In response to the wave of scandals hitting corporate America, a state lawmaker wants to raise penalties for California companies that set up offshore shelters to avoid paying taxes.
Los Angeles Assemblyman Dario Frommer says his bill would increase fines and give tax officials more time to investigate corporations that skirt state and federal taxes. The Franchise Tax Board estimates that California loses up to $500 million every year from companies that set up headquarters offshore even though most operations and jobs are in the United States.
If the bill is approved, state officials could levy a fine worth 25% of the money put into the offshore shelter. The bill would also extend the statute of limitations from 4 years to 8 years, giving tax officials more time to investigate.