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On The Money: California Names 500 Biggest Tax Cheats

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California is being cheated out of millions of tax dollars by deadbeats who don’t pay their bills, according to a new list revealed Friday by the Board of Equalization.

The list includes 500 businesses that owe collectively more than $555 million – missing money that could have had a direct impact on education, by providing funding for more than 78,000 students in grades K–12.

Under Proposition 98, California spends $7,096 per pupil. The 78,000 figure is enough people to sell out San Francisco’s Candlestick Park.

One of the delinquent businesses, according to the BOE, is Lyons, a Sacramento restaurant on J Street, listed as the 13th biggest debtor, owing $4.1 million in back taxes. On The Money visited Lyons Friday to ask the manager why the restaurant has failed to pay up.

“You have to talk to the owner,” he said. “I’m the manager, I have no idea.”

When asked who the owner is, the manager replied, “His name is David”, but he would not provide a last name. The manager then said, “I’ll give him your number and he’ll call you back.”

But the owner never did call CBS13. Lyons of California is a corporation. But after more digging, On The Money discovered the secretary of state had suspended the license last June, for failing to disclose corporate information.

“They are not legally able to do business in California and they have lost their rights to the name,” said Shannan Valayas, a spokeswoman for the Secretary of State’s Office.

Yet the restaurant is clearly still doing business, despite owing $4.1 million in unpaid taxes. But it is not the only deadbeat, according to state authorities who published that list of 500 names, adding up to $555 million in lost revenue.

“All of these businesses or taxpayers that are on this list have failed to pay their taxes and all of them owe more than $100,000 to the state of California,” said Jaime Garza, a spokesman for the Board of Equalization.

California has already placed tax liens on those businesses to capture lost money that could be helping schools. In July, state agencies will roll out a new weapon – a law allowing them to take action against “drivers’ licenses, occupational licenses, contractors’ licenses, to revoke or suspend or even refuse to issue licenses to these folks hoping that that might be another incentive to get them to pay,” Garza said.

Shaming the businesses by publicly disclosing the top delinquents has also been effective. The Board of Equalization has received $5.3 million from 40 taxpayers whose names were posted on the Internet.

Send your story ideas to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter and also on Facebook.

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