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State Targets 700,000 Tax Nonfilers

State Controller and Franchise Tax Board (FTB) Chair Steve Westly today announced that the FTB's efforts at tracking down 2002 income tax nonfilers is projected to raise nearly $450 million.

To date, the FTB sent nonfiling notices to more than 700,000 individuals asking for their 2002 tax return. The FTB's filing enforcement program targets people who earned California income, but did not file a state income tax return. Also being launched this month is the state's effort to crack down on corporate nonfilers who have not filed their 2002 tax returns. The FTB will contact nearly 30,000 businesses during July. The corporate nonfiling program raises another $30 million annually.

“People who earned money but didn't file a tax return have some explaining to do,” said Westly. “We're making sure that everyone who has a tax bill comes forward to pay their fair share.”

The tax gap, estimated at $6.5 billion, is the difference between what is owed and what is paid. Each year, Californians voluntarily file more than 14 million state tax returns. Estimates show that compliant taxpayers carry the burden of the tax gap by paying nearly 20 percent more in state taxes to make up for what is lost through tax cheating.

The filing enforcement program reviews more than 220 million income records from third parties such as banks, employers, state departments, the IRS, and other sources. The FTB matches these income records against its database of tax returns filed. The FTB gives nonfilers 30 days to file their return or show why a tax return is not due. Those who ignore the letter get a tax assessment with added penalties and fees.

Editor's note: Please call for a breakdown by county or city for nonfiling individuals. Also, see the table on the next page listing the totals for millionaires and other professionals. Graphics emailed on request.

Who's Not Filing

Statewide Facts:
Number of Nonfilers Identified
Statewide
Los Angeles
Orange
Sacto
San Diego
San Francisco
Santa Clara
Millionaires
865
202
96
12
57
47
65
Lawyers
6,756
2,030
604
206
568
389
221
CPA's
1,458
374
115
38
90
49
59
Contractors
22,769
4,162
1,662
935
1,608
327
896
Med. Profs
20,473
4,818
1,369
620
1,476
443
563