The state expects to raise nearly $450 million by tracking down those who failed to file a state income tax form in 2002.
The State Franchise Tax Board has sent out nonfiling notices to more than 700,000 individuals in the state, asking for their 2002 tax returns, according to state controller Steve Westly.
Targeted are those who earned money in California but didn’t file a state income tax form.
Also being targeted are corporate nonfilers who didn’t file in 2002. The state expects to contact nearly 30,000 businesses this month and raise another $30 million annually from nonfiling corporations.
“People who earned money but didn’t file a tax return have some explaining to do,” Westly said. “We’re making sure that everyone who has a tax bill comes forward to pay his 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, Westly said.
The state filing enforcement program is reviewing more than 220 million income returns from third parties, such as banks, employers, state departments, the federal Internal Revenue Service and other sources, the state controller said.
The Franchise Tax Board matches these income records against its database of tax returns filed.
The Franchise Tax Board is giving nonfilers 30 days to file their return or show why a tax return is not due, Westly said.
Those who ignore the letter get a tax assessment with added penalties and fees, he said.