July 30, 2009

Rhody Going After "the Little Guy"

Marc Comtois

This ProJo story about RI government going after small businesses for uncollected sales tax caught the attention of the Drudge Report. Great. Li'l Rhody comes shining thru again.....

State tax officials have put more than 1,200 businesses across the state on notice this week that they are out of business unless they pay their overdue sales taxes immediately.

For most, that action came in the form of a personal visit from the state Division of Taxation, ordering business owners to lock their doors at once.

By Wednesday, a line of people had queued up inside the Department of Administration building on Smith Hill, waiting their turn to plead their case to a state revenue agent. Some were angry. Others frustrated.

“I understand the state needs money, but to put pressure on the small guy or the moderate guy that’s struggling, it’s not going to do any good,” said Mike Suriani, who owns an electrical supply company in South Providence.

In Suriani’s case, it may have been a bookkeeping error that landed him in the three-hour line. Suriani says he paid his taxes in full — albeit a little late –– and had copies of the cancelled checks from the state showing he had indeed turned over the sales taxes he collected.

But that didn’t keep taxation officials from appearing at his door Tuesday demanding that he close up shop.

“Yes, the rules state that we have a responsibility to pay our bills every quarter. But when your customers come in and they don’t pay you for a month, and then another month, and another month, businesses have no choice [in] the eyes of the state but to close up and get out,” Suriani said.

It's easy to have a knee-jerk anti-tax reaction and the commentary on the story is widely against the state tax collectors. No surprise: who likes taxes? And we shouldn't be surprised that bureaucrats show little or no empathy or compassion to those conscripted to do the government's dirty work.

However, you have to think that some of these small businesses collected sales tax on behalf of the state and they actually haven't passed that back as required. Like it or not--and I don't--government dictates that business has to do the tax collecting (sales and income) for them. Easy enough to think it stinks and make comments about how RI stinks (presumably along with the other states who collect sales tax?). But it'll take major political change to alter the current tax system (like making people pay income taxes on their own).

So maybe this can be an opportunity to make a change. A tax revolt? Perhaps. More likely, it could be a key issue for electing reform-minded politicians in 2010. We'll see. But if nothing is done, then all we'll have is a little righteous indignation and the status quo.

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My father was a municipal tax collector, and I always used to ask him why the sleazebag developers in our city ere allowed to get away with outrageous amounts of unpaid taxes. He believed in the "it's better to get something than nothing" theory.
Wonder how many of these folks tried to work something out to pay what they could. And how many were Tea Partiers who believe, to paraphrase Leona Helmsley, paying taxes is only for the liberals.

Posted by: rhody at July 30, 2009 4:02 PM


You did note that Jessica Bahl had everything in order and still got shut down? How would you feel about losing at least one day of revenue due to government incompetence? I wonder how many are there like Bahl that the ProJo didn't bump into, or who,had spent previous days resolving the issue?

Just this morning I mailed in the RIET quarterly filing for my wife's company. I paid the $5.50 for registered return receipt delivery. She is recovering from a health problem and has paid no wages so the reporting form is all zeros. It is a bar bet that she will get a penalty form asking for $25 for a late or missing filing. She will then contact Div Tax and they will remove it. They admit that zero revenue filings are at the back of the line and the automated system sends out the penalty form before they can get around to processing the low priority reporting forms. Still, it takes time to clear up and it can't just be circular filed.

Incidentally, I doubt you'll find any sympathy here for sleazy developers. What exactly do they have to do with unpaid sales taxes or business permits?

Posted by: chuckR at July 30, 2009 4:52 PM

Aggressive tax collection in tough economic times is expected. For all you people who suggest that the government should be more like private sector businesses do not complain when that occurs. The only question here is how AR can blame this on Democrats.

Posted by: Phil at July 31, 2009 7:07 AM
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