Vote Smart's Synopsis:

Vote to pass a bill that establishes the False Claims Act which expands the tax fraud detection program.

Highlights:

• Requires that a person who commits any of the following acts is subject to either the state or local subdivision for 3 times the amount of damages that the state or local subdivision sustains, and requires that any person who commits any of the following acts be liable to the state or to the local subdivision for a civil penalty of between $5,500 and $11,000 per violation (Sec 2):

• Knowingly presents a false or fraudulent claim for payment or approval;

• Knowingly makes, uses, or causes a false record or statement material to a false or fraudulent claim;

• Conspires to commit a violation of this subdivision;

• Has possession, custody, or control of public property or money used by the state or by any political subdivision and knowingly delivers or causes to be delivered less than all of that property;

• Is authorized to make or deliver a document certifying a receipt of property used by any political subdivision and knowingly makes or delivers a receipt that falsely represents the property used; 

• Knowingly buys, or receives as a pledge of an obligation or debt, public property from any person who lawfully may not sell or pledge the property;

• Knowingly makes or uses a false record or statement material to an obligation to pay or transmit money or property to the state or to any political subdivision, conceals, or decreases an obligation to pay or transmit money or property to the state or any political subdivision; or

• Is a beneficiary of an inadvertent submission of a false claim, subsequently discovers the falsity of the claim, and fails to disclose the false claim within a reasonable time after discovery.

• Specifies that this law does not apply to any controversy involving an amount of less than $500 (Sec 2).

• Defines “controversy” as any one or more false claims submitted by the same person in violation of this law (Sec 2).

• Specifies that this law does not apply to claims, records, or statements made pursuant to Division 3.6 of Title 1 or to worker’s compensation claims filed to Division 4 of the Labor Code (Sec 2).

• Specifies that this law applies to claims, records, or statements made only if the damages pleaded in such action exceeds $200,000 and if the following exceeds $500,000 for any taxable year (Sec 2):

• If the taxable income of any person other than a corporation against whom the action is brought under Part 10 of Division 2 of the Revenue and Taxation Code;

• The gross receipts less returns and allowances of any corporation against whom the action is brought; or

• The sales of any persona against whom the action is brought.

• Requires the Attorney General or prosecuting authority to consult with the taxing authorities to whom the claim, record, or statement was submitted prior to filing or intervening in any action under this law (Sec 2).

• Authorizes Attorney General to obtain confidential records relating to taxes, fees, surcharges, or other obligations under the Revenue and Taxation Code in order to investigate or prosecute suspected violations of this bill from state and local taxing authorities (Sec 2).

• Requires the Attorney General to investigate violations involving state funds and authorizes the Attorney General to bring a civil action against violators of Section 2 of this bill (Sec 3).

• Authorizes the prosecuting attorney to have the right to intervene in an action brought by the Attorney General under this law within 60 days after the receipt of the complaint (Sec 3).

• Requires that a complaint filed by a person to be filed in a superior court in camera, and specifies that the complaint must remain under seal for at least 60 days and cannot be served on the defendant until the court orders so (Sec 3).

• Authorizes the Attorney General to intervene and proceed with an action within 60 days after receiving a complaint and written disclosure of material evidence and information alleging violations that involve state funds (Sec 3).

• Authorizes the Attorney General to do the following before the expiration of the 60-day period (Sec 3):

• Notify the court that it intends to proceed with the action; or

• Notify the court that it declines to proceed with the action.

• Authorizes the Attorney General to forward copies of the complaint to the appropriate prosecuting authority for disposition within 15 days after receiving a complaint alleging violations that exclusively involve local funds (Sec 3).

Full Bill Text