Success of Amnesties Tied to Enforcement

Amnesties only work when the public believes that the government isn’t bluffing and has the resources to crack down on lawbreakers who don’t take advantage of the official forgiveness.

But should the cheaters--whether they are unlicensed contractors or tax evaders--perceive that they can safely call the government’s bluff, then the amnesty and its objectives are doomed.

That sums up the feelings of California officials who have participated in a number of amnesties in recent years.

“An amnesty in and of itself is worthless unless you have some tough enforcement tools to go after the hard-core cheaters,” asserted Jim Reber, a spokesman for the state Franchise Tax Board, which mounted an amnesty effort two years ago. “People cheat because they think they have a relatively low chance of being caught.”

A variety of state and local amnesties have been attempted in recent years--affecting parents delinquent on child-support payments, overdue library fines and even dog owners who haven’t paid tag fees for years--with varying degrees of success.

Here are four recent amnesties in California and the results:

- State Business Taxes. The State Board of Equalization supervised an amnesty for business tax evaders between Dec. 10, 1984, and March 15, 1985.

According to Len Taylor, a business tax compliance supervisor for the board, it was estimated that the amnesty would produce about $6 million in unpaid sales and use taxes. In fact, he said, enough business people with guilty consciences came forward to generate about $14 million in additional revenues for the state.

Like a good poker player, Taylor suggested, the state had been bluffing to the extent that it wasn’t sure it could crack down on the tax offenders.

- State Income Taxes. During the same period, Dec. 10, 1984, to March 15, 1985, the state Franchise Tax Board coordinated an amnesty for personal income tax evaders.

About $60 million was anticipated from taxpayers who hadn’t been reporting some or all of their income to the state, according to board spokesman Reber. In fact, he said, $154 million in back taxes actually came in.

“We thought about 100,000 people would apply (for the amnesty) and we had 147,000 people” come forward, he said.

Given this success, will the board recommend that the Legislature authorize a new amnesty program? No, Reber replied. “If there was another one, it would lose its effectiveness. Many (current tax evaders) would wait for the next amnesty.”

- State Vehicle Registration Fees. Between Jan. 1, 1986, and March 31, 1986, the Department of Motor Vehicles coordinated an amnesty to lure motorists who weren’t paying their registration fees to come forward.

William Gengler, the spokesman for the agency, said it had been estimated that 1.2 million operating motor vehicles were not registered in California when the amnesty began. If this entire group had paid up, he said, the state would have been richer by $100 million.

Actually, he said, his agency estimated that about 25% of those drivers, or 300,000, who were breaking the law would send in their registration fees, thus providing the state with an extra $21 million in revenues.

But the amnesty didn’t entirely live up to expectations.

Only about 9%, or 108,000, of the lawbreakers came forward during the three-month amnesty period, Gengler said. Still, he added, the scofflaws produced an extra $14.5 million for the state, more than two-thirds of the revenue officials had hoped to collect.

Undaunted, Gengler said: “I think it was quite successful. We knew we would not be able to get them all.”

- City of Los Angeles Business Taxes. Between Oct. 1, 1985, and Dec. 31, 1985, city tax officials conducted an amnesty for business people who hadn’t been paying their gross receipts or payroll taxes.

“We thought it would bring in more than $2 million,” said Paul Inafuku, a city tax official.

Motivating the lawbreakers, he said, was the threat that the city “was going to follow up with criminal actions” against tax evaders.

The dramatic result: about $13 million in tax revenue was collected during the three-month period.

“I think it was really successful for the City of Los Angeles as well as for the people who were not in compliance,” Inafuku said.