State Cashes In on Conscience, Reaps Tax Amnesty Windfall

One man sent in $400--just in case.

“He said he did not think he owed any back taxes and felt he had a clear conscience,” Jim Shepherd, a public affairs officer with the state Franchise Tax Board, recalled later. “But just in case it was discovered in the future that he owed us something, this was his amnesty insurance.”

The man--his name was not revealed--was one of 60,000 anxious souls who queued up or called in Friday in an effort to beat the midnight deadline for amnesty on overdue state taxes.

California officials Saturday proclaimed the amnesty program a success, estimating that more than $100 million in unpaid taxes was paid or promised by the deluge of delinquents.

Some Franchise Tax Board offices had stayed open after the normal closing time, and 132 special operators had continued to man their switchboards Friday evening as it became obvious that the response was exceeding all expectations.

Relenting under the last-minute flood of repentance, the tax board granted a short extension, deciding that anyone who had registered or called in before midnight would be given another 10 days to come up with the money.

Others paid up, even if it wasn’t in dollars.

Currency of the Realm

A man now living in Mexico, who figured that he still owed California $521, sent in 116,000 pesos to pay his debt.

Others--most of them promising American dollars--called in from Hong Kong, Saudi Arabia, East Germany, Korea, Hungary and Chile.

Two film stars, who were not further identified, called in to cough up roughly $400,000 between them, Shepherd said.

“One man who applied for amnesty had sent his form back in 1979 with the word ‘deceased’ scrawled across it,” Shepherd said. “He’s been making $100,000 a year since then.” A man who applied at the El Monte office said he hadn’t filed for 35 years because he’d been in jail. A farmer dropped off $622 for sales taxes owed since 1966 on some hay he had sold to horse owners. An elderly taxpayer with a conscience said he wanted to correct his declarations for 1944 and 1951.

He wasn’t the only one plagued with guilt. In Fresno, when a television crew arrived at the tax office to film the last-minute rush, several people in line chose to seek cover rather than coverage, and sprinted for the door.

Escaping a Penalty

Under the amnesty program approved by the Legislature last year, taxpayers who beat the deadline--or its 11th-hour extension--are being permitted to pay what they owe without penalty. Those who failed to take advantage of the grace period and are caught cheating will face penalties that include fines of up to $20,000 and three years’ imprisonment.

Shepherd said that while it probably would take several weeks to calculate how much income the amnesty program generated, “we are already pretty sure we will get well over $100 million,” considerably more than the earlier estimate of $66 million.

The program was aimed at narrowing the $2-billion gap between what was owed the state and what had been paid.