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Iowa: Pizza Man Meets Tax Man

  • Feb 6, 2013 | Gail Cole

 Iowa Pizzeria Learns the Power of the Tax Man.

The economic downtown of the past several years has hit many people hard. A recent case in Iowa reminds that, even in difficult times, paying sales taxes should be a priority. Businesses that don't risk having their retail sales tax permit revoked, which effectively shuts them down.

The case in question (Document Reference 13300003) is clearly a difficult one for the Iowa Department of Inspections and Appeals. The owner of two pizzerias fell behind on sales tax payments to the state in recent years, allegedly because business suffered from the weak economy. The administrative law judge noted the following factors that "weigh against revocation" of the sales tax license:

  • The taxpayer "appears to have been in compliance with the tax laws of this state until recent years;
  • "[F]actors outside of [taxpayer's] control -- such as the economy -- have undoubtedly hurt the business;" and
  • Revoking "the sales tax permit will further limit the ability of the business to survive" or to be sold "for a fair price… ."

All the same, taxes are due, and the Iowa Department of Revenue seriously questions whether or not they can be paid. The taxpayer fell behind on paying sales tax, made a payment plan, and then violated the payment plan. At the time of documentation, the taxpayer "had an outstanding delinquency of $45,761.80 in sales taxes due, penalties, and accrued interest… ." IDOR notes that "[t]his is more than $22,000.00 more than the permit holder owned when the payment plan was developed six months earlier."

Despite the best intentions of the taxpayer, which no one involved seems to doubt, the owed taxes are increasing. Ultimately, the judge in charge of the case determined that:

"While I would like to provide him with another opportunity to correct past errors, I have no evidence that sales have increased enough to provide sufficient revenue to cover both the past debts and current obligations. Ultimately I must agree with the Department -- at this point, the state cannot afford to allow the business to accrue additional tax liability."

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.