Local Hero or Tax Cheat?
Gus Rancatore's ice cream shop, Toscanini's, is a fixture in Cambridge, Massachusetts. When it was seized for nonpayment of taxes, the community responded.
Nathaniel Welch
IN APPEARS: Gus Rancatore never expected that his unpaid taxes-$177,000 before interest and penalties-would come to define his business in many people's minds.
Elisha Boudrea
CONE OF SILENCE: The owners had only enough time to remove a few computers before state authorities locked down the store.
Anthony Verde
A FEW SCOOPS: News of Toscanini's tax troubles made The New York Times, The Boston Globe, and the Boston Herald.
On the morning of Thursday, January 17, my business -- an ice cream store called Toscanini's in Cambridge, Massachusetts -- was closed by the state for nonpayment of taxes. Two state troopers and two stone-faced officials from the Department of Revenue arrived with a court order. They let me and my sister Mimi (who is my partner) remove a few computers; then they changed the locks on the doors and affixed to the windows a Day-Glo sticker that read: "SEIZED." Mimi and I stood for a few minutes on the sidewalk, stunned. Then we went off in a daze to a friend's house so we could use telephones and the Internet. It was the start of a week that was by turns frightening, embarrassing, and deeply moving.
I had come to Boston in the late '70s to finish college. I never graduated, but I did get a job as the nighttime cleanup guy at an ice cream shop. In time, I was promoted to server, and then I was taught to make the ice cream. Eventually, I decided to go out on my own.
Toscanini's opened in 1981, in Cambridge's Central Square, near the Massachusetts Institute of Technology. (The name was suggested by a former partner whose grandfather, a musician, had played for Arturo Toscanini.) The area included two gentrifying neighborhoods, two housing projects, and old industrial buildings that were converted over time into offices.
From the beginning, we emphasized quality, customer service, and a sense of place. We used ingredients from other countries and cultures -- nocciola and gianduia from Italy; khulfee, cardamom, and saffron from India. We came up with flavors like tiramisu and mango-Guinness. (That last flavor sounds horrifying to most Irish but is popular with people from Barbados.)
How the store looked and how customers felt when they walked in the door were very important to me. A key part of this was music. Over the years, employees helped us put together a nice soundtrack that featured an eclectic mix of jazz, opera, New Zealand pop, any kind of British music, and even Balkan choral singing.
Toscanini's got off to a good start; it quickly built a following in the neighborhood. As time went on, our reputation grew. People magazine hailed our vanilla ice cream as the best in the U.S. The New York Times went further, proclaiming that Toscanini's was "regarded by lactophiles as the best ice cream in the world."
As is often the case in business, a little success can be a dangerous thing. Within six months of opening, I was urged by customers and friends to add new stores. It was an impulse I resisted. For many years my goal was to have a single, extraordinarily busy location like Pepe's pizza in New Haven, Connecticut, or Ted Drewes Frozen Custard in St. Louis or the Salt Lick, a barbecue restaurant near Austin.
Toscanini's never quite achieved that goal. We were often busy but never extraordinarily so. As the years passed, Drewes and the Salt Lick opened additional locations, and with some trepidation, I decided to expand, too. My second store, located inside MIT's student center building, was probably my favorite, because it was such a part of the MIT community. The school had always meant a lot to Toscanini's. A survey of students and faculty had ranked us as the community's favorite off-campus business. Right before we opened on campus, in 1987, a student wrote a paper on our plans. He estimated that we would gross $1 million a year in the new location.
It didn't work out that way. That store was busy Monday through Friday when classes were in session, but it was never crowded at night or on weekends, and it was positively dead from December 21 to February 5, when MIT had a long winter break. Worse, MIT doesn't have much of a summer school. I worried that I was running the only ice cream shop in the country that experienced a decrease in sales during July and August. After a decade of mediocre results, I closed it down.
My expansion plans could have ended there, but they didn't. I raised $200,000 from friends and family and began to scout new locations. People had always suggested that I open a store in Harvard Square, and finally I did. It was a small, 500-square-foot nook directly across from Harvard Yard. Next, I took over another business, a coffeehouse called the Someday Café. Between these two new stores, we added $10,500 to our monthly rent. We also started selling pints of ice cream through Whole Foods in New England.
The complexity of managing multiple locations and a wholesale division was more than I had expected. Supplying the different stores was a problem that should have been easily mastered, but I never created the systems necessary for what business schools call multiple-unit operation. I found myself spending much of my time bicycling around the city or riding the subway. I wasn't making ice cream anymore, and I seemed to be constantly telling workers not to play death metal, speed metal, or gangsta rap. My problems seemed to multiply, and I had the uneasy sense that the stores were wandering away from an intangible ideal that I deeply valued.
I could give you plenty of excuses for what happened next. Our margins were low to begin with, which meant that when our costs went up, we sometimes slipped into the red. If I had one underperforming store, I would have had enough cash flow to get by. But with two underperforming stores, I had no margin for error. Because we constantly flirted with unprofitability, and because I had virtually no securable assets -- I live in a rented apartment -- my bank was unwilling to lend me money.
The bottom line is that, in the day-to-day craziness of running a business that was in danger of going off the rails, I missed tax payments -- both employment taxes and my state meals tax. When it came to paying the state on time or making payroll and paying the milkman, I felt I had to worry about taxes second. Over a five-year period from 1999 to 2004, the total amount I failed to pay was $177,000.
