California State Assembly Advances AG-Sponsored Legislation to Strengthen the False Claims Act and Protect California Taxpayers from Fraud

SACRAMENTO – The California State Assembly today approved AB 2570, legislation authored by Assemblymember Mark Stone and sponsored by California Attorney General Xavier Becerra, that will strengthen the California False Claims Act (CFCA). The legislation increases the ability of the Attorney General and other prosecuting authorities to investigate fraudulent claims and recover public funds lost due to fraud or misrepresentation — which ultimately helps protect California taxpayers.

“We must do everything in our power to put an end to tax fraud that hurts our communities. AB 2570 will allow us to do just that, and will help recover money that supports our families, our schools, and healthcare and public safety services throughout our state,” said Attorney General Becerra. “We applaud the members of the Assembly for acknowledging the importance of this bill and look forward to working with members of the Senate.”

“AB 2570 is an important policy to move forward in these difficult times,” said Assemblymember Mark Stone. “This bill is a tool for government entities to collect taxes owed by large taxpayers, but which have been intentionally and illegally not paid. In these difficult economic times, all tax payers need to be held accountable. It is only fair.”

Fraud and false claims against the government rob our state and local communities of funding necessary to support essential public services, such as improving our schools, providing healthcare and public safety, and fixing our roads. Because of the COVID-19 crisis, state and local governments face massive budget shortfalls and deficits, and the protection of every public dollar is essential. California’s taxing authorities can only go after fraud the agencies know about, and false claims actions involving whistleblowers typically reveal cases of fraud previously unknown to authorities.

Currently, the CFCA does not apply to tax fraud, including claims or statements made under the Revenue and Taxation Code. AB 2570 will give the Attorney General and local prosecutors additional legal tools under the CFCA to protect important city, county, and state programs and services against those committing egregious tax fraud. Additionally, the bill further incentivizes whistleblowers by providing more complete protections from discrimination and retaliation for reporting violations of the CFCA and by protecting them from civil liability for sharing confidential documents to provide evidence of a false claim. 

Yesterday, the Los Angeles County Board of Supervisors unanimously voted to submit formal support of AB 2570. Additional supporters of this bill include the Association of California Cities – Orange County, California Contract Cities Association, California District Attorneys Association, California Labor Federation, California Low-Income Consumer Coalition, California State Association of Counties, California Special Districts Association, California Tax Reform Association, Consumer Attorneys of California, Constantine Cannon LLP, Latino Caucus of California Counties, League of California Cities, and SEIU California.