Underground Economic Activities in California

Part 12.3 of Division 3 of Title 2 of the California Government Code concerns underground economic activities. Government Code Section 15925 authorizes an agency to request of information from the Employment Development Department, the California Department of Tax and Fee Administration, and the Franchise Tax Board for known or suspected felony violations involving tax-related or fee-related crimes.

This includes cases from the Joint Enforcement Strike Force on the Underground Economy involving tax or fee administration associated with underground economic activities. The EDD, CDTFA, and FTB must fully and timely provide the requesting agency with intelligence, data, including confidential tax and fee information, documents, information, complaints, reports, analysis, findings, or lead referrals for specified purposes.

Any state agency personnel who received confidential information obtained pursuant to this section must not divulge, or make known in any manner not provided by law, any of the confidential information received by or reported to the agency. Confidential information authorized to be provided pursuant to this section must retain its confidential status and otherwise remain subject to the confidentiality provisions contained in existing state laws.

Government Code Section 15926 requires the Department of Justice to maintain the two multiagency Tax Recovery in the Underground Economy Criminal Enforcement Program investigative teams in Sacramento and Los Angeles. These investigative teams, including the Department of Justice, the EDD, the CDTFA, and the FTB are required to continue their collaboration for the recovery of lost revenues to the state by investigating and prosecuting criminal offenses in the state’s underground economy, including tax-related and fee-related crimes such as tax evasion or tax fraud.