Attorney General Becerra and Assemblymember Stone Announce Bill to Combat California Tax Fraud and Protect Taxpayers Passes Judiciary Committee

SACRAMENTO – California Attorney General Xavier Becerra and Assemblymember Mark Stone announced that AB 1270, legislation that seeks to strengthen the California False Claims Act (CFCA) has passed the Judiciary Committee. The legislation, authored by Assemblymember Stone and sponsored by Attorney General Becerra, strengthens the ability of the Office of the Attorney General and other California prosecuting authorities to investigate fraudulent claims. AB 1270 will provide false claims whistleblowers with greater protections from retaliation for reporting fraud to the government. Additionally, the bill gives all prosecuting authorities the ability to pursue tax fraud as a false claim under the CFCA. It will bolster California’s efforts to combat tax fraud by harnessing the CFCA to uncover and prosecute previously unknown cases of tax fraud across the state. It will also clarify false claims law to ensure that all attempts to cheat the government can be prosecuted and full recovery obtained for all foreseeable harms.  

 “When individuals cheat our tax system, they leave lawful working California families holding the bag,” said Attorney General Becerra. “AB 1270 would provide my office with the necessary tools to protect our state’s programs and services against fraudulent actors. We plan to hold individuals accountable and combat tax fraud to protect the benefits of Californian’s public dollars.”  

“AB 1270 ensures that California has the right tools to hold bad actors accountable,” said Assemblymember Stone. “Not only will this bill increase protections for whistleblowers, it will ensure that California taxpayers will not be forced to cover the costs associated with those that deliberately defraud the government.”

Over the past decade, California has seen a rise in its annual estimated tax gap, which is the difference between total taxes owed and total taxes paid on time. That gap is estimated at billions of dollars per year due to underpayment and fraud. This legislation aims to increase the efforts to reduce and eventually close the gap, thereby providing additional resources to California communities for essential services such as fixing our roads, providing healthcare, and funding public schools. 

The CFCA has been an effective tool that helps reveal, deter, and punish those who defraud the government of public funds. However, currently the CFCA lacks provisions that enable prosecutors to pursue claims or statements regarding tax fraud. In an effort to close the tax gap and address tax fraud, this legislation authorizes the California Attorney General and local prosecuting authorities to pursue tax fraud cases. AB 1270 further incentivizes whistleblowers by providing more complete protections from discrimination and retaliation for reporting violations of the Act and from civil liability for sharing confidential documents to provide evidence of false claim.