Californian State Controller Announces $800 Million Windfall From Tax Shelter Crackdown

by Leroy Baker, Tax-News.com, New York

26 April 2004

Californian State Controller and Franchise Tax Board Chair, Steve Westly announced last Thursday that the state’s crackdown on illegal tax shelters has yielded over $800 million in additional tax revenues.

The figure is almost ten times higher than the $90 million that the state was expecting to gain from the initiative.

Westly pointed to legislation that he sponsored last year, which included new enforcement tools and stiffer penalties to target illegal tax shelters, as a partial explanation of the dramatic results.

Among the new measures was a one-off Voluntary Compliance Initiative, allowing taxpayers who had used abusive tax shelters to come forward and amend their state tax returns before increased penalties took effect.

Commenting on the revelation, Westly noted: “The huge success of our amnesty program shows that government can think outside the box. We must collect the taxes already owed to California before we consider raising taxes or cutting services.”

According to figures released by the Board, 460 individual taxpayers have brought in $589 million, and 182 corporate taxpayers have brought in $249 million.

The FTB is still totalling Voluntary Compliance Initiative receipts, and will announce the final number in early May.

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