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Thursday, 20 November 2008 08:22 UK Bengaluru, India


 

California tax collector must pay inventor $388 million

Don't you just love it when that happens?

By John Oram in California @ Saturday, August 16, 2008 7:08 AM

 
 

Nobody likes their local tax man, least of all Californians. So when we saw on TV that our tax man owes somebody $388 million, there was big cheer among those of us sitting at the local pizza parlor.

California residents pay their state taxes to an agency called the Franchise Tax Board. In 1879, California adopted its state constitution which among many other programs created the State Board of Equalization and the State Controller, which administered all tax programs. In 1950, California abolished the office of the Franchise Tax Commissioner and created today’s Franchise Tax Board.

This story gets even better, because it was jurors in another state that handed the verdict to California's tax man.

In a Clark County, Nevada, District Court, trial juriors awarded Las Vegas inventor Gilbert P. Hyatt $250 million in punitive damages Thursday for the 'outrageous conduct' of Franchise Tax Board auditors in an investigation that began in 1993. The award was on top of $138.1 million that jurors gave Hyatt last week for 'invasion of privacy' and 'emotional distress.'

Former chief counsel for the Franchise Tax Board, Brian Toman, said the result was completely unprecedented.

Inventor Hyatt's suit alleged that Franchise Tax Board auditors went through his garbage and mailbox. They then spread rumors among his business associates that he was being audited. They are also accused of sending letters containing his Social Security number to third parties including newspapers and doctors that had never treated Hyatt.

These KGB-like tactics were portrayed as part of efforts to harass and intimidate Mr. Hyatt into paying a $7.4 million tax bill that has grown to $49 million with interest and penalties. Mr. Hyatt, who holds more than 70 patents, contends that he moved to Las Vegas in October 1991, and did not earn millions from his patents until after he left California.

Hyatt's lead counsel, Mark A. Hutchison, said that government agencies should pause and reflect on the significance of this verdict.

Franchise Tax Board officials were huddling today to decide on an appeal. Of course, they had no comment. Not even one of those semi-official clearing-of-the-throat things the tax man does in tax court when they are trying to pillage a citizen. X

 
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