False Claims Act At-a-Glance: What You Need to Know
- House Bill 1697 (False Claims Act) would duplicate a federal system Pennsylvania already uses to recover funds.
- It would expand enforcement into state and local tax matters and allow private parties to file lawsuits over tax disputes.
- CPAs could face lawsuits even when returns are filed in good faith.
- The bill would create financial incentives to file lawsuits, with some recovered funds going to private parties instead of the Commonwealth.
Watch a quick overview from PICPA CEO Jen Cryder
What Is a False Claims Act?
A False Claims Act allows private individuals to sue on behalf of the government if they believe someone improperly received government funds. These cases are often brought by whistleblowers, who may receive a share of recovered funds. The law also allows for significant financial penalties.
What Is Being Proposed in Pennsylvania?
House Bill 1697 would create a Pennsylvania version of this law, allowing private individuals to file lawsuits on behalf of the state and receive financial rewards if they win. What makes the Pennsylvania proposal different?
- It could apply to taxes. Unlike federal law and most states, this proposal may allow lawsuits over state and local tax matters.
- It expands who can enforce the law. Private individuals—not just state agencies—could bring cases.
- It creates incentives to sue. People who file claims could receive a portion of recovered funds.
- Not all funds go back to the state. Some recovered money would go to private parties.
Why Does It Matter?
This proposal could increase lawsuits over tax issues, including routine matters involving professional judgment. For CPAs and small businesses, that may mean greater legal risk, higher costs, and more uncertainty.
How This Compares to Existing Law
Fraud is already addressed under federal law, which Pennsylvania uses today. House Bill 1697 would add a new, overlapping layer of enforcement.
PICPA's Position
The PICPA supports strong enforcement against fraud. However, tax enforcement should remain with government agencies, and good-faith decisions should not be treated as fraud. The proposal should align with federal law by excluding tax matters.
What Happens Next
House Bill 1697 is under consideration in the Pennsylvania Senate. The PICPA will continue to monitor the bill and advocate for changes.
Additional Resources
- Blog: Peter Calcara, Vice President of Government Relations - "State False Claims Act Misses the Mark"
- PICPA Comment letter to State Senate: PICPA Concerns with False Claims Act and Tax Administration
