Media Invited to Witness Crackdown on Tax Bills : 4 Told to Shell Out as Tax Board Drops In

Shortly after 6 a.m. Thursday, with state police surrounding her Woodland Hills home, Katherine Smyth was awakened and paraded down her front walkway past a clutch of reporters and whirring television cameras invited to record her arrest.

It wasn’t that anyone expected Smyth, a 54-year-old widow, to hole up and shoot it out with the cops. Indeed, they even let her gussie up before bringing her in. That they were bringing her in was the point, and state officials were making sure that many more people got the message.

Smyth is one of four people arrested early Thursday in the Los Angeles area, part of what a state Franchise Tax Board spokeswoman called a stepped-up, statewide effort to prosecute people suspected of failing to pay state income taxes or file tax returns.

Three From Valley Arrested

Three of those arrested are San Fernando Valley residents suspected of failing to pay taxes or file returns for as many as four years on annual incomes ranging from $21,000 to $159,000, according to the tax board.

Police seized three vehicles belonging to Robert and Margie Salcido of Woodland Hills, who tax board officials say have owed $2,766 in state income taxes since 1984. They were not arrested.

Janie Cordray, a tax board spokeswoman, said the press had been invited to witness arrests this week in San Francisco and San Diego as well. Cordray said the arrests in front of media were planned so an estimated 100,000 delinquent California taxpayers would see that “you have to obey the law.”

$2 Billion in Lost Taxes

The Franchise Tax Board collects about $13 billion in taxes every year, but officials estimate that the state is losing more than $2 billion because of tax evasion.

“It runs the gamut,” Cordray said, “from the gardener who makes $20,000 a year and doesn’t report it, to the guy who sells an $18-million office building and doesn’t come forward.”

State tax agents are attempting to recover more than $700 million in delinquent taxes, officials said. Since January, criminal charges have been filed against 223 people suspected of tax evasion, and about 500 others are under criminal investigation, said James Reber, a tax board spokesman in Sacramento.

Last year, Reber said, 159 people were charged and 120 convicted of tax-related crimes. Five years ago, Cordray said, the number of people convicted was 25.

Tax officials said they have stepped up prosecutions in the wake of an amnesty program that ended in March, 1985. The board collected nearly $4 million during the three months of the amnesty, in which penalties were withheld if people paid back taxes.

In Smyth’s case, an arrest warrant was issued after she failed to appear April 15 for arraignment on four counts of failing to file state income-tax returns, Cordray said. Smyth, who works for a real estate firm, had been asked over the last four years to pay state taxes on income totaling $138,000, the tax board spokeswoman said.

Neighbor Embarrassed

“For me, this is quite embarrassing, and I can only imagine what she must be going through,” said Libby Williams as she watched Smyth, her neighbor and longtime friend, cover her face while being led past news cameras and into a waiting squad car.

Smyth, who was released on $250 bail, could not be reached for comment.

Others arrested Thursday include Richard W. Weber, 41, a film editor at Universal Studios, and Brian Holland, 45, a songwriter from Bell Canyon, Cordray said. Holland, who was part of a team that wrote many hit songs for Motown Records during the 1960s, has been accused of failing to file state income-tax returns from 1980 to 1982, when he earned about $448,000.

The Salcidos’ van and two pickup trucks were seized following civil proceedings to satisfy a $2,766 tax bill owed since 1984, Cordray said.

“What are we going to do, stomp our feet and jump up and hope that they’ll go away?” said Margie Salcido as she watched state police attach the vehicles to tow trucks. “If I knew this was going to happen, I would have paid it earlier.”

By noon, Robert Salcido, a self-employed sign installer, had paid the tax bill and retrieved his vehicles. He took the day’s events good-naturedly.

“We’ve known for sometime we owed the money and that maybe something like this would happen,” he said, facing the cameras in his front yard. “But, if I’d known you guys were coming, I’d have at least mowed the grass.”