New York Times, Applebees are Some of RI’s Biggest Tax Cheats
Thursday, July 02, 2015
The top 100 delinquent businesses owe as much as $18.7 million according to the state list. (See the below slides for the top 50 on that list.)
But the total amount the state is owed by delinquent taxpayers is in fact much larger. The Division of Taxation has 38,000 delinquent accounts which total $69.5 million—and that’s just for personal income taxes, according to David Sullivan, the state tax administrator.
New York Times disputes state listing
The state’s officially published list of delinquent businesses—something mandated by state statute—shows that the New York Times Shared Services Center owes $45,244.
A Times spokeswoman yesterday disputed that finding. “We are not delinquent on our taxes in Rhode Island and appear on this list in error. We have been communicating with state officials there to resolve this issue since the beginning of last year,” said Eileen M. Murphy, the Vice President for Corporate Communications at the New York Times.
When asked why the Times believes it had been listed in error, Murphy did not elaborate. “It’s Rhode Island’s list, so it is not a question we can answer,” she responded.
Failure to pay any of a number of taxes could land a business on the list. That includes sales meals and beverage, payroll, corporate, and health care taxes.
Applebees is listed as owing $85,625. The restaurant chain reportedly had 4.5 billion dollars in sales last year. There are about 2,000 locations worldwide, with 8 in Rhode Island. A company spokesman did not respond to a message seeking comment yesterday.
At least one company on the listing bills itself as a Fortune 500 company: the Houston, TX-based Service Corporation International, which provides cremation and funeral services at 4,500 locations in over 20 countries. Last year, SCI had $2.9 billion in revenues. It owes $88,013 in back taxes to the state. (Technically, it was on the Fortune 1000 list, ranking 834 in 2013.)
Top delinquent owes $4.2 million
But the biggest companies aren’t the ones that owe the most. That distinction falls to smaller, more local companies. Topping the list is S&P Temporary Help Services, a local temp agency that is on the hook for $4.2 million and has been on the list for years. In 2010, S&P’s owner Cheang Chea pled guilty to underreporting wages and failing to pay as much as $20 million in income and FICA taxes, according to a news release from the U.S. Attorney’s office.
Two other businesses owe $1 million or more: the Access O/F Group, based in Rumford, and RI Marble and Granite, located in Providence.
GoLocalProv reached out to about half a dozen companies that were on the list for comment. Only a handful responded. And only one admitted that there was any fault—and there the blame was shifted onto a vendor, not the company itself.
“Our response is that we are working with our payroll provider in the state of Rhode Island to rectify a mistake on their part,” a spokeswoman for Asure Software, an Austin, Texas-based company in a voice mail message. State records show the company owes $55,508.
Great Recession spurs tax shaming in states
Gary Sasse, the former state revenue director and the founding director of the Hassenfeld Institute for Public Leadership, backs publication of the lists. “I think it’s important to publish the list,” he said. Aside from what he described as a significant impact on the state budget, there’s the principle behind it and the fact that the burden of unpaid taxes falls on others, Sasse said.
Nationwide, the practice dates back to about a decade ago and really took off in the recession, according to Sujit CanagaRetna, a fiscal policy manager for the Council of State Governments. “Six years after the Great Recession, states are still struggling to recoup some of the revenues they lost,” CanagaRetna said.
Wisconsin, Louisiana, and California were among the first states to start publishing lists of delinquent taxpayers. Today, about two thirds of the states have such lists, according to CanagaRetna.
Overall, states have collected more than expected. Over the last eight years, California has collected $413 million in what would otherwise be lost revenues through the program. And one year after publishing a list of delinquent taxpayers, Vermont expects to collect $1.5 million in back taxes—double its projections, he added.
“It’s been pretty effective in terms of generating the revenue,” CanagaRetna said.
Over the last three years, the delinquent taxpayer lists have resulted in $1.1 million in revenues for Rhode Island, according to Sullivan. “It has brought more taxpayers into compliance with our tax laws. It has also raised revenue—which, in turn, reduces the burden on those who pay what they owe on time,” Sullivan said.
But others say public shaming has the potential to do undue harm.
When asked to name examples, Sepp forwarded a link to a report about an Illinois-based corporation that had been erroneously listed as behind in $5.6 million in taxes to Wisconsin. He also provided examples of three major cities where there had been reported foul-ups in government tax records.
Sepp said such lists might prompt some taxpayers to take action. But he said they accomplish little in cases where someone does not have the ability to pay. “Exposing them to public opprobrium isn’t necessarily going to change their situation,” Sepp said.
Contrary to what might be expected, as a general rule, the higher the amount owed, the less likely someone is to pay, according to CanagaRetna.
A number of businesses on Rhode Island’s list appear to have gone bankrupt or gone out of business entirely. But that does not mean those businesses—or their owners—get a pass on their back taxes, according to Sullivan.
