A Review of Selected Taxing and Enforcing Agencies’ Programs to Control the Underground Economy

Report #66, August 1985

OVERVIEW

The largest segment of California’s underground economy involves self-employed persons and employers and employees who pay or receive cash for work performed or for goods sold without reporting to the various taxing agencies.

In this study, the Commission finds that the State’s organization of taxing and enforcing agencies is a major obstacle to more effectively combatting this rapidly growing underground economy.

The Commission makes 22 findings and 20 recommendations which include reorganizing some or all State taxation responsibilities; establishing a Multi-Agency Task Force to conduct complete audits and investigations of blatant tax and cash-pay violations; and creating a standing committee of all appropriate agencies to expand information sharing.