Business Tax Amnesty Provides $9.1-Million Boost to City’s Coffers

A tax amnesty program hailed as “wildly successful” by Los Angeles Mayor Tom Bradley reaped more than $9.1 million in delinquent business taxes from companies scrambling to avoid penalty fees and the threat of prosecution, city officials said Thursday.

An estimated 10,500 businesses--including 450 companies in the city that had never paid taxes before--responded to the amnesty offer, which a jubilant Bradley praised during a City Hall news conference attended by City Controller Rick Tuttle, City Councilman Howard Finn and City Clerk Elias Martinez.

“I know that some of them just put it off,” said Bradley of the delinquent taxpayers. “They procrastinated as many of us often do.

“But the slate has been wiped clean, and the penalties that they otherwise would have been charged with and the possible criminal investigation and prosecution will not be needed.”

Bradley said the $9.1 million collected during the three-month program far exceeded the expectations of city officials who saw $6 million of that total pour in during the final week of the amnesty period, which ended Dec. 31.

Under the amnesty ordinance, authored by Finn and patterned after a similar state program, businesses were allowed to pay their overdue business and payroll expense taxes--amounts that have ranged from as little as 1 cent to as much as $102,500. Delinquent taxpayers were required to pay the tax principal and interest, but penalties were forgiven and prosecutions by the city attorney’s office were waived.

Although the amnesty deadline has passed, city officials said businesses can still pay their overdue taxes and any interest--plus a 40% penalty fee--and avoid criminal prosecution if they act quickly.

But Tuttle made it clear that the city attorney’s office will soon be cracking down on recalcitrant taxpayers with a field enforcement staff beefed up with 18 more investigators for a total of 60. The city, he said, has served notice that it will engage in “stronger enforcement policies of the business taxes, that the honest taxpaying businesses will no longer have to subsidize the city service for those businesses which are not paying their taxes.”

Paul Inafuku, assistant chief of the city clerk’s tax and permit division, said his office has processed most of the $9.1 million in payments to the city but that the overall dollar amount will climb even higher as additional payments--postmarked by Dec. 31--are received.

Overall, Los Angeles collects $183 million in taxes from 220,000 businesses operating within the city. And while the amnesty program pulled in most of the $10 million believed to be owed the city in back taxes, Tuttle said another $20 million to $100 million may be owed by businesses that the city has yet to track down.