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What consequences can Californians face for delinquent tax debts?

Twice every year, the California Franchise Tax Board publishes a list of the 500 state residents who owe the greatest amount in income taxes. The state Board of Equalization has a parallel list, published every quarter, which tracks debts owed on sales and other taxes.

By making the tax debts public, the lists aim to create an incentive for people to settle their debts by paying them off or entering into an installment agreement that allows taxpayers to whittle the total down over time. The reasoning goes that being exposed as a tax evader inflicts sufficient damage on taxpayers' reputations to galvanize them to deal with the issue.

But one's esteem in the community is not the only thing that can be affected by being placed on the lists. Taxpayers who have professional, occupational or driver's licenses could have them suspended or revoked if they fail to satisfy their tax debts, affecting not only their mobility but their livelihood as well. The lists are made known to California licensing authorities, who can take action against the taxpayers.

Incentives hold a great power to affect human actions. According to the BOE and the FTB, the lists are having the desired result. The two agencies have combined to collect over $170 million in back taxes.

Of course, the loss of one's license and one's standing in the community are not the only consequences taxpayers with past due debts can face. Whether one is on the top 500 list or not, California can impose penalties and interest, place a lien on delinquent taxpayers' property and issue criminal charges in some cases.

Source: NBCSanDiego.com, "Delinquent Taxpayers Face New Penalties," Monica Garske, Sept. 20, 2012

Source: State of California Franchise Tax Board, "Top 500 Delinquent Taxpayers."

• Due to the wide array of harmful consequences tied to non-payment of taxes, those with tax debts should act quickly to eliminate them. There are options to reduce and pay off the amount owed. If you would like to learn more, please visit my California tax payment plans page.

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