BILL NUMBER: SB 319 CHAPTERED 09/02/99 CHAPTER 306 FILED WITH SECRETARY OF STATE SEPTEMBER 2, 1999 APPROVED BY GOVERNOR SEPTEMBER 1, 1999 PASSED THE ASSEMBLY AUGUST 23, 1999 PASSED THE SENATE APRIL 29, 1999 AMENDED IN SENATE MARCH 25, 1999 INTRODUCED BY Senator Burton FEBRUARY 8, 1999 An act to amend Section 106 of the Labor Code, and to amend Section 329 of the Unemployment Insurance Code, relating to the economy. LEGISLATIVE COUNSEL'S DIGEST SB 319, Burton. Joint Enforcement Strike Force on the Underground Economy: citations. (1) Existing law authorizes the Labor Commissioner until January 1, 2000, to designate, authorize, and train an employee of any agency participating in the Joint Enforcement Strike Force on the Underground Economy to issue citations and to issue and serve a penalty assessment order, pursuant to specified provisions. This bill would extend that authority to January 1, 2006. (2) Existing law, until January 1, 2000, authorizes the activities of the Joint Enforcement Strike Force on the Underground Economy. This bill would extend that authority to January 1, 2006. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 106 of the Labor Code is amended to read: 106. (a) The Labor Commissioner may authorize an employee of any of the agencies that participate in the Joint Enforcement Strike Force on the Underground Economy, as defined in Section 329 of the Unemployment Insurance Code, to issue citations pursuant to Sections 226.4 and 1022 and issue and serve a penalty assessment order pursuant to subdivision (a) of Section 3722. (b) No employees shall issue citations or penalty assessment orders pursuant to this section unless they have been specifically designated, authorized, and trained by the Labor Commissioner for this purpose. Appeals of all citations or penalty assessment orders shall follow the procedures prescribed in Section 226.5, 1023, or 3725, whichever is applicable. (c) This section shall remain in effect only until January 1, 2006, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 2006, deletes or extends that date. SEC. 2. Section 329 of the Unemployment Insurance Code is amended to read: 329. (a) The director, or his or her designee, shall serve as Chairperson of the Joint Enforcement Strike Force on the Underground Economy provided for in Executive Order W-66-93. The strike force shall include, but not be limited to, representatives of the Employment Development Department, the Department of Consumer Affairs, the Department of Industrial Relations, and the Office of Criminal Justice Planning. Other agencies that are not part of the administration, such as the Franchise Tax Board, the State Board of Equalization, and the Department of Justice, are encouraged to participate in the strike force. (b) The strike force shall have the following duties: (1) To facilitate and encourage the development and sharing of information by the participating agencies necessary to combat the underground economy. (2) To improve the coordination of activities among the participating agencies. (3) To develop methods to pool, focus, and target the enforcement resources of the participating agencies in order to deter tax evasion and maximize recoveries from blatant tax evaders and violators of cash-pay reporting laws. (4) To reduce enforcement costs wherever possible by eliminating duplicative audits and investigations. (c) In addition, the strike force shall be empowered to: (1) Form joint enforcement teams when appropriate to utilize the collective investigative and enforcement capabilities of the participating members. (2) Establish committees and rules of procedure to carry out the activities of the strike force. (3) To solicit the cooperation and participation of district attorneys and other state and local agencies in carrying out the objectives of the strike force. (4) Establish procedures for soliciting referrals from the public, including, but not limited to, an advertised telephone hotline. (5) Develop procedures for improved information sharing among the participating agencies, such as shared automated information data base systems, the use of a common business identification number, and a centralized debt collection system. (6) Develop procedures to permit the participating agencies to use more efficient and effective civil sanctions in lieu of criminal actions wherever possible. (7) Evaluate, based on its activities, the need for any statutory change to do any of the following: (A) Eliminate barriers to interagency information sharing. (B) Improve the ability of the participating agencies to audit, investigate, and prosecute tax and cash-pay violations. (C) Deter violations and improve voluntary compliance. (D) Eliminate duplication and improve cooperation among the participating agencies. (E) Establish sharable information data bases. (F) Establish a common business identification number for use by participating agencies. (G) Establish centralized, automated debt collection services for the participating agencies. (H) Strengthen civil penalty procedures to allow the strike force to emphasize civil rather than criminal penalties wherever possible. (d) The strike force shall report to the Governor and the Legislature annually during the period of its existence, commencing February 1, 1995, regarding its activities. The report shall include, but not be limited to, all of the following: (1) The number of cases of blatant violations and noncompliance with tax and cash-pay laws identified, audited, investigated, or prosecuted through civil action or referred for criminal prosecution. (2) Actions taken by the strike force to publicize its activities. (3) Efforts made by the strike force to establish an advertised telephone hotline for receiving referrals from the public. (4) Procedures for improving information sharing among the agencies represented on the strike force. (5) Steps taken by the strike force to improve cooperation among participating agencies, reduce duplication of effort, and improve voluntary compliance. (6) Recommendations for any statutory changes needed to accomplish the goals described in paragraph (7) of subdivision (c). (e) This section shall remain in effect only until January 1, 2006, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 2006, deletes or extends that date.