What Is a False Claims Act?

False Claims Acts allow 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

Pennsylvania's False Claims Act (House Bill 1697) would duplicate the federal system Pennsylvania already uses to recover funds. In addition ...

• 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.

What Is Being Proposed in Pennsylvania?

House Bill 1697 would allow private individuals to file lawsuits on behalf of Pennsylvania and receive financial rewards if they win. What makes the Pennsylvania proposal different and dangerous?

• Unlike federal law and most states with similar legislation, 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 routine tax matters involving professional judgment. For CPAs and small businesses, that may mean greater legal risk, higher costs, and more uncertainty.

Fraud is already addressed under federal law, which Pennsylvania uses today. House Bill 1697 would only 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. Any proposal in Pennsylvania should align with federal law by excluding tax matters.

Watch a quick overview from PICPA CEO Jen Cryder

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. Let your state senator know that you and your colleagues oppose this bill as it is currently written.

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

Reviewed June 2026