The California Attorney General’s (AG) office recently issued letters to more than 1,700 companies listed as manufacturers or retailers on their California state tax returns requiring them to notify the AG’s office that they are, or are not, in compliance with the California Transparency in Supply Chains Act (the Act).
These letters appear to be an attempt to enforce compliance with the Act, which became effective on January 1, 2012, but has received little attention outside of the traditional retail sector. The letters have been received by companies across a vast array of industries that happen to have sufficient sales in California, catching many companies and their general counsel’s by surprise. The Act requires companies to make certain disclosures about their efforts to avoid forced and child labor in their supply chains. Any company that identifies as a retail seller or manufacturer on its California tax return and earns annual worldwide gross receipts greater than US$100 million must comply with the law. Violations of the Act can result in an action brought by the Attorney General for injunctive relief.