After three years of trying, L.A. city officials have finally received state approval to track down business tax scofflaws and bring tens of millions of additional dollars into city coffers.

The approval, contained in one of the hundreds of measures Gov. Gray Davis signed at the last minute on Oct. 14, clears a major stumbling block in the battle to reform the city’s business tax structure. The bill, AB 63, authored by state Assemblyman Gil Cedillo, D-Los Angeles, grants cities access to state income tax records to find businesses that have escaped paying their gross receipts taxes.

Former City Controller Rick Tuttle estimated that the measure could bring in as much as $66 million to city coffers each year as scofflaws are tracked down and ordered to pay up. The city can use these extra funds to finance broad-based business tax cuts and tax code simplification.

Local businesses long have contended that the city’s business tax structure is too complicated. There are 64 separate tax rates, with many businesses subject to multiple rates. Also, they contend that the tax rates themselves are too high to compete favorably with neighboring cities like Calabasas or Glendale.

Previous attempts at substantial reforms floundered in part because of concerns that granting tax cuts to businesses would blow a hole in the city’s budget. As a result, the council to date has only approved measures that reduced business taxes for start-up companies and other narrow categories.

“I think we have a great opportunity here to finally get this substantive business tax reform passed,” said City Councilman Nick Pacheco, who chairs the council’s budget and finance committee.

Also, AB 63 now can serve as a complement to the city’s business tax amnesty program, which began on Oct. 1 and lasts through the end of the year.

Across-the-board tax relief is still months away. A blue-ribbon committee set up by the council and former Mayor Richard Riordan and recently re-appointed by Mayor James Hahn is now crunching numbers through economic models to determine how to simplify and reduce the tax rates. Committee co-chair Mel Kohn, an Encino accountant, said that he expects the panel to come up with a proposal mid-way through the first quarter of next year.