Some states asking the tax man to get tougher

Under adamant no-new-tax Democratic Gov. Peter Shumlin, Vermont has added about 10 new tax compliance auditors and has stepped up efforts to scour records in rural areas, and add greater scrutiny to businesses ranging from auctioneers to Internet-based cloud-computing services.

Idaho hired 48 temporary auditors and collectors in fiscal 2011 as part of Gov. C.L. "Butch" Otter's effort to boost earnings without raising taxes and narrow the so-called "tax gap" - the amount of taxes in the state that are due however go unpaid, either unintentionally or by intent.

Effort to help close a $900 million budget shortfall

Oklahoma added about 30 people to its tax collection staff since 2010 in an effort to help close a $900 million budget shortfall. The state collected near $35 million in delinquent taxes while the 12 months that ended in June, and overall sales tax earnings jumped by about $159 million from the first 10 months of fiscal 2011 to the same period in fiscal 2012.

States have a variety of strategies for following up when audits find tax scofflaws. One tactic in California is public shaming: The state publishes lists of individuals and businesses behind on income or sales taxes.

Gale Garriott, executive director of the Federation of Tax Administrators, a Washington-based group that tracks state tax policy, said the handful of states that have taken a tough approach by hiring more auditors have usually been rewarded with more revenue.

Lowe, the landscaper, hasn't been so lucky. He operated his landscaping business for near all of its 36 years with the understanding that bark mulch, soil additives and similar products he sells were exempt from Vermont's 6 percent sales tax.