New York Governor Kathy Hochul signed legislation that broadened the scope of the New York False Claims Act (NYFCA). This expansion targets entities that fail to file tax returns in New York state. This is different from the federal False Claims Act, and most False Claims Acts in other states, where tax-based claims are excluded . It also separates New York from States that allow tax-related claims, but only for false claims within submitted documents. States maintaining tax-related False Claim Act matters include Illinois, Indiana, the District of Columbia and New York.
The legislation applies to any tax obligation intentionally hidden, or avoided including by not filing, from May 2020 forward . For context, the NYFCA holds any entity accountable if they falsify records or statements that relate to financial obligations to the state or local governments . Since 2010, the NYFCA has addressed tax claims, targeting those with annual taxable income or revenue above $1 million, with potential unpaid tax damages over $350,000.
N.Y. State Fin. Law § 189 outlines the liabilities for various fraudulent acts related to financial dealings with the state or local government. Anyone who:
Those committing the above will be liable for a civil penalty plus three times the damages the government incurs due to the fraudulent act. The court may reduce the damages to twice the amount if the violator provides information about the violation within 30 days of discovering it, fully cooperates with the investigation, and there had been no prior investigation or action regarding the violation.
Violators are also responsible for the costs of any civil action, including attorneys’ fees. This section specifically applies to tax law violations if the individual or entity has a net income or sales exceeding one million dollars for the taxable year in question, and the claimed damages surpass $350,000. For tax-related cases, the attorney general must consult with the tax department and must obtain approval for specific actions, such as disclosing tax records.
This section has been amended over time, most recently as discussed here in 2023, which extended the act to cover failure to file.
Schneider Wallace represents whistleblowers, including those in New York . Schedule a consult with our false claim lawyers for a free and confidential consultation. Contact us at 1-800-689-0024 or info@schneiderwallace.com .