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Collaborative team to go after California's underground economy

It's time for us to get very California-specific in this blog.

To be sure, many tax issues are common throughout the country. After all, federal tax law is the same in every state. To paraphrase Woody Guthrie's famous song "This Land Is Your Land," the federal tax code applies "from California to the New York island," and "from the redwood forest to the Gulf Stream waters."

Each state, however, also has its own, separate, system of state-level taxation. And in California, the state-specific tax law that must be discussed is the new task force aimed at collecting more taxes from the underground economy.

The task force is authorized by AB576, a new state law passed by the legislature and signed by Goverrnor Jerry Brown.

Sponsors of AB576 assert that tax evasion is a major problem that costs the state about $9 billion a year in tax revenue.

What the new law does is set up a pilot program to address this perceived tax evasion problem. The program is to run until 2109 and involve the creation of a collaborative team drawn from several agencies.

The California Franchise Tax Board is only one of the participating agencies. There are numerous other agencies participating as well.

The new team to be created will be called the Revenue Recovery and Collaborative Enforcement Team. The California Department of Industrial Relations has been tasked with overseeing the new team.

But trying to cut through bureaucratic inefficiencies by creating another government unit -- even one billed as cross-functional -- can sometimes only add to those inefficiencies. It remains to be seen how well the new team does in navigating its organizational challenges.

Source: Sacramento Bee, "Legislation aims to crack down on tax evasion," Oct. 7, 2013

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