Tax Recovery in the Underground Economy (TRUE)

Protecting Workers, Consumers, and Law-Abiding Businesses

Assembly Bill 1296 established the Tax Recovery in the Underground Economy Criminal Enforcement Program (TRUE) on January 1, 2020. Formerly known as Tax Recovery and Criminal Enforcement (TRaCE), TRUE is an important measure to support the state’s efforts to combat and deter underground economic crimes in California.

The passage of AB 1296 strengthens TRUE by permanently establishing the program in state law and creating the framework for the Legislature to fund TRUE investigative teams in every major metropolitan area in the state. By strengthening TRUE, the state will improve its multiagency collaboration to combat economic activities, protect consumers, workers, and law abiding businesses, as well as collect lost tax revenue for the state.

What is the Underground Economy?

"Underground Economy" is a term that refers to those individuals and businesses that deal in cash and/or use other schemes to conceal their activities, identities and true tax liability from government licensing, regulatory, and taxing agencies.

The State of California loses billions of dollars to the underground economy. Fraud and tax evasion most often occur in cash-driven businesses such as bars, restaurants, used car dealerships, and construction, but is also common in businesses selling counterfeit products and in the tobacco industry.

Tax evasion hurts California's economy as legitimate businesses are confronted with unfair competition, funding for public resources is lost, and employees are forced to work in conditions without basic protections or may even lose their jobs.

Why Should I Care?

Whether you know it or not, the underground economy affects you directly or indirectly. The people who operate in the underground economy are taking money out of your pocket.

  • Illegal underground economy activities lead to lost tax revenue, which leads to the need to increase/ impose taxes in other areas.
  • When you buy black-market drugs, your health is threatened from unsafe products.
  • When you pay for services "under the table" you may be supporting human trafficking—modern-day slavery, it ends with us.
  • When you buy knock-off merchandise, you get an inferior product and support those who steal ideas of designers and take jobs from workers that manufacture legitimate products.
  • When you buy a pirated DVD, it hurts every job in the movie industry from actors to ticket takers, and could ultimately affect the price of your movie ticket.
  • Illegal underground economy activities often fund organized crime which can impact your local community.
  • Dollars generated from illegal underground activities have been tracked to terrorist organizations.

Press Releases

6/18/2020 Attorney General Becerra Announces Sentencing of Unlicensed Tobacco Distributor from the Inland Empire

10/11/2018 Attorney General Becerra Announces Sentencing of Sacramento Family for Illegal Foreign Pharmaceuticals Scheme

9/7/2018 Attorney General Becerra Announces Criminal Charges in a Bay Area Labor Exploitation and Human Trafficking Case

1/17/2018 Attorney General Becerra: Retailer Sentenced to Prison for $5.6 Million Fraud Scheme



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