Paying cash at the restaurant

After a huge #1 hit, “I Love This Bar” in 2003, country star Toby Keith was encouraged to open a chain of restaurants called Toby Keith’s I Love This Bar & Grill. Today there are fifteen locations throughout the United States, and one spot in Oklahoma City, Oklahoma, Keith’s hometown.

Recently Forbes reported that “it appears that at least one location may be singing a different sort of tune: Toby Keith’s I Love This Bar & Grill in Destiny USA is said to owe more than $189,000 in back taxes. Destiny USA is the largest shopping center in the state of New York, and the sixth largest in the nation. The shopping center attracts more than 20 million visitors each year, which makes it an attractive spot for a franchise like Toby Keith’s.”

In the past, Toby Keith’s restaurant chain has made the news for bad food and instituting a no-guns policy in Woodbridge, Virginia, regardless of the fact that it is legal to carry firearms in bars and restaurants in the state of Virginia.

To the undiscerning eye, the restaurant was doing well, however, the state of New York thinks differently. They have handed the chain a tax bill of more than $189,000 in back taxes.

Unpaid sales taxes are what are believed to be the reason for the back taxes, because sales taxes are collected and processed separately than business taxes. “Sales taxes are not paid out of the business but rather are collected from customers to be turned over to the taxing authorities,” says Kelly Phillips Erb of Forbes. Sales taxes, also known as “trust fund taxes”, are gathered by the business and held until tax time.

In addition to sales taxes, trust fund taxes are considered the taxes collected from employee withholding or any other party. Trust fund and sales taxes are not “dischargeable or forgiven,” regardless of whether the business is struggling financially. It is not uncommon for trust-fund tax liabilities to be placed on the shoulders of the business owner of CFO’s of companies. According to Forbes, “Sales taxes can be tricky for businesses to maneuver since the cash is paid over directly but doesn’t belong to the business. When businesses find themselves in financial difficulty, it can be tempting to dip into trust fund tax accounts, like sales tax accounts, to pay bills to keep the lights on.” Where businesses get into trouble is when they do not anticipate how close tax season is approaching. So when they can’t pay their tax bills they get themselves into serious trouble.

“That tax trouble can result in seizures and forfeitures. In this case, the State of New York has filed a tax warrant against Toby Keith’s, which allows it to satisfy the tax liability by levying the business’ bank accounts. The state could also seize the business and its assets to satisfy the debt: for now, however, the restaurant remains open,” wrote Phillips Erb.

Owing back taxes is a problem for many Americans. Often the IRS sends you a tax bill that you were not even expecting. Unexpected tax bills leave businesses and individuals confused and frustrated. If you or someone you know owes back taxes to the IRS, contact the experts at U.S. Tax Shield today. U.S. Tax Shield’s tax resolution attorneys are well versed in tax code and can help you get out of IRS debt.