Hank Investigates: Tax Target

Inside we found the plan's motto: "show me the money." The hit list of tax audit targets is based on what you do for a living, the kind of home you buy, and personal activities, like gambling.

Rep. John Rogers
"The examples they see in this one report is frightful. But it's more frightful and more daunting, because it's them next."

Bake Shop owner Bob Cerrato had no idea Cape Cod businesses like his were on the hit list...

Bob Cerrato
"It's ruined my life."

And look at the huge sales tax assessment Cerrato got: 15,000 dollars!

Bob Cerrato
"Nobody really wants to help because they're afraid of the DOR."

The 1998 plan promises "there's more money on the way," and it targets chiropractors and dentists, people in partnerships, temporary employment agencies, and people who win lottery money.

Hank
"This looks like a hit list!"

DOR says it's just doing what any business does: making a plan to collect the money that's due.

Ann Murphy, Department Of Revenue
"We're not out to target anyone but we have to do our job, too."

The plan uses lines like "let the games begin..." It describes "project exotic," where revenue agents are sent out on surveillance of Springfield adult entertainment establishments. It also plots out the "CMJ project," which uses information from the registry to examine the incomes of people who own Cadillacs, Mercedes and Jaguars.

Hank
"Does that seem fair? To go after people because they have a fancy car?"

Ann Murphy
"This is what we have to do to enforce the laws fairly for the commonwealth."

It didn't seem fair for parishioners of Our Lady of St. Carmel. They did not know non-profits were on the hit list too, but after their annual Italian festival they got socked with a 2,500-dollar bill for not charging sales tax on items like lasagna and manicotti.

Msgr. Edmond Tinsley, Archdiocese of Worcester
"We really and truly didn't think we owed it."

And if you're now doing your taxes, you are better look at Audit Plan 1999. It proves the target system is still underway, pointing at auto body and repair shops, certain doctors, people who buy fur coats from out of state, and many more.

Rep. John Rogers
"All they ever want is two things: all they ever really want is money and power."

And if you're in their sights, get out your checkbook! A controversial provision in Massachusetts law demands you pay a disputed tax bill before you can fight it in tax court. Some lawmakers want that rule changed.

Rep. Peter Larkin
"I think you should have your day in court before you have to pay."

But now if you don't pay, the DOR can even seize all your assets, including your house! This current rule is so tough on taxpayers even the DOR thinks it's unfair.

Ann Murphy
"We think it's onerous and it's burdensome and we'd like it changed."

After all, when the DOR loses in tax court they have to pay the money back with interest!

Hank
"So hundreds of times you've ruled that taxpayers should get their money back."

Ken Gurge, Chairman of the Appellate Tax Board
"Oh yes."

In fact, the church got its money back.

Msgr. Tinsley
"We rejoiced!"

And that's why Bob Cerrato will head to tax court next month.

Bob Cerrato
"I have nothing to lose."

Bob may well wind up a winner, once three out of five times DOR has to reimburse angry taxpayers!

Hank
"Is that millions of dollars?"

Gurge
"Yes, it's millions of dollars a year."

And remember that's money taxpayers had already paid up-front. Now, some lawmakers are working to abolish the pay-first system. However, if the law doesn't change, the next payment-on-demand tax bill may be addressed to you.