Revenue Recovery and
Collaborative Enforcement Team 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 team
consisting of the Employment Development Department,
Franchise Tax Board, Department of Justice,
and State Board of Equalization, to be known as the
Centralized Intelligence Partnership Revenue Recovery
and Collaborative Enforcement Team , to collaborate in
combating illegal underground operations
criminal tax evasion associated with the underground economy
by, among other activities, providing
developing a plan for 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
team members and representatives of other participating agencies
to exchange information for the purpose of investigating
illegal underground operations criminal tax
evasion associated with the underground economy . The bill
would require the partnership team , on
or before July 1, 2015, to annually report to the Legislature and
entities participating in the partnership
each participating agency 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 team and cases
investigated or prosecuted , as specified as
a result of team collaboration .
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)
(a) According to the State Board of Equalization, an
estimate of eight estimated nine
billion dollars ($8,000,000,000)
($9,000,000,000) 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
(b) Criminal tax evasion associated
with underground economic activities 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.
Despite significant statewide efforts, California continues to lose
billions of dollars in annual tax revenues due to the underground
economy.
(c) The mission of the Labor Enforcement Task Force (LETF) and the
Joint Enforcement Strike Force (JESF) is to combat the underground
economy to ensure a level playing field for California businesses.
However, these programs focus on labor violations while often
overlooking or disregarding criminal tax evasion.
(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)
(d) The Legislature intends this act to enhance
existing efforts to combat the underground economy
criminal tax evasion associated with underground economic
activities 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,
criminal tax evasion will further aid the state in its
progress toward protecting consumers from counterfeit products,
increasing public services, and preventing human trafficking
by enhancing the state's ability to identify and punish
offenders . 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
Revenue Recovery and Collaborative Enforcement Team . A
key element of this effort is to authorize and facilitate data and
intelligence sharing among the Centralized Intelligence
Partnership and participating 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 who operate in the
underground economy and flagrantly violate the tax laws .
(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
Revenue Recovery and Collaborative Enforcement Team
Act
15910. This part shall be known, and may be cited, as the
Centralized Intelligence Partnership Revenue
Recovery and Collaborative Enforcement Team Act.
15912. (a) The Centralized Intelligence Partnership
Rev enue Recovery and Collaborative
Enforcement Team is hereby established in state government as a
pilot program.
(b) For purposes of this part, the term "partnership"
"team " shall refer to the
Centralized Intelligence Partnership Revenue Recovery
and Collaborative Enforcement Team .
15914. (a) The partnership team
shall include all of the following state entities:
(1) Employment Development Department.
(2)
(1) Franchise Tax Board.
(2) Department of Justice.
(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: team:
(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. Employment
Development Department.
(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
may 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
15916. The team shall meet as needed, but
at least quarterly, to conduct its business.
15918. (a) To serve the
best interests of the state by combating criminal tax evasion
associated with the underground economy, the
partnership shall do all of the following to combat illegal
underground operations: participating agencies shall
do all of the following:
(1) Provide
(a) Develop a plan for a central
intake process and organizational structure to document, review, and
evaluate data and complaints.
(2) Establish
(b) Evaluate the benefits of a
processing center to receive and analyze data, share complaints, and
research leads from the input of each impacted agency.
(3)
(c) 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
team members of the partnership, and agencies
participating in an advisory capacity, and
representatives of other participating agencies may exchange
intelligence, data, documents, information, complaints, or lead
referrals for the purpose of investigating illegal
underground operations criminal tax evasion associated
with underground economic activities . Any member or ex-member
of the partnership team , any agent
employed by any member of the partnership
agency , or any person who has at any time obtained such
knowledge from any of the foregoing partners
agencies 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
team . 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 team shall report on its
activities and accomplishments to the Legislature in compliance with
Section 9795, and to each entity in the partnership
participating agency .
15923. The partnership team 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 team .
(b) The number of cases investigated or prosecuted through civil
action or criminal prosecution as a result of team collaboration
.
(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.