Officers Kill Armed Man Holed Up in Tax Agency : Violence: Jim Ray Holloway overpowered guards and took hostages at Board of Equalization Building. Police say he was having tax problems.

SACRAMENTO —  A heavily armed former state investigator, frustrated over his personal tax problems, overpowered security guards at a state tax agency Friday and held workers hostage until he was killed in a barrage of police bullets.

Jim Ray Holloway, 53, told his hostages at the Board of Equalization that he was having trouble with back taxes, and Sacramento police said they found a stack of tax documents on him.

The incident forced the evacuation of 2,300 state workers from the high-rise, seven blocks from the Capitol.

Holloway demanded to see a particular Board of Equalization bureaucrat. The employee, who had retired, was responsible for sending letters to taxpayers informing them that their state tax returns were incomplete or that they owed more money.

“We believe he was having some taxation problems,” Sacramento Deputy Police Chief Fred Arthur said. “He had gone to the Board of Equalization to, unfortunately, try to resolve it with a shotgun, a carbine rifle, a .45 caliber pistol, a revolver.”

Holloway had been a California Highway Patrol officer from 1966 to 1972, when he went to work for the state Department of Alcoholic Beverage Control as an investigator.

On Friday, officers shot Holloway at close range as he crouched and leveled a shotgun at them on the 18th floor of the new 23-floor Board of Equalization Building.

Holloway was wounded in the face and retreated into a nearby cubicle. He refused to drop his gun and again aimed it at police. The officers fired and killed him.

In all, officers fired 17 or 18 rounds.

Holloway may have been confused about the state tax bureaucracy; he had asked whether he was at the offices of the Franchise Tax Board, which collects state income taxes. The Board of Equalization collects business taxes, such as sales and gasoline taxes.

The drama began early in the morning when Holloway walked into the high-security building and tried to get past the system of locked doors by flashing a badge to a guard. He was refused admission and returned to his van.

Soon afterward, a second security guard, who was checking the building’s perimeter, noticed Holloway sitting in his van and confronted him. Holloway emerged from the vehicle, managed to disarm and handcuff the security guard, and then returned to the building.

This time, he aimed his shotgun at the guard, stationed behind a glass partition, who controlled the locked doors. The guard released the locks. That sounded an alarm, which flustered Holloway; he fired several times into the guard booth. The officer escaped unharmed.

As Holloway made his way to the 18th floor, a state police officer was shadowing him and reporting his location to other officers. Within minutes, a Sacramento police special weapons team arrived.

Meanwhile, Holloway was telling about half a dozen hostages that he had no intention of being taken alive. At one point, Holloway announced: “ ‘I’m going to kill the first police officer to come through the door,’ ” said Lt. Joe Enloe, head of the Sacramento Police Department’s homicide unit.

Holloway demanded to know the whereabouts of seven state employees on a list he had brought with him. All but one of the people on the list worked for other agencies.

Ironically, until a month ago when it moved into new quarters, the Board of Equalization had never had a security system. The system was installed at the insistence of the agency’s executive director, Burt Oliver, who argued that it was foolhardy for a tax office to operate without security.

Said Board of Equalization Chairman Brad Sherman: “It’s amazing that this happens just a few weeks after we move into a new building that is so much more secure than our main facility was before.”

Oliver rushed to the 17th floor when he heard that a gunman had taken hostages on the 18th. He then directed office workers on several floors to lock their doors and barricade elevator and stairwell doors.

Holloway allowed one hostage, Chris Salgado, to phone a friend of hers on the 17th floor, where Oliver happened to be. “She was saying, ‘Get me out of here,’ ” Oliver said. “She said he had guns, extra ammunition.”

Holloway joined the state Department of Alcoholic Beverage Control as a special investigator in 1972. Twelve years later, he was disciplined for getting drunk and frightening a group of campers with a firearm.

Holloway’s salary was cut by 5% for a year. He also was found to have filed false daily reports stating that he was working when he was absent from the job. He resigned from the ABC in 1985. For a short time in 1986 he had a license to sell beer and wine in Milpitas, ABC records show. Most recently, he had been living in Manteca.

Times staff writer John Hurst contributed to this report.