Tax & Budgets
Removing the Tax Bar: Three States Debate Expanding the Scope of False Claims Acts
May 18, 2022 | Mollie Jackowski
Lawmakers in New York, Michigan, and Connecticut introduced legislation to expand the scope of their states’ False Claims Act (FCA) to include tax actions. The FCA imposes penalties on those who knowingly submit false claims to the federal government and allows private parties to bring actions against those that defraud the government, in other words, it allows third parties to report alleged misdeeds to the government, and may result in financial compensation. The federal government and most states exclude tax actions from FCAs to allow revenue departments to administer tax laws without interference. When states attempt to include tax laws in FCAs, experts worry about the efficacy and administration of state tax laws.