--- Wed, 05 Feb 2003 19:10:18 -0500 Date: Wed, 5 Feb 2003 19:18:00 -0800 From: Jack Dean <JackDeanat_private> To: Declan McCullagh <declanat_private> 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.kristofat_private ------------------------------------------------------------------------- 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 -------------------------------------------------------------------------
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