Apr 1, 2008

Local Hero or Tax Cheat?

 

All of this happened just before the Martin Luther King weekend holiday. State offices were closed on Monday, which meant that Mimi and I couldn't do anything that would allow us to reopen until Tuesday morning. That Sunday night, I made plans to meet some friends at Gandhi, an inexpensive Indian restaurant not far from my padlocked business. With zero income and negligible prospects, I worried about spending money on even a modest dinner out. The streets of Cambridge were nearly empty on that wintry Sunday night. It was easy to find a parking space for the large freezer van I drove around. As I locked its doors, a street person approached me. "Hey, man," he called out. "You got any damaged pints in that truck?" "No," I said. "I don't have any ice cream." I had been locked out of the store for four days. If I wanted ice cream, I would have had to go to Whole Foods and buy a pint.

Sensing my mood, he changed tack: "My name's Anthony," he said. "Nine years ago, you gave me a pint. You got to get back. Remember…Anthony." Between that encounter and dinner, I started to feel better. Around midnight, a friend from Washington, D.C., called to see how I was doing. "It's a good day in the lifeboat," I joked. "There aren't any sharks circling; there aren't any buzzards overhead."

"And there are no leaks in the boat," she added.

The next day, Mimi and our accountant, Robert Hurst, spoke with the officials at the Department of Revenue. They were, as they had been throughout the process, incredibly fair, patient, and professional. They said they were impressed by the amount of attention we had received, with the newspaper articles and the TV segments and the activity on the Web. Perhaps they saw a benefit for themselves in our saga. During a typical year, the Department of Revenue will seize roughly 75 businesses in Massachusetts, and few of those actions get any attention. In terms of warning small businesses what could happen to them if they failed to pay taxes, closing Toscanini's was a PR bonanza for the agency.

By Tuesday night, we learned we had passed our initial fundraising goal of $25,000. That was good enough for us to arrive at an oral agreement with the Department of Revenue on Wednesday. On Friday, Mimi picked up a certified check at our bank -- the sum of our PayPal donations up to that point. She and I drove to the offices of the department's seizure division, in Chelsea, Massachusetts. The level of security there reminded me of that at the Pentagon station on the D.C. metro. Two department officials came downstairs, and we gave them the check and filled out the necessary paperwork. Forty-five minutes later, we met them at Toscanini's, changed the locks, and took back possession of the business. Mimi and I immediately set about cleaning the store. A health inspector from the city of Cambridge came by a little while later, and then we were officially cleared to reopen.

Getting the store back up to speed took a lot of hard work. Plus, there were so many people we had to call or write to thank, and there was another flurry of newspaper, radio, and TV interviews. One writer ridiculed my "cyber-panhandling" in The Boston Globe. Another reporter asked me what I planned to do next. "All I want to do is make ice cream and pay my taxes in a timely fashion," I replied. That will include taxes on the $34,348.08 raised to date through the website, of course. On the bright side, when Mimi and I closed the Harvard Square store and the café, we were able to create a loss carryforward that we can apply to future income tax liability.

Looking back, I realize that I got to play the George Bailey role in It's a Wonderful Life. When trouble struck, the amount of support that came to me from all over the world was amazing. But it was also an experience that no one would ever choose to go through. I am determined to avoid any new misadventures. We have a tentative agreement with the state concerning the abatement, which would reduce our remaining tax burden. When it comes to expanding, I won't do anything unless there's almost no downside risk.

Am I a tax cheat? It's hard to answer that question without sounding cavalier. I was certainly a nonpayer of taxes, and I know that I created the problem myself. But I have to say that I look at this more as a sign of my own stupidity than as something unethical. Maybe that's proof of my ethical myopia.

Why did all of these people rally around Toscanini's? I think many of the people who helped us had sympathy for me, even as they recognized that my own inept management was to blame. A few mornings after we reopened, I pulled up to the parking lot behind our store, and there was an auxiliary police officer blocking my path. For a moment, I was filled with a sense of panic. But as it turned out, there was a fire nearby, and he was just trying to keep traffic moving. I parked a few blocks away. As I walked to the store, the officer came running up behind me, exclaiming that he hadn't recognized me -- otherwise, he would have let me park behind the building. Then he told me he had heard about my situation. He said he was also a small-business owner on the side. "No one understands that all we get is what's left after everyone else gets paid," he told me. "It's almost impossible sometimes." Then he gave me a hug.

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