This Is Why We Must Pay Taxes .....

Decorating By sweetnessx3 Updated 8 Feb 2011 , 3:38pm by TexasSugar

sweetnessx3 Posted 8 Feb 2011 , 3:36am
post #1 of 15

This happened in my home town last week.... Shes been operating for a few years and very popular in our area.... I just dont understand how she let this happen icon_sad.gif

14 replies
jason_kraft Posted 8 Feb 2011 , 3:44am
post #2 of 15

Sounds like that was just the state collecting past due sales taxes ($200K worth!), I'm guessing the IRS is on deck with federal tax evasion charges.

LoveMeSomeCake615 Posted 8 Feb 2011 , 3:46am
post #3 of 15

Wow, I don't understand that either. Especially with all the warnings she got. That's something that is so easily avoided by just doing what's right and paying your taxes!!!

sweetnessx3 Posted 8 Feb 2011 , 3:50am
post #4 of 15

Its just crazy....shes doing so well ! How do you not pay taxes ? She is a respected lady from our community . I always tease her saying one day when I open my shop , my cakes will be better icon_sad.gif but in all truth , her cakes was delicious ... Just blows my mind .... now Im scared to do my 30.00 cake a month lol!

scp1127 Posted 8 Feb 2011 , 4:48am
post #5 of 15

She was doing so well because she was living off of her gross income. This is why I am so blunt when people come on here and say, "I'm looking at locations so how do I start a business?". When things aren't going well, the decision is usually made to pay the electric instead of the IRS, a decision that can haunt a person for years.

KSMill Posted 8 Feb 2011 , 5:12am
post #6 of 15

It could be she didn't pay her taxes, but don't jump to conclusions. I know someone personally that started getting letters about unpaid taxes from more than a year earlier...yet... yup she had canceled checks with the deposit dates on the back to prove which governmental agency deposited them and on what date and it still took months and multiple faxes of the same documents to get it straightened out. The excuse she got...they were just behind on entering payments into their system.

tryingcake Posted 8 Feb 2011 , 5:28am
post #7 of 15

while I follow all laws to the best of my knowledge, I am much more fearful of Mr. Taxman than I am of the health dept. Long before becoming 100% legal I still paid all taxes on my earnings. You hear of people going to jail for tax evasion, not for not having a proper health dept clearance. While both sources should be taken seriously, I am absolutely terrified of tax evasion and just a little nervous of health issues (fine vs jail... hmmmmm).

scp1127 Posted 8 Feb 2011 , 6:19am
post #8 of 15

When the IRS seizes a business, there have been multiple steps in place to avoid that action. Seizures are not mistakes. They are the last straw.

tryingcake, you are right about the order. Illegal caking is civil, a fine, while tax evasion is criminal, possibly ending in a prison term, and always ending in penalties and interest.

indydebi Posted 8 Feb 2011 , 12:47pm
post #9 of 15

I was shaking me head at the comments following the article from those who thought it was "unfair" that the "little guy" had to pay taxes.

Sales tax is not "paid" by the business. The business is set up as a collector for the state; the business collects the sales tax and then turns it over to the state.

not paying sales tax is the same as stealing from the state. To me, this is way different than not paying, for example, property tax on your house or excise tax on your car. This is not money that is technically coming out the business's pocket ... this money was collected up front for a specific purpose and was not built in to the product's cost structure or profit margin.

I'm sorry to hear that anyone has to go thru all of this. As was mentioned a number of times, shutting down a biz is the last step, not the first.

sandeeb Posted 8 Feb 2011 , 1:01pm
post #10 of 15

I am not sure what the problem was. I pay sales tax every month to the Parish,Louisiana, and state sales taxes every quarter and estimated IRS income taxes every quarter also.
My business is small but I can't imagine not paying taxes because I collect the percent of sales tax, I am required to collect, on every purchase. Then after the end of the month I fill out the form and mail in the amount due. Maybe she did not do her own paper work but I can't understand how or why she did not handle this situation long before it became a problem.
I hope everything works out for her.

luckylibra Posted 8 Feb 2011 , 1:26pm
post #11 of 15

I am a hobby baker, so not in business please forgive me if this is a stupid question.. Isn't food non-taxable?

indydebi Posted 8 Feb 2011 , 1:39pm
post #12 of 15
Originally Posted by luckylibra

I am a hobby baker, so not in business please forgive me if this is a stupid question.. Isn't food non-taxable?

depends on the state. Many prepared foods are taxable (look on your mcdonald's receipt). Some states doen't charge sales tax on anything that is edible. Some states charge sales tax on certain kinds of edibles.

In my state, if I provide a plate and fork to eat the cake, then I have to charge sales tax. If I sell just the cake, then there's no sales tax. I believe the logic is that providing a fork and plate implies the food will be eaten right away (like fast food) but not providing the plate/fork means it will be taken home and eaten later (like groceries).

luckylibra Posted 8 Feb 2011 , 1:49pm
post #13 of 15

I see, thanks so much for enlightening me. icon_smile.gif

dinascakes Posted 8 Feb 2011 , 2:03pm
post #14 of 15

In Florida, there is no sales tax on things like groceries, but on anything that's been prepared (or cooked already) there is tax. For instance, I can go to Publix and buy groceries, but decide to pass by the Deli and buy a prepared rotisserie chicken to take home for dinner (no plate/no fork) and my groceries will not be taxed but the chicken will be.

TexasSugar Posted 8 Feb 2011 , 3:38pm
post #15 of 15

I agree with Debi. If she was collecting sales tax from customers and not paying it, then she took money from people and instead of turning it over to the state kept it. If she wasn't collecting when she should, that's different, but this is why it is so important to look at every asspect of doing business, not just doing cakes. It isn't just about baking a cake and selling it to someone.

We just did the sales tax report yesterday, for my day job which is not cake related. It was a big sales tax month for us, and we had collected several thousands of dollars in sales tax money from payments that were made to us. It sucks to have to send it in, but when it comes to that, the business is only really the middle man.

I'm curious because the comments were about taking money from the 'small town bakery' would they have had the same comments if Walmart or the local grocery store wasn't paying their taxes like they should? If you own a business, you should follow the rules/laws, all of them, not just the ones you want to.

Quote by @%username% on %date%