Friend in deep with sales tax problem - Posted by Anon

Posted by anon in Michigan on April 29, 2003 at 15:35:00:

Yes, I agree that it was not wise to stay in the business. The tax issue is more telling of a business
out of control, who owes everyone. It is sad. Our friend is very nice, and is trying to do the right thing for her family. She, of course, is on the hook
for all debt, taxes, etc.

Friend in deep with sales tax problem - Posted by Anon

Posted by Anon on April 29, 2003 at 14:52:51:

I posted this here in Legal:
http://www.creonline.com/legal/wwwboard7/messages/15726.html

but know a lot of you with deep experience may not see
it there.

Any assistance for our friend is appreciated:

I realize this is a little off topic to real estate, but
I really enjoy these forums, and know their is a lot
of knowledge out there.

Our good friend (really, not myself…) has a small
floral business in Michigan. She has gotten herself
in over her head, and it loses maybe 2-3K per month.

She has had it 5 years. She also got behind in paying
her sales tax to the state. She now is in arrears for that
maybe 25-30K. She has no equity. She has remortgaged her home, owes the IRS another 30-40K, etc. all trying to get
this business to work - to help her Mom out (she loves
working there.)

BK will not fix her tax problems. She still thinks she
can turn it around, and somehow pay this all back.

Any referrals for Michigan CPAs or attorneys who may
have experience negotiating with the State of Michigan
that we could pass on.

She is a wonderful person, who should never have let this
to this far.

Oh, almost forgot, she has another full time job, and
her Mom is not equipped to handle the financial issues. Also - she said the state treasury staff showed
up at the shop today…

Thanks in advance.

Anon in Michigan

a hobby - Posted by Donald

Posted by Donald on April 30, 2003 at 03:33:20:

Anon,

  1. Your friend broke the law by not turning in the sales taxes as REQUIRED BY LAW. (talk to an attorney today)

  2. 2k to 3k negative cash flow every month? (your friend has made the mistake of turning a business into a HOBBY. ( sell it, lease it out, give it away to the state, she needs to cut her losses NOW)

Donald

Re: Friend in deep with sales tax problem - Posted by JT-IN

Posted by JT-IN on April 29, 2003 at 18:38:17:

Anon:

There is really no answer on the upside here. The only solution to keep it from being worse than it is already is to close the door, for good. Absent that approach, the state may well do it for her, if it continues to go on as you describe. Most States take a pretty dim view of a business person collecting taxes (that are commonly called trust taxes, because they are entrusted to the proprietor to collect and remit) and NOT remitting them to the Dept of Revenue. This is a felony if it goes on for this length of time… No difference than taking monies out of your account, just because she is short this month.

Any busiuness person who lacks the self discipline to submit these taxes in a timely fashion, or not collect them at all, should face stiff punishment… Most states are all too lenient about acting quickly about these matters, and really let folks get in deeper and deeper, most times once the pattern is set.

If your friend had a temporary dip in revenue and at some point could see there way clear to pay current taxes and some additional to pay up the deficiency, then a remedy can be sought. Most states are not willing to negotiate on recent trust taxes that are unpaid, all the while current taxes are not being paid too. Forget that avenue completely… Sorry for the ice breaking news here.

JT-IN

Not much help but … - Posted by Redline

Posted by Redline on April 29, 2003 at 15:17:17:

How long can you run a business losing $2-3k a month? Sounds like it’s time to throw in the towel here and yes, get a good attorney that will probably suggest a bankruptcy. Sure it won’t make the tax bill go away but it may give you leverage in negotiating a payment plan - assuming there wasn’t outright fraud here.

Good luck,
RL

Michigan state tax attorney referrals?? - Posted by anon in Michigan

Posted by anon in Michigan on April 30, 2003 at 10:12:37:

Donald,

Thanks for your thoughts.

Our friend has another full time job working 50-55
hours per week, with her Mom as the “floral artist”
at the business full time. Here Mom has zero financial
knowledge.

I believe our friend’s problem is that she never had
time to be at the store, only on Saturdays, and nobody
properly did any of the books, etc.

It is a disaster area, and I would not do it this way.
I think that our friend only recently discovered that
they taxes were not being paid - or understood it,
so this may be a mitigating circumstance.

I would take action to close the store now, and seek
legal council also - and we are trying to push her to do that.

Any recos - anyone - for Michigan state tax attorney
referrals?

Thanks for all info.

Anon in Michigan

Any Michigan state tax attorney referrals?? - Posted by anon

Posted by anon on April 30, 2003 at 10:10:36:

JT, you state your points clearly.

Our friend has another full time job working 50-55
hours per week, with her Mom as the “floral artist”
at the business full time. Here Mom has zero financial
knowledge.

I believe our friend’s problem is that she never had
time to be at the store, only on Saturdays, and nobody
properly did any of the books, etc.

It is a disaster area, and I would not do it this way.
I think that our friend only recently discovered that
they taxes were not being paid - or understood it,
so this may be a mitigating circumstance.

I would take action to close the store now, and seek
legal council also - and we are trying to push her to do that.

Any recos - anyone - for Michigan state tax attorney
referrals?

Thanks for all info.

Anon in Michigan