News from New York State Department of Taxation and Finance

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Tax Department Targets Restaurateurs Who Have Not Paid Their Tab

Repeat Tax Offenders Failed to Pay Sales and Withholding Taxes

ALBANY, NY (10/19/2007; 1509)(readMedia)-- Acting New York State Commissioner of Taxation and Finance Barbara G. Billet today announced that the Department of Taxation and Finance’s Collections and Civil Enforcement Division has seized and closed down four City restaurants for repeatedly failing to pay their tax bills while accumulating multiple warrants and/or assessments. In each instance, the tax liabilities involved trust funds -- sales taxes paid by consumers or payroll taxes withheld from employees -- totaling in the tens, and in some cases hundreds, of thousands of dollars. In all cases, the seizures followed repeated efforts by the Department to collect the taxes due without conducting a seizure.

Business seizures are a tool of last resort for the Department. After a taxpayer’s tax liability has been established, the Department files a tax warrant, which is a lien against the taxpayer’s property. To satisfy the taxpayer’s warranted debt, the Department is authorized by law to seize and sell certain taxpayer property. As a matter of policy and practice, the Department only seizes property after it has made every effort to help the taxpayer achieve compliance and settle their debts, and it is only after those options are exhausted, and often after the taxpayer has repeatedly defaulted, that the Department will seize a business and its assets to collect a tax debt. In most instances, businesses are only seized when taxpayers have had repeated assessments and warrants and when they have repeatedly failed to honor their tax obligations.

Acting Commissioner Billet said, “While the seizure of a business operation to collect a tax debt is unquestionably a serious step that the Department will only pursue after careful review, and only after other options have been explored and have failed, sometimes it is the only option available to the Department. Businesses cannot repeatedly ignore their tax obligations with impunity and they must understand that the Department will use all of its tools to ensure that every taxpayer fulfills their tax obligations. The failure to remit trust taxes deprives the state and localities of badly needed revenue to support vital programs such as education, health care and infrastructure maintenance. Given what is at stake, the Department is committed to using all of its tools to end such breaches of fiduciary duty.”

Deputy Commissioner of Tax Enforcement William Comiskey said, “Businesses that repeatedly ignore their obligation to collect and remit sales taxes, or withhold employee payroll taxes, face serious civil sanctions – illustrated by the seizures announced today. They also face possible criminal sanctions if it is demonstrated that they have misappropriated trust fund collections. All businesses should be aware that the Department is taking a hard look at those that have received repeated tax assessments for this type of misconduct and that we are determined to commence criminal investigations in appropriate cases. These seizures should serve as a clarion call that we will work with any taxpayer committed to coming into compliance just as we will vigorously pursue chronic offenders, especially those who cross the line from civil offenses to criminal.”

The restaurants targeted in this round of seizures include:

Porcao Churrascaria, located at 360 Park Avenue South in Manhattan. Porcao Churrascaria has a warranted liability of $286,352.10 for unpaid sales tax.

Meg Jamaican Bakery & Restaurant, Inc. (Golden Crust Caribbean Bakery & Restaurant franchise), located at 200-08 Linden Boulevard in Queens. Meg Jamaican Bakery & Restaurant, Inc., has a warranted liability of $21,958.32 for unpaid sales tax.

Rahman Sandwich Shops, Inc. (Subway franchise), located at 2451 Eastchester Road in the Bronx. Rahman Sandwich Shops, Inc., has a warranted liability of $33,117.33 for unpaid sales tax.

Inanna Corp., located at 194-01 Northern Boulevard in Queens. Inanna Corp. has a warranted liability of $47,983.85 for unpaid sales and withholding tax.

Since the above four seizures were effected on Thursday October 18, 2007 the owners of Porcao Churraascaria, Meg Jamaican Bakery & Restaurant Inc. and Rahman Sandwich Shops Inc. have been allowed to reopen after having made satisfactory arrangements with the New York State Department of Taxation and Finance to ensure that warranted liabilities will be satisfied. The quick reopening of these businesses demonstrates both the effectiveness of asset seizures as an enforcement tool as well as the Department’s commitment to continue to work with taxpayers to bring them into compliance and help them remain in compliance.

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