FC: State governments already Poindexterizing us for tax bills

[Declan McCullagh <declan () well com>]

---

Wed, 05 Feb 2003 19:10:18 -0500
Date: Wed, 5 Feb 2003 19:18:00 -0800
From: Jack Dean <JackDean () WebCommanders com>
To: Declan McCullagh <declan () well com>
Subject: Data mining helps states boost tax revenue


Looks like Poindexter is actually behind the curve . . .

http://www.nj.com/business/ledger/index.ssf?/base/business-3/104434381947750.xml

The Star-Ledger
[Newark, NJ]
February 04, 2003

States mining data to boost tax revenue

By Kathy Kristof

Los Angeles officials scoured 324,000 electronic files in the process
of hunting down Don Mann, an admitted business-tax violator.

But in Mann's case, their prize looks pretty paltry. If Mann's
accountant is correct, all that searching will lead the Van Nuys,
Calif., resident to cough up about $100 in delinquent business license
taxes.

Mann, a freelance movie consultant, concedes he didn't pay the tax,
saying he didn't know about it. City officials acknowledge that is
likely given the obscure nature of the levy.

Yet in this age of stressed state and local budgets, with declining
revenues and mounting expenses, every little bit counts. And stories
like Mann's are bound to become far more common.

Cities, counties and states across the country are turning to a
practice known as data mining to squeeze more money out of taxpayers,
often through the collection of little-known levies such as business
taxes and so-called use taxes.

"It amounts to combing through files that can tell you something about
taxpayers, or people who should be taxpayers, and matching those
results to your files," said Harley Duncan, director of the Federation
of Tax Administrators in Washington.

Mann's saga is a classic example of data mining in action. The Los
Angeles business license tax isn't new, and the city has long believed
all businesses, including small firms and sole proprietors, should pay
it. But few freelancers and home-based workers have complied, and the
city had no way of knowing who wasn't paying.

That changed in 2001, when a state law was passed allowing the
California Franchise Tax Board to share information gleaned from
Californians' income tax returns with cities and counties. That gave
city finance departments a way to check on taxpayer compliance, and
Los Angeles asked for files on anyone living in the city who reported
income from self-employment or owning a business.

The city received 324,695 files. About half of those taxpayers were
dismissed as duplicates and bigger businesses that already paid tax
under a corporate name. The rest were sole proprietors, self-employed
individuals or people who worked at home or had some outside freelance
income. Late last year, Los Angeles sent notices demanding three
years' worth of tax payments on their gross revenues.

[...]


Kathy Kristof writes for the Los Angeles Times. She can be reached at
kathy.kristof () latimes com.




-------------------------------------------------------------------------
POLITECH -- Declan McCullagh's politics and technology mailing list
You may redistribute this message freely if you include this notice.
To subscribe to Politech: http://www.politechbot.com/info/subscribe.html
This message is archived at http://www.politechbot.com/
Declan McCullagh's photographs are at http://www.mccullagh.org/
-------------------------------------------------------------------------
Like Politech? Make a donation here: http://www.politechbot.com/donate/
Recent CNET News.com articles: http://news.search.com/search?q=declan
-------------------------------------------------------------------------