California’s top cop wants power to prosecute tax cheats, saying they cost taxpayers’ billions

California Attorney General Xavier Becerra is asking the Legislature to give him the authority to more aggressively go after tax cheats that he says cost the state $20 billion in lost revenue in 2019.

Currently, that power rests with California’s Franchise Tax Board and California Department of Tax and Fee Administration, which can investigate suspected tax cheats and levy penalties on them.

Becerra held a press conference Thursday where he championed Assembly Bill 2570, which would give his office, and other prosecuting agencies, the power to pursue tax fraud cases where the suspect is believed to be withholding $200,000 or more in unpaid taxes.

They’d gain that authority by amending a state law called the California False Claims Act, which forbids companies from submitting fraudulent bills to the government, so that it also encompasses tax codes.

“This is not about going after the mom and pop. This is not about going after individuals who go out and file and maybe make a small mistake. We’re talking about folks who are hiding a big chunk of money,” Becerra said.

The attorney general was joined Thursday by Assemblyman Mark Stone, D-Scotts Valley, who sponsored the bill, as well as Terry Brennand of the Service Employees International Union.

“At a time when corruption and abuse is being normalized, even excused, at the highest levels of our government, it’s time for California to help lead the way and show what accountability looks like,” Brennand said.

Stone acknowledged that AB 2570 is the successor to a previous bill introduced this session, which stalled in the Senate. The Franchise Tax Board, which collects state income tax, last year told lawmakers Stone’s bill would “not affect state revenues.”

“Having run this through last year, we saw a lot of criticisms which are a bit astonishing to me, to object to a mechanism that goes after knowing tax cheats,” Stone said.

One of those critics was the California Chamber of Commerce, which opposed the previous version of the bill, calling it “a solution in search of a problem.”

“The CalChamber is unaware of any reporting of rampant tax fraud in California that would justify new tools such as the (False Claims Act) being utilized and which would potentially provide additional income if (False Claims Act) lawsuits could be brought,” the chamber said in a statement at the time.