L.A. Catches Small Fish by Casting Wide Net in Search for Tax Scofflaws

Slap the cuffs on me. I’m an outlaw. A tax dodger. My face is probably going up on a wanted poster in City Hall at this very minute.

Mine and 151,000 other Angelenos’.

The official letter that arrived in last week’s mail didn’t have quite the chilling salutation of a draft notice (“Greetings”) but ran a photo-finish second. It began, “Re: City of Los Angeles business tax.”

The city let me know it has information that “indicates you may be engaged in business within the City” and “our records indicate that you do not have a valid City of Los Angeles Tax Registration Certificate. You may owe business taxes....”

Two “mays” and two “indicates” -- sounds pretty soft to me. What business? What tax? I’m not operating a psychic pals’ network out of the bathroom; if I were, don’t you think I would have been able to predict that the sewer line would back up?

So I called the phone number printed on the letter. The other 151,000 people who got the letter must have, too. We all got a busy signal.

Antoinette Christovale, who signed the letter, is director of the city finance office, and once I’d bribed someone to give me her direct number, she told me that her office “wasn’t expecting as many people to call in.”

It shouldn’t have been a surprise. It would be a surprise if the 151,000 people who got a letter saying they might be prosecuted if they don’t respond didn’t all pick up the phone.

Assembly Bill 63, Christovale says, the “business tax enforcement program,” gives the city a hand in enforcing its business-tax code. Any California city can ask the state franchise tax board to hand over tax information about its residents. Anybody who files a 1099 form -- payment for “independent contract” work -- is on that list. If you earned $100 a week baby-sitting for college money, if your church paid you $6,000 to refinish the pews, shazam! You could be a small business.

If you earned less than $5,000, you might be off the hook. But since the tax board only hands over names, addresses and types of business -- no income information -- the burden is on you and me to prove a negative: to fill out the city’s form, showing we’re exempt (and putting tax data in their hands), or pay taxes all the way back to 1999.

So, do I run a “hot business”? I made a little money doing commentaries for National Public Radio, telling the rest of the world what it doesn’t know about L.A. and should, but I look upon that as God’s work, not business. I probably cleared $500 this year from my book -- so much for best-sellers making writers rich. I think the city made more in sales tax on the book than I got from writing it.

Isn’t that enough? What do they want, blood? Oh, I see -- there’s a place on the form for that, too.

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I can’t entirely blame the city. A lot of substantial businesses do dodge taxes. But can someone explain to me why the city expects to track down tax dodgers by going after people who have filed taxes?

In Jackie Jones’ case, the city already gets her tax money. She’s owned Jones Coffee Co. in Northridge for 24 years, selling coffee, tea and gifts. The 1994 quake put her out of business for three months, and did she get a tax break from the city? One guess.

She was furious when she opened the letter. “This catches law-abiding citizens, people who pay attention to something like this.... And to spend our money mailing those things out? It’s ridiculous, totally ridiculous.”

VICA is the Valley Industry & Commerce Assn. Its chairman, Fred Gaines, says VICA has been swamped with calls from people who “have no idea why they’d be in a position to pay tax and thought the tone of the letter was very bizarre and threatening. I think [the city] has handled it very poorly.” VICA never jokes about taxes, so Gaines may not be entirely kidding when he mutters something about a Chai Tea Party in Lake Balboa.

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The Writers Guild of America is hearing from members who’ve received this letter -- some of them retirees who haven’t written for a long time but are still getting residuals for years-old work. The guild is talking with the city about sorting out the intricacies and differences in writing at home versus, say, doing auto-welding at home.

But how indeed do you tax writing? If I get an idea for a column while I’m passing through Garden Grove, do I have to pay a Garden Grove business tax? Think of some civic taxman hammering on Emily Dickinson’s front door and hollering in to the Belle of Amherst, “Open up, lady! We know you got poems in there!”

Five years ago, L.A. proposed making writers and artists register for a business permit and pay a $25 annual fee. This didn’t happen, in part because of the Writers Guild, and for good reason: How do you license creativity?

I do admit, it’s tempting, a certificate proving I’m a writer, especially when some choleric editor demands, “You call yourself a writer?” and I can say modestly, “Well, I don’t ... but the city of Los Angeles does.”

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Patt Morrison’s columns appear Mondays and Tuesdays. Her e-mail address is patt.morrison@latimes.com