Eighteen small-business owners in the District have been caught trying to cheat the D.C. government out of $700,000 in back taxes, city officials said yesterday as they announced a new effort to curb tax evasion.

When filing for a permit or license, business owners are required to sign letters saying they do not owe the D.C. government more than $100 in taxes, fines or other fees. Investigators checking the letters turned up 18 businesses that owed at least that much in city taxes when their owners filed papers with the District. The names of the businesses are confidential, as are individual taxpayer records.

In the depths of the city's financial crisis four years ago, millions of dollars in tax revenue was not being collected, in part because individuals and businesses knew they could escape scrutiny.

Now, with new management and a larger budget, the tax and revenue agency has increased collections by 100 percent over two years and beefed up its criminal enforcement division. George Fields, the Internal Revenue Service's former director of tax crimes, now heads the District's tax crimes division.

In the last fiscal year, the city collected $58.6 million in delinquent taxes, $40 million of which was from businesses. In contrast, the city collected $26.2 million in back taxes, $18 million from businesses, three years ago.

Lee Monks, director of compliance for the city tax agency, said: "The message is, we're going to take a more visible, aggressive stance with fraud. We're going to make sure people are filing and paying what they owe."

The 18 businesses were violating a 1996 law called the Clean Hands Act, which was intended to ensure that businesses seeking permits were not delinquent in paying taxes and fines. The tax agency has only recently begun reviewing the records of the city's 6,000 businesses, and officials said the number of cheaters probably will rise.

Businesses have 15 days to settle their debts with the city; installment payments will be considered, agency officials said. If they don't pay, the business owners' licenses could be revoked and they face penalties of $1,000 for false certification for having signed the forms.

Also yesterday, city tax officials announced that they had sold the two licenses for liquor stores that had been seized because they had not paid their taxes. The sale at auction netted the city treasury about $22,500, reflecting a new opportunity for the city to raise money.

"We've never sold liquor licenses before," said Donald Walsh, chief of collections for the city tax and revenue agency.

The new owners of the licenses will be permitted to open liquor stores in the Georgetown area, where the seized stores were located.