Four Arrested in Tax-Evasion Sweep

Four Los Angeles County residents were arrested this week in a tax-evasion sweep that the state controller said illustrated yet another challenge for the state and local governments with budget crises.

Linda Marie Phillips, 50, of Compton, Mark R. Lee, 44, of Woodland Hills, and Los Angeles residents Rigoberto Gonzalez, 59, and Carlos Vidal Fuentes, 33, each allegedly owe the state between $1,550 and $130,000 in overdue taxes, said Barry Gilbert of the Franchise Tax Board.

Phillips allegedly committed a refund fraud of $1,550, Lee allegedly failed to report income of more than $900,000 during four years, Gonzalez allegedly filed false tax returns and failed to report income of more than $1.4 million, and Fuentes allegedly failed to report income of more than $1 million over two years, Gilbert said. Each felony tax count carries a maximum of three years in state prison.

Even the lowest level of tax evasion deprives the state and local governments of revenue needed for services, state Controller Steve Westly said.

Improved technology and close cooperation with the federal Internal Revenue Service have led to increased crackdowns on tax scofflaws this year, Westly said.

Wednesday’s sweep was the third in seven months, according to Franchise Tax Board officials, who investigate about 400 evasion cases a year.

Tax evasion takes many forms and costs the state and local governments billions in lost revenue, authorities said.

Transactions in which employers pay workers cash under the table alone cost the state between $2 billion and $3 billion a year, said Denise Azimi of the tax board’s Sacramento headquarters. The use of illegal tax shelters, most often by wealthy individuals or corporations, costs the state between $600 million and $1 billion, she said.