Tax evasion may cost businesses 

If business-tax scofflaws are caught significantly underreporting, they could soon start paying a hefty penalty.

Hundreds of thousands of dollars could start pouring into city coffers annually if the “substantially underreporting” penalty goes into effect.

The Board of Supervisors Budget and Finance Committee voted Wednesday to send legislation that would enact the penalty to the full board.

Introduced by Mayor Gavin Newsom, the legislation defines substantially underreporting as 25 percent or more and would assess a penalty of 50 percent on the amount.

“This is similar to underreporting penalties that exist at the federal and state level,” said David Augustine, program manager for the Office of the Treasurer.

It’s estimated that penalties would total $662,000 in the 2012-13 fiscal year and as much as $993,000 during fiscal year 2013-14.

If a business owed $15,000 but only paid $10,000, the penalty would be $1,250.

The legislation would have required that at least 50 percent of the revenue from the new penalty go toward paying for technology improvements in the Tax Collector’s Office. The committee eliminated that provision.

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