Amnesty Brings Tax Bonanza : Rush to Beat Cutoff Nets $100 Million

More than $100 million in unpaid taxes was paid or promised to California authorities by midnight Friday, as a deluge of delinquents scrambled to beat the deadline for the tax amnesty, state tax officials said.

In a hectic last day before the final bell, telephone calls came in from all over the world, and two unnamed film stars filed for amnesty, paying roughly $400,000 in back taxes between them.

More than 20,000 people crowded the state’s 16 regional tax offices, clamoring to pay what they owed, and some offices worked hours beyond their normal 5 p.m. closing, said Jim Shepherd, assistant public affairs officer for the Franchise Tax Board in Sacramento, shortly before the midnight deadline.

Nearly 40,000 callers jammed special hot lines linked to the state’s tax headquarters in Sacramento, where 132 special operators--some of whom put in 18 hours Friday--toiled to cope with the traffic.

‘Wonderful Bonus’

“It’s a wonderful bonus for California,” Shepherd said. “The response to the tax amnesty plan has exceeded our wildest hopes. People are in a panic. They want to get in before the deadline, and they’re afraid they’ll miss it.

“Our original estimate was that, with luck, we might pull in $66 million in extra income. Now we are already pretty sure we will get well over $100 million.

“One man who applied for amnesty had sent his form back uncompleted in 1979 with the word ‘deceased’ scrawled across it,” Shepherd said. “He’s been making $100,000 a year since then. One man who applied at our El Monte office said he hadn’t filed for 35 years because he’d been in jail. An elderly taxpayer with a conscience said he wanted to correct his declarations for only two years--1944 and 1951.”

Shepherd said a mystery state resident sent a payment of $400 and applied for amnesty.

‘Clear Conscience’

“He said he did not think he owed any back taxes and felt he had a clear conscience, but just in case it was discovered in the future that he owed us something, this was his amnesty insurance,” Shepherd said.

In Fresno, when a television film crew went into the tax office to record the rush, several taxpayers ran out of the office because they did not want to appear on film, Shepherd said.

One call came from Hong Kong, from a man who lives there but who owns an apartment building in San Francisco. Other taxpayers, mainly Americans living or traveling abroad, called from Saudi Arabia, East Germany, Mexico, Korea, Hungary and Chile.

One man now living in Mexico, who was unable to obtain the dollars to pay his debt, sent 116,000 pesos to cover a debt of $521.

Calls Pour In

For much of the day, telephone calls were coming in at the rate of 3,000 an hour, Shepherd said. During one hour, as normal closing time approached, there were more than 3,600 calls.

Right up to midnight, operators were still taking several hundred calls an hour.

However, thousands of people did not trust the telephone, and there were long lines for much of the day at some of the 16 regional state tax offices. At the Long Beach office, there was a line of more than 100 people waiting early in the morning when the manager arrived for the last day, Shepherd said.

Even before the final day began, there had been more than a quarter of a million inquiries, and 55,000 people had already paid up, Shepherd said.

The largest check in the amnesty campaign--$1.7 million--came from a company based in Illinois. Roughly half the delinquent taxes being paid came from Los Angeles County.

Future Benefit

“This response is a benefit not only for this year, but for the future,” Shepherd said. “We estimate that California has a tax gap between what should be paid and what is paid of about $2 billion a year.

“This means that to make up the deficit, honest taxpayers are each having to pay about 20% more than they should. But now all these people who have been defaulting are coming back into the system.”

Under the amnesty, the state is allowing delinquent taxpayers to hand over what they owe without incurring any penalty. The payments were supposed to be made by midnight or postmarked by midnight if mailed. Those who failed to take advantage of the amnesty were threatened with stiffer fines and tougher enforcement.

However, as it became obvious that the response would exceed all expectations, tax officials gave a slight extension. Anyone registering or asking for information to be sent before midnight Friday was given another 10 days to pay.

Make It Easy

“We want to make it as easy as possible for people to pay,” Shepherd said.

Among the new tools tax officials have are supercomputers for checking property tax reports, employee wage information and business licenses.

Fines for those found guilty of not paying their share of taxes could be as high as $20,000.

“It means the price of cheating is going to soar,” Shepherd said. “People are afraid. You can hear the relief in their voices when we tell them they can still apply.”

Shepherd said it would probably take several weeks to calculate exactly how much extra income the amnesty program had collected.