Tax amnesty plan proves a bonanza for Massachusetts

Thousands of Bay Staters now have clearer consciences and thinner wallets. It is all part of Massachusetts' amnesty program for the tax evader - a success story that could net the commonwealth well over $60 million in back taxes.

State revenue officials initially expected the three-month effort to bring between $3 million and $5 million into state coffers.

But the amnesty plan, recently ended, so far has produced more than 10 times the latter amount - and the tally is not yet complete.

Massachusetts Revenue Department officials hint broadly that the final figure may be considerably greater than the $56.9 million in back taxes and interest collected through Jan. 23 from various tax dodgers.

Although not the first program in the nation to offer tax evaders immunity from prosecution if they come forth and ante up, the program here appears to have produced the most dramatic yield.

The amnesty approach, pioneered by Arizona in a program that ended early last year, netted that state $6 million. Since then, Missouri collected $854,000, and North Dakota, between $120,000 and $150,000.

Encouraged by the experience of his home state, US House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts is urging Congress to consider a similar plan to collect some of the estimated $100 billion the federal government loses each year through tax evasion.

At the behest of Speaker O'Neill and US Rep. Dan Rostenkowski (D) of Illinois , chairman of the House Ways and Means Committee, staff members for that panel have been scrutinizing the Bay State effort.

Commenting on the tax question, O'Neill said, ''Personally I strongly favor the idea.'' Such a program at the federal level, he suggests, would benefit millions of Americans ''who could take advantage of the opportunity to settle their account with the federal government.''

Despite the Speaker's enthusiasm for a program of forgiveness for tax delinquents who agree to pay Uncle Sam what they owe in back taxes, prospects for congressional approval are uncertain. And within the US Internal Revenue Service, the amnesty idea has strong opposition.

The federal tax-amnesty program aside, interest in this approach is building in several states. Inquiries for information on the Massachusetts effort have come from lawmakers, revenue officials, or civic leaders in about two dozen states and some cities.

For example, on Jan. 18 the Boston City Council unanimously approved an order calling on Mayor Raymond L. Flynn to provide a two-month amnesty to help collect about $80 million in various levies.

Amnesty critics question whether it is right to overlook the years of tax evasion which some scofflaws have practiced. They contend that granting them amnesty is unfair to honest taxpayers who have paid on time. And, they argue, amnesty might encourage others to withhold taxes in anticipation of a future grace period.

Massachusetts officials make it clear there is to be no second chance and those who evade taxes henceforth as well as those who failed to respond to the special program can expect increasingly aggressive pursuit of their unpaid taxes , including imposition of criminal penalties.

The $56.9 million collected thus far in Massachusetts range from $1,087,000, owed by an out-of-state corporation, to as little as 8 cents, according to Harry Durning of the state Revenue Department.

In at least a few instances, tax evaders who came forth actually were entitled to a refund from the commonwealth. ''One man, after meeting with our people, told me he thought he would be getting back $1,760,'' Mr. Durning notes.

So far, the biggest payment of a personal income tax was $165,000 paid by a Bay State stock broker, not further identified, who owed back taxes for five years.

Initially projected to cost about $500,000, mostly for personnel, total expenses may reach twice that amount, due largely to the heavy response and the additional time it will take to process all applications and determine how much various tax dodgers owe. State Revenue Commissioner Ira A. Jackson says the amnesty plan is a good one for the commonwealth - for every dollar spent more than $50 will come in.

Although all criminal penalties were waived for those who squared their accounts with the state, the accumulated interest on the unpaid taxes was collected. That ranged from 0.5 percent to 25 percent a year, depending on the period involved. In at least a few instances, the evasion dated back 40 years.

Last fall's North Dakota amnesty program, which ran from Sept. 1 to Nov. 30, in 187 delinquent taxpayers who owed an average of $100. The largest payment was for the tax evasions, says David Herring of the state tax department.

Missouri's amnesty last September and October also was restricted to those who had failed to file in previous years and did not include taxpayers who had filed false returns. Those who came forward to ante up included 274 individuals and businesses, reports Richard King, the state revenue director.