Article from Reason by Zach Weissmueller.

In the early 1990s, California tax authorities traveled to Las Vegas in pursuit of Gilbert Hyatt, an inventor who earned a fortune as the patent holder of the microcomputer. They staked out his home, dug through his trash, and hired a private eye to look into his background. He’d moved to Nevada in 1991, but California made a claim that the state was entitled to millions of his recent earnings.

What transpired over the next twenty-five years is a story of greed, harassment, anti-semitism, and the abuse of power. And it wasn’t the first time that the California tax agency has strong-armed a former state resident. What’s so unusual about Gilbert Hyatt is that he fought back—and won.

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The board ultimately ruled in Hyatt’s favor on the primary issue of residency. The tax agency claimed that by this time, Hyatt owed roughly $55 million in taxes, fees, and interest penalties. The board ruled he owed the state $1.9 million for appearing to operate portions of his business out of California during the disputed 6 month period, but it confirmed that he was indeed a Nevada resident during this time and was not liable for state taxes on his income.

Hyatt also sued the Franchise Tax Board for fraud and harassment years ago, and a Nevada jury awarded him a $388 million judgment. That amount was later reduced to $50,000 because of a statutory cap on the amount state agencies can be held liable for their conduct.

Read the entire article at Reason.

Image Credit: By Henri Sivonen from Helsinki, Finland (flickr: California State Capitol) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons