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California Bar Owner May Be Liable For Tenant’s Unpaid Sales Tax

  • Aug 6, 2015 | Gail Cole

 You can be held liable even if you didn't run the business.

John Schireck is the long-time owner of the Outpost, a bar and casino in San Ramon, California. At 86, he is ready to retire; but before he does, he needs to settle a dispute with the men who leased his business from 2008 to 2014 and allegedly failed to report millions in sales.

According to a California State Board of Equalization (BOE) audit, Robert Bilovocky and David Strunk did not report roughly $3.3 million in sales during their tenure as Schireck’s tenants. The BOE is reportedly going after their company, R&D Operations, for unpaid tax revenue.

Although Schireck wasn’t involved in the business at that time, the BOE is also holding him liable for approximately $400,000 in unpaid sales tax because the sales tax permit for the Outpost is in his name.

Venus Stromberg of the Board of Equalization confirmed, “[A] seller’s permit holder is the one liable for taxes, regardless of who runs a business.” She added that if it is determined that an individual collected taxes and did not remit them, a criminal investigation could take place.

Bilovocky says this is all a “mix-up” and that he didn’t collect sales tax on alcohol “because he wasn’t aware it was required.” He told reporters, “I ran a smooth business and I thought that I was doing everything properly, and I had no intention to defraud anybody” (Daily Democrat).

Tax requirements

Ignorance is not generally an accepted form of defense when it comes to taxes. In California, sellers are “responsible for paying the correct amount [of sales tax] to the BOE.” In an effort to "make doing business in California as easy as possible,” the BOE provides an enormous amount of information on its website.

Yet the BOE also admits, “It is not possible to explain what is taxable for every type of business.” Taxpayers are encourage to seek advice “regarding the taxability of a particular sale or transaction.”

In the end, the board will do all it can to ensure the proper amount of tax revenue is remitted. Thus the audit.

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photo credit: Audit via photopin (license)

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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.