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State aims to crack down on tax evasion

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POSTED October 7, 2013 8:52 p.m.

SACRAMENTO  (AP) — Not everyone is conscientious about paying their tax bill, and the scofflaws cost California an estimated $9 billion a year in uncollected revenue.

Lawmakers and Gov. Jerry Brown want to change that dynamic by creating a task force charged with bringing the state's underground economy into the open and collecting the corporate, personal, and sales and use taxes owed the state.

The Democratic governor on Monday announced the signing of legislation is intended to reduce the amount of tax revenue eluding the state each year.

An analysis of AB576 says much of the $9 billion the state loses each year in tax revenue is due in large part to income that is under-reported or not reported at all.

Evading tax payments reduces the amount of money available to fund government services, leaves workers without basic job protections and creates unfair competition for legitimate businesses, according to the bill by Democratic Assemblyman V. Manuel Perez of Coachella.

AB576 creates a pilot program until 2019 in which several state agencies will join forces to combat criminal tax evasion that is associated with the so-called underground economy. A signing statement from the governor said the state Department of Industrial Relations will oversee the Revenue Recovery and Collaborative Enforcement Team, which is required to produce a report to the Legislature by Dec. 1, 2017.

That report is to include the number of complaints received by the team and cases investigated or prosecuted.

Brown also said he wants the Department of Industrial Relations to recommend to him "ways to improve our effectiveness in attacking the underground economy."

 

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