Art of the Table --
Tax Story - More
Products for Entertaining
A specialty food, beverage & tabletop retail store.
606 Wealthy SE Grand Rapids, MI
askus@artofthetable.com
(This issue has now been resolved. see Update from 03/27/06)
The long and the short of it:
When we started the transfer of our liquor licenses (beer/wine & liquor)
in January '03 through the state, we were investigated seriously. From
our financial background and criminal checks to our intentions for the
use of the licenses. We came through with flying colors and nine months
later they released the transfer of the licenses to us.
Despite the fact that the licenses were in escrow with the state for over nine months, they never made us aware of any issues including tax liens against the licenses so at the same time they were released, we paid the original licensee for the licenses.
In April '04 the State sent us a letter demanding $100,000 for sales tax and single business taxes owed by the original owner of the licenses. This amount was accrued between 1996 and 2002 and is made up of somewhere around $70,000 in actual taxes and over $30,000 in penalties and interest. Those taxes owed are made up of sales & withholding taxes and are "estimates" of tax and interest charges because he failed to either file or pay them. The taxes owed on the Single Business taxes are $10,000 per year and should not have been owed to begin with as this business is located in a Renaissance Zone. Ironically he shouldn't have owed a penny on Single Business Tax but because he never filed his papers NOT to pay taxes, they billed him for a flat rate plus interest.
Normally the state would look toward the taxpayer, and though he is alive, he is not well and apparently has driveled away any money we gave him for these licenses and lost his house to boot! The State said that because he can't pay, we should be responsible to his debts.
The State says we should have acquired a "Tax Clearance Letter" in order to be sure there were no tax liens against the licenses - as apparently they are an asset of his business that we were purchasing - the only asset as it appears!
As News 8's story states, there is a serious doubt that the State even had the licenses and debt linked at the time of the license release to us. As a first time business owner, especially one opening her brand new business, we weren't aware that there were documents we needed when buying one intangible item - especially one actually controlled by the state.
The State asserts that the money originally in escrow for the licenses should have gone to the State. We assert the original owner of the debt should be responsible for his own debt, but apparently they think that instead of chasing him or his sibling, they should chase us.
We disagreed with the charge to us from the beginning and since we don't take things sitting down, we hired a lawyer, contacted business and tax law experts, worked with a state mediator, contacted our senators, legislators & the Administrator of the Office of Hearings in the Treasury. We have been doing our best to work with the original owner of the licenses through his accountant (who also apparently hasn't been paid for work in years) and have continually found dead ends and more assessments.
It has been recommended by some (including the state) that we attempt to appeal to the Michigan Tax Tribunal or the State courts but as it is typically a losing proposition and very costly (probably more than our actual debt at this point), we have left that option behind and decided to just cut bait and pay the debt.
What we are hoping, now that Henry Erb and News8 have offered their investigative help, that if there is enough friend, neighbor & taxpayer support in our case that possibly the Governor and Treasury may consider change in the law not only to help us out in this case but not to sour small businesses from entering into neighborhoods that need them, to rid us of ridiculous responsibilities that hinder business, not help them.
If you feel so inclined, we ask that you write Jerry Kooiman's office to encourage him to make good on his public statement to take this to the Treasurer and Governor. If you know people in the City or State's public office, and if you feel so inclined, urge them to seriously look at the honesty and integrity of this case.
The Governor has a serious interest in protecting zones such as ours. If in fact we are a model area and the Governor wants small business to succeed, she needs to be protective of situations like this.
Thanks again for your great support!
Amy & Steve Ruis
Michigan State House of Representative Jerry Kooiman
251 Capitol Building
P.O. Box 30014
Lansing, MI 48909-7514
Fax: 517-373-5696
Phone: 517-373-2668
Michigan State House
of Representative Michael Sak
N1095 House Office Building
P.O. Box 30014
Lansing, MI 48909
517-373-0822
State Treasurer Jay Rising
Michigan Department of Treasury
Lansing, Michigan 48922
(517) 373-3200
Governor Jennifer M. Granholm
P.O. Box 30013
Lansing, Michigan 48909
PHONE: (517) 373-3400
FAX:(517) 335-6863
Stop by and see us!
Amy, Steve and Staff at Art of the Table