In cases of bankruptcy, he said it depends on what action bankruptcy court takes. “If the debt is discharged, we would waive it,” Sullivan said in an e-mail.
“Also, just because a company goes ‘out of business’ does not mean its tax debts are extinguished; we can continue to pursue repayment—again, depending on the circumstances. For example, someone who is the responsible agent for a company’s trust fund taxes still would be responsible for paying those taxes even if the company does not pay,” Sullivan added.
Among the 100 companies listed by the state, perhaps Capco Steel’s financial troubles are most well known locally. State records show the company owes $213,202 in back taxes. That’s just a fraction of the $5 million loan guarantee the former Economic Development Corporation made the manufacturer in an effort to stem some of the bleeding after it lost some $85 million in contracts during the great recession.
Tips on potential corruption at the local or state level, misspending, abuse of power, and other issues of public interest can be sent to [email protected]. Follow Stephen Beale on Twitter @bealenews
Related Slideshow: Top 50 Business Delinquent Taxpayers
Below are the top 50 delinquent business taxpayers in the state, ordered from least to greatest. Data was obtained directly from the state Division of Taxation and is based on an official statutorily mandated list of tax delinquents that must be published. Applicable taxes include sales, meals, beverage, withholding, corporate, and health care taxes. Total amounts are current as of this past January. Delinquent payers who have made payments since January have been removed from the list. This listing of businesses is current as of June 28. For each business the official business address is listed, which may in some instances be different than the public business location. When available, more information is provided about the business or circumstances potentially relevant to its delinquency.
Business Name: Bird Incorporated
Business Address: 750 East Swedesford Road Valley Forge PA 19482
Description: Bird Incorported was founded in the mid-1790s, when George Washington was in his second term. Today it is best known as a manufacturer of roofing shingles and vinyl siding.
Amount Owed: $81,742
Business Name: Applebee's International Inc.
Business Address: 450 N. Brand Blvd 7th Floor Glendale CA 91203
Description: With more than 2,000 locations worldwide and $4.5 billion in sales in the United States alone, Applebee's is among one of America's most popular restaurant chains.
Amount Owed: $85,625
Business Name: SCI Funeral & Cemetery Purchasing
Business Address: 1929 Allen Parkway Houston TX 77019
Description: A Fortune 500 company that had $2.9 billion in revenues last year, SCI describes itself as the "largest provider of funeral and cemetery services" with 4,500 locations in 20 countries, according to its Web site.
Amount Owed: $88,014
Business Name: Pytko Construction Corp.
Business Address: 654 Eddie Dowling Highway North Smithfield RI 02896
Description: Owner Paul Pytco last year pled guilty to conspiring to sell company equipment and conceal the sales from the IRS in order to pay off more than $1 million in alread-accumulated back taxes, according to an FBI news release.
Amount Owed: $107,144
Business Name: Symmetry International Inc.
Business Address: 55 Industrial Circle Lincoln RI 02865
Description: A local manufacturing firm of exhibits, sculptures, and other products ranging from a 28-foot tall Optimus Prime statue to set pieces for the movie Zookeeper.
Amount Owed: $112,930
Business Name: Bradford Printing & Finishing LLC
Business Address: 2540 Claire Marsh Rd. Seabrook Island SC 29455
Description: A local military uniform manufacturer located in the Westerly area. It reportedly went out of business in 2011. (It's business address is where its former executive vice president lived.)
Amount Owed: $142,000
Business Name: Capco Steel LLC
Business Address: 55 Holly Hill Lane Cranston RI 02921
Description: A leading regional steel manufacturer that has experienced a series of well-publicized difficulties after a $5 million state-backed loan failed to help the business offset a loss of $85 million in contracts during the recession.
Amount Owed: $213,203
Business Name: Regal Auto Body& Radiator Work Inc.
Business Address: 135 Adirondack Drive East Greenwich RI 02818
Description: A local auto body shop based in Pawtucket (despite an official East Greenwich address). Its business registration has been revoked by the state.
Amount Owed: $389,242
Business Name: Edward S. Johnson D/B/A Johnson's Boat Works
Business Address: 1128 Narragansett Boulevard Cranston RI 02905
Description: Johnson's Boat Works bills itself as New England's number one repair shop for Yanmar engines, a Japanese brand. The company offers other repair, restoration, and replacement services and also hauls and stores boats for customers.:
Amount Owed: $638,925
Business Name: S & P Temporary Help Services Inc.
Business Address: 17 Florence Ave Lowell MA 01851
Description: S&P was a temp agency. In 2010, its owner, Cheang Chea, was sentenced to two years in prison for failing to pay millions in payroll taxes for the some hundreds of temp workers he had provided to 30 local businesses.
Amount Owed: $4,284,023
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