Franchise Tax Board Hunting for Scofflaws

Monday, June 18, 2012

The Franchise Tax Board estimates that 90% of taxpayers pay their fare share of income and corporate taxes. But those who don’t pay account for millions of dollars in lost revenues that would go a long way toward covering the state’s chronic budget deficit.

The board announced last week that it is sending out notices to more than 100,000 businesses that didn’t pay taxes in 2010, although a review of 5 million records from the IRS, the Employment Development Department, the State Board of Equalization, financial institutions and city business tax information indicate perhaps they should have.

Last year the board collected $21 million from delinquent businesses that hadn’t filed.

The board publishes a list twice a year of the top 500 corporate and personal income tax scofflaws who make the list when a tax lien is filed by the state. Leading the personal income tax list is Halsey M. and Shannon Minor who, at $10.46 million, have been atop the roster since 2009. Halsey Minor is founder of online technology news site CNET. The top corporate tax scofflaw on the list is Baldomero De Leon, Jr., M.D., Inc. at $4.05 million. Actress Pamela Anderson checks in further down the personal tax list at $524,241.

The board mails letters to individuals and businesses who are about to appear on the list, giving them an opportunity to pay their bills. Since inception of the published lists in 2007, the department has recovered more than $133 million in revenue as of June 1, 2012.

While critics of the lists understandably include those who are on them, they are joined by the state Department of Finance, which warned in 2006: “Confidentiality of tax returns is an important feature of the tax system. Breaching that confidentiality may work to undermine the public’s confidence in the tax system.”

–Ken Broder

To Learn More:

California Tax Collectors Searching for Possible 2010 Scofflaws (by Marc Lifsher, Los Angeles Times)

Thousands of Businesses Contacted to File Tax Returns (Franchise Tax Board)

State Tells Delinquent Taxpayers to Pay Up (by Joanna Lin, California Watch)

Top 500 Delinquent Taxpayers (Franchise Tax Board)

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