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TODAY’S TOPIC: New York’s Tax Amnesty May Bring In $200 Million

October 30, 1985

ALBANY, N.Y. (AP) _ New York officials hope to bring in about $200 million during a three-month tax amnesty program that starts Friday with the message: ″You know who you are and so do we.″

″What I really would have loved to do is get everyone feeling guilty, but I’m not that naive,″ said state Tax Commissioner Roderick Chu, who estimates tax cheating costs New York $1 billion annually.

Instead, New York’s amnesty television commercials emphasize that the tax collector has new ways of finding cheats and tougher penalties for those who don’t pay up voluntarily.

Chu speaks of the easy to remember ″three Cs″ that Gov. Mario Cuomo has said underly the program.

″If you’re a tax cheat, we’re going to catch you, we’re going to convict you and we’re going to can you,″ says Cuomo.

The same tough-guy approach has been used in other amnesty programs in Illinois, California and Massachusetts. Like New York’s, their programs let taxpayers pay delinquent taxes, plus interest, without civil or criminal penalties.

Illinois raised an estimated $152.4 million from its program last fall, according to records collected by New York tax officials researching amnesty programs nationwide. In California and Massachusetts, the estimated returns were $144 million and $85 million, respectively.

Dollars raised by those states’ programs and the $200 million projected for New York are inflated, amnesty experts say, because an estimated 70 percent to 80 percent of the money collected is revenue that tax collectors knew was owed.

The idea of granting amnesty to tax cheats wasn’t welcomed initially by Chu, who was recruited by Cuomo from the public accounting firm of Arthur Andersen & Co. to take over a department that collects more than $21 billion annually in taxes.

When Chu was considering whether to take the job as commissioner, he consulted with his 85-year-old Chinese immigrant grandfather whose response Chu translated as: ″Everyone will hate you 3/8″

Chu says he doesn’t mind tax cheats hating him for modernizing the department’s computer capability that tracks tax evasion. Nor does he care if they hate him for helping convince Cuomo and the Legislature this year to pass major civil and criminal tax penalties before embarking on an amnesty program.

Under the new tax law, individuals who cheat on their income taxes can be sent to prison for up to four years or fined up to $50,000.

Corporations can be fined up to $250,000, and employers caught withholding payment of state income taxes can draw seven-year prison sentences. Bootlegging gasoline distributors can lose their tank trucks.

With the new penalties in effect, Chu said he has changed his mind about a one-time-only amnesty program.

″What’s best for the honest taxpayer is to get the tax cheats to pay up the taxes they owe and the interest, even if it means forgiving a penalty, but more importantly, getting them on the tax rolls from here on out,″ Chu said.

Information provided to state authorities is also made available to the Internal Revenue Service, so the tax cheat who clears his slate with the state this year may be talking to the federal tax collector next year, Chu said.

Without tougher penalties and surer enforcement, amnesty won’t work, Chu said. North Dakota, he noted, didn’t toughen penalties to go along with its amnesty program and raised only about $150,000 from fewer than 200 taxpayers.

″If I were a tax evader,″ Chu said, ″I would want to know what’s the likelihood of getting caught and what will I pay if I do get caught.″

To many cheats, it’s a gamble to evade taxes, and Chu said the new penalties and the arming of his department’s 5,000 employees with a brand new $65 million computer system have changed the odds.

A computer expert, Chu created a whole new detection unit and named it after himself: ROD for Revenue Opportunity Division.

ROD recently caught 91 doctors for not filing tax returns by checking payments made by the state through Medicare and Medicaid and by other health insurance carriers.

No one seemed immune from ROD. An internal check of the Department of Taxation and Finance last spring found 69 employees who may have violated the tax laws.

While sales and business taxes are the major amnesty targets, many individuals have already come forward. ″I’ve gotten some very impassioned letters (from people) who talk about the fear of God,″ Chu said.

A 73-year-old Rochester widow told tax officials that she owed $3.75 in 1982 taxes and $10.03 in 1983 taxes and asked them to bill her for the interest, said department spokeswoman Madeline Lewis.

Some letters are cautiously worded. A Brooklyn woman wrote, ″I have a good friend who needs some help. He hasn’t filed state tax returns in seven years. Of course now he is scared silly. He has agreed to let me help him.″

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