Betty The Restauranteur

[Tama]

That's if the employees are even paid by check anymore, and not under the table in cash...

[XCashier]

Of course she doesn't want him to know. I wouldn't be a bit surprised if she's living well above her means... this smells like the buildup of a true crime story or a Lifetime movie.

Oh, undoubtedly, will happen soon. The IRS is probably gearing up to drop the bomb on her. I feel bad for her employees and anyone else who's involved.

[DGoddessChardonnay]

The husband still hasn't come in to sign the extension documents for the house loan. I still intend to tell him about the restaurant going tax forfeit next year. Both because it's public record and because real estate is automatically owned jointly by spouses in MN. He is equally as responsible for the restaurant property as she is. I suspect she doesn't want me to tell him because she wants to avoid the argument it will cause.

Of course she doesn't want him to know. I wouldn't be a bit surprised if she's living well above her means and is robbing Peter to pay Paul and they're both about to gang up on her now. Or that she somewhere has a huge life insurance policy on her hubby that will give her a big windfall in the event of his unfortunate demise . . .

Either way, this smells like the buildup of a true crime story or a Lifetime movie.

[Ghel]

Betty has multiple state (MN, to answer taxguykarl's question) and federal tax liens on her credit report. We have received many liens and garnishments, and we send as much money as Betty has in her checking account, which is usually only a couple hundred dollars. I don't know how much this has affected the employee turnover rate at Betty's, but I can't imagine it helped.

The 90-day extension is on the house loan, which is not in danger of being tax forfeit for real estate taxes. The restaurant loan is separate, and doesn't mature for nearly a year. The restaurant property will go tax forfeit before the loan matures. To prevent a loss for the bank, we sent a pre-foreclosure letter that will expire in January. Betty has until then to pay the real estate taxes, or we'll start foreclosure proceedings. The county will start the tax forfeiture process in May if all the back real estate taxes aren't paid.

I think I mentioned in the previous threads about Betty that we have, in the past, advanced funds on the restaurant loan to pay federal and state taxes and real estate taxes. We did that to prevent having her from losing her business, but it has instead given her the expectation that we will pull her out of the next jam she gets herself into. When the new bank took over (about 4 years ago, now), they put a stop to that practice.

I haven't been to Betty's in over a year, but from what I hear, she has good food and brisk business. I think her issues lie more in money management than restaurant management.

The husband still hasn't come in to sign the extension documents for the house loan. I still intend to tell him about the restaurant going tax forfeit next year. Both because it's public record and because real estate is automatically owned jointly by spouses in MN. He is equally as responsible for the restaurant property as she is. I suspect she doesn't want me to tell him because she wants to avoid the argument it will cause.

[bookworm]

Sorry, but he's correct. The one earning the income, employees in the OP, are responsible for the taxes ultimately. Yes, they can set up an offer in compromise or even take the matter to a tax court.

I double checked with my boss (CPA) because that sounds crazy to me and he said that while yes, the IRS could do that, odds are they won't and if they did you could probably get it dropped in appeal. I've never heard of it actually happening and I've had several clients get behind on their payroll taxes. When payments are made, they are always applied to the trust taxes (the employee paid portion that the employer is holding "in trust" for the IRS) first, and then to the employer portion.

What a nightmare that would be!

[mjr]

Where's Robert Irvine when you need him??

[KuariKaydrith]

What really sucks in this situation is that Betty may be deducting taxes from her employees' pay and not submitting the funds to the IRS. This means that the employees are going to get royally screwed at tax time because, in essence, they are going to get dinged twice for taxes - once by Betty deducting taxes and second by the IRS.

I once worked for an employer that was having a hell of a time paying bills and their staff - I got to the point where when I got paid I would head directly to their bank just after they did their daily deposit in order to ensure I would receive my pay. This after two paycheques bounced and my bank refusing to honour any further cheques from my employer. My boss threatened to fire me if I kept getting my cheque cashed as soon as they did their deposit because it was causing them to miss more payments! I told them that I needed to pay shit too, and that unlike them I didn't own my own house or have money coming in from other sources. They gave me my notice of termination during the Christmas holiday and tried to tell me, after being there for 18 months, that I didn't know how to do my job, and on my employment papers they put down that I had quit...um yeah. They closed six months later with several employees owed mega-bucks in pay. The writing was on the wall long before that, and I kept telling people to jump ship. Of course there were a few people that held out until the bitter end and never got paid what they were owed, to the tune at least a month's worth of pay each.

[taxguykarl]

Dear Lord; please let Erickei be wrong.

Sorry, but he's correct. The one earning the income, employees in the OP, are responsible for the taxes ultimately. Yes, they can set up an offer in compromise or even take the matter to a tax court.
FWIW, the "employer half" of which Eric speaks is, in fact, the social security and medicare taxes that match the amounts withheld.
If I were in such a situation, I would contact the taxpayer advocate to work on a solution...or at least get the crosshairs moved towards Betty. As she has not filed for several years, she is on the IRS radar, already. Come to think of it, the employees will need to look into the state counterpart. What state are you in, Ghel?

[Argabarga]

The most distressing thing to me is her attempts to hide the real situation from her husband, shows how far in denial she is about the mess that's growing exponentially larger and larger beneath her, one hopes HE isn't lying to HER about HIS status, each hoping to lean on the other when the big bill they can't pay/borrow their way out of hits the ledger.

[Gilhelmi]

Dear Lord; please let Erickei be wrong.

Oh, the legal troubles that will cause (for all involved).

[Seshat]

Before the last hack, we used to have a poster here, The1JimmyK, who worked at an awful seafood restaurant where the owner cut a lot of corners. "Low Tide Clam Chowder" came about when the owner decided to use non-dairy creamer in the soup instead of real cream. The result tasted just as nasty as it sounds, as well as being an unappealing shade of grey.

OH YES! I remember that now!
I wish I'd just asked instead of looking up the urban dictionary.


Erik: For her employees' sake, I hope not. But I fear that your interpretation of IRS law is correct.
NOTE: I am not a lawyer, tax assessor, nor even American. Not even in the sense of being a citizen of any country on the American continents. However, I'm pretty sure I've heard the same as Erik, from people who it's happened to.

[EricKei]

Betty neglects to forward the taxes she withholds from her employees' paychecks to the IRS, so she has multiple tax liens against her.

I really hope I'm wrong on this...>_< I know the employer portion (half, iirc) of the payroll taxes are Betty's responsibility, but aren't employees ultimately held liable for their portion if the IRS can't get it out of the employer?

[XCashier]

I'm not familiar with that phrase, so I searched the urban dictionary.

Would it be related to the urban dictionary's NSFW definition of 'clam chowder'?

Before the last hack, we used to have a poster here, The1JimmyK, who worked at an awful seafood restaurant where the owner cut a lot of corners. "Low Tide Clam Chowder" came about when the owner decided to use non-dairy creamer in the soup instead of real cream. The result tasted just as nasty as it sounds, as well as being an unappealing shade of grey.

[Seshat]

I'm not familiar with that phrase, so I searched the urban dictionary.

Would it be related to the urban dictionary's NSFW definition of 'clam chowder'?

[XCashier]

Wow, Kitchen Nightmares vibe...I'd be willing to bet that the food is crap.

Even if it wasn't, I'd bet the ticked-off employees and ex-employees have spread the word about Betty's questionable business practices. Some folks might stay away out of principle.

But you're probably right about the food quality. She probably takes monetary shortcuts with the food as well ("low-tide clam chowder" comes to mind ).