OPPOSE AB 2570 (Stone) False Claims Act

July 7, 2020

Senator Hanna-Beth Jackson, Chair
Senate Judiciary Committee

Re: AB2570 (Stone)

Dear Senator Jackson,

Inland Action is opposed to AB2570 (Stone), which authorizes tax-based false claims actions. This bill would allow private, profit-motivated parties to bring punitive civil enforcement lawsuits. Tax enforcement should be in the hands of our tax agencies: Franchise Tax Board and the California Department of Tax and Fee Administration.

Other states have enacted similar statues to enable a False Claims Act to be expanded to tax cases. In those circumstances, very few of the tax fraud cases involve internal whistleblowers, actual fraud or reckless disregard of clear law. Instead the cases most often involved inadvertent errors or good-faith errors in the interpretation of the tax laws.

Expanding the California False Claims Act to tax claims will only serve to hurt good-faith taxpayers. The bill would, more likely than not, force taxpayers to incur enormous defense costs or pressure them into settlements to “make a case go away” to avoid the risk of paying treble damages in a false claim lawsuit, including those claims which were weak or meritless.

Thus, Inland Action does not support AB2750. We strongly believe the negative impacts of expanding the CFCA to tax claims far outweigh whatever benefits the author envisioned.


Carole Beswick, CEO