Government: Smoking Out Tax Dodgers

One taxpayer wrote out a check for $2.5 million. Another showed up at a Manhattan tax office to pay a bill totaling 1 cents, and demanded a receipt. No fewer than 95,000 New York State tax dodgers, including doctors, lawyers, scientists and schoolteachers, have come out of hiding since Nov. 1, when the state started an amnesty program in which people could pay overdue taxes voluntarily without suffering penalties or being subject to prosecution. The grace period ended Jan. 31, and the state announced last week that it had raked in $245 million. That was more than any of 17 other states, from California to Massachusetts, has collected through similar programs in recent years. Elated New York officials suggested that a national amnesty campaign might help cut the federal budget deficit.

New York's program worked so well because it carried a big stick: the Omnibus Tax Equity and Enforcement Act. Passed by the state legislature last April, the bill raised penalties for many kinds of tax evasion and strengthened enforcement. On Feb. 1, the state began to get tough. Says New York Tax Commissioner Roderick Chu: "It's open season on tax cheats now."