The Rexall Grill of Duluth Georgia was forced to close its doors recently over a $500,000 sales tax liability (tax interest, penalty). According to the news article, the tax was due for the period January 2004 to October 2009. That’s over 5.5 years of delinquent sales tax. The restaurant had been open since 1982. This story is sad for two reasons.
1. It took the Georgia DOR 5.5 years to contact a business that had not paid its taxes. I am not at all surprised by this. I’ve had dealings with several businesses over the years who have fallen 3, 4, 5 and 6 years behind in paying sales tax and the DOR had never contacted them once. Not a call not a letter. In many cases, such as the Rexall Grill, I’m assuming that the tax was collected from customers and not paid. Georgia taxpayers deserve better administration of the sales tax. It should not take the DOR 4 years to contact someone who owes sales tax.
2. Unfortunately, this situation is not that unusual. This one just made the paper because the restaurant was popular. Situations like this usually arise when a taxpayer gets one or two months behind. At that point, they start to panic and don’t know what to do. They know it will be bad they become paralyzed. More months go by and months turn into years. At this point, its too late to just pay the tax and they don’t know what to do. They are on a collision course with disaster. Someone should have intervened on behalf of this owner early on in the situation. Here accountant or someone should have asked some basic questions or wondered why there were no payments for sales taxes being made.
There are hundreds maybe thousands of businesses like this in Georgia and in every state. Small problems that can be corrected early are allowed to grow and create a financial catastrophe for the business and the owner.
Ned Lenhart
President
Georgia Tax Liability closes business