Pennsylvania legislators have proposed House Bill 1697 to create a state False Claims Act. As drafted, the proposal would allow private lawsuits over state and local tax issues now handled through audits and administrative review. That shift raises concerns about unnecessary legal exposure and government overreach.
Today, tax enforcement is managed by the Pennsylvania Department of Revenue through a centralized system designed to provide structure, consistency and accountability. Disputes are resolved through established procedures rather than costly litigation.
Consider a small accounting firm helping a regional hospital navigate complex Medicaid billing rules. A disgruntled former employee partners with a contingency-fee attorney to allege false claims based on a disputed billing interpretation. No fraud needs to be proven, yet the firm could face treble damages and penalties of up to $27,000 per claim. Faced with catastrophic exposure, many firms settle regardless of merit, while the attorney and former employee pocket up to 30 percent.
A predictable tax system is essential for economic growth. Businesses need clarity and stability to make decisions, invest and plan ahead.
The federal government and most states exclude tax matters from false claims laws. Pennsylvania should follow that approach. Narrowing House Bill 1697 would help maintain a stable environment for businesses, employers and taxpayers.
Peter Calcara
Harrisburg