False Claims Never Die In California

Recently, AB 2570 has cleared the Assembly Appropriations Committee, which authorizes tax-based false claims actions-allowing private, profit-motivated parties to bring punitive civil enforcement lawsuits. The bill is now on the Assembly floor for consideration and faces a June 19 house-of-origin deadline for passage. The bill is similar to a bill that failed to pass last year (AB 1270) after encountering intense opposition.

California's current False Claims Act (FCA) bars its use in tax cases, a similar practice followed by most states with FCAs. This leaves initiation of tax enforcement to tax agencies that interpret and enforce those laws. In states where a FCA has been expanded to tax cases, such as in Illinois and New York, very few cases involve internal whistleblowers, actual fraud or reckless disregard of clear law. Instead, they typically involve inadvertent errors or good-faith interpretations of murky tax law. FCA expansion undermines taxpayer reliance on