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New York Times, Applebees are Some of RI’s Biggest Tax Cheats

Thursday, July 02, 2015


The businesses that owe the most in back taxes to Rhode Island include one of the country’s most prestigious newspapers, a popular restaurant chain, and at least one Fortune 500 company, according to data from the Division of Taxation.

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.

Sullivan said he could not comment on individual cases. But a department spokesman confirmed that any companies that paid the past due amount would have been removed from the list.

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.

The official state list of 100 delinquent businesses includes mom-and-pop shops side-by-side with international corporations. All types of businesses are represented, ranging from a few flower shops to an investment firm, but construction-related companies and temp agencies seem to be overrepresented. About a third of the listed businesses have official out-of-state addresses.

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.

Beyond economics there are also political motives. “We’re still in an environment where raising taxes is considered very toxic,” CanagaRetna added.

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.

“Generally our opinion is that this kind of shaming has to be administered very carefully. If the government itself publishes false information the reputation of the individual or business could be damaged irreparably,” said Pete Sepp, the president of the National Taxpayers Union.

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.

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Business Name: Gina R. Durante DBA New 2-U Consignment Store

Business Address: PO Box 8833 Cranston RI 02920

Amount Owed: $75,146

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Business Name: Gary Branch DBA Branch Woodworking

Business Address: 500 Wood St. Bristol RI 02809

Amount Owed: $76,731

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Business Name: American Window Enterprises Inc.

Business Address: 20 School Street Rehoboth MA 02769

Amount Owed: $77,849

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Business Name: Jamestown Tavern LLC

Business Address: 580 Weetanoe Street Fall River MA 02720

Description: The tavern, which was located in Jamestown, was reportedly closed in 2013 after its liquor license was pulled.

Amount Owed: $78,301

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Business Name: Newgrange International Inc.

Business Address: 600 Putnam Pike Greenville RI 02828

Amount Owed: $80,283

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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

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Business Name: AA Thrifty Services Inc.

Business Address: 17 Paolino Circle Scituate RI 02857

Description: A sign and awning design and fabrication company. Its business registration with the state was revoked in 2011. 

Amount Owed: $83,944

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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

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Business Name: CDE Corporation

Business Address: 15 Greenhill Rd. Johnston RI 02919

Description: A local demolition and debris removal contractor. 

Amount Owed: $85,813

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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

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Business Name: Wayne Prolux DBA East Bay Flooring

Business Address: 628 Metacom Ave. Warren RI 02885

Amount Owed: $92,125

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Business Name: Robert Cucino Jr.

Business Address: 14 Sallsbury Rd. Foster RI 02825

Description: Robert Cucino, Jr. is the president of the Cucino Corp., a heavy truck hauler based in Johnston. 

Amount Owed: $95,495

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Business Name: Floortech Industries LLC

Business Address: 2 Navaho Dr. Canton MA 02021

Amount Owed: $97,989

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Business Name: Affordable Lanscape Concepts Corp.

Business Address: 296 Simmonsville Ave. Johnston RI 02919

Amount Owed: $98,517

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Business Name: Off Track Bedding Ltd.

Business Address: 209 Cambridge Lane Nicholasville KY 40356

Amount Owed: $104,643

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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

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Business Name: Highway Construction Serv Inc.

Business Address: PO Box 40369 Providence RI 02940

Amount Owed: $107,404

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Business Name: America House Comm Ltd.

Business Address: 28 Jacome Way Middletown RI 02842

Description: A yacht design firm with more than $1 million in sales a year.

Amount Owed: $111,026

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Business Name: Contemporary Telephone Group Inc.

Business Address: 72 Reservoir Avenue Providence RI 20907

Description: A 30-year local business that provides voice mail and other telephone services, according to its Web site.

Amount Owed: $112,632

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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

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Business Name: Stephanie Masoian DBA Delicacies

Business Address: 108 Whitewood Dr. Cranston RI 02920

Amount Owed: $114,565

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Business Name: EZ Mart LLC DBA Diamond Hill Market

Business Address: 1166 Washington St. Weymouth MA 02189

Amount Owed: $118,318

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Business Name: CSCS Inc., FKA Strategic Supply Chain Inc.

Business Address: 59 Greenhill Street West Warwick RI 02893

Description: A national supply chain services company with headquarters in Grand Rapids, Michigan.

Amount Owed:  $118,366

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Business Name: JH Prestige Granite Countertops Inc.

Business Address: 940 Wellington Ave. Cranston RI 02910

Amount Owed: $118,597

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Business Name: Freedom Funding Group Inc.

Business Address: 591 Main St. East Greenwich RI 02818

Amount Owed: $132,588

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Business Name: Athens 2005 Inc.

Business Address: 828 Lake Avenue N. Apt. #6 Delray Beach Fl 33483

Amount Owed: $133,530

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Business Name: Conversent Communications LLC

Business Address: 5 Wall St. Burlington VT 01803

Amount Owed: $134,405

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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

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Business Name: Adla LLC

Business Address: PO Box 40369 Providence RI 02940

Amount Owed: $144,536

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Business Name: Precision Granite Works Inc.

Business Address: 14 Audrey Street Warwick RI 02886

Amount Owed: $152,012

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Business Name: Greystone Equipment LLC

Business Address: 154 Sylvan Drive East Greenwich RI 02818

Amount Owed: $162,176

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Business Name: Alves Productions Inc. 

Business Address: 327 Barton St Pawtucket RI 02860

Description: A local liquor store. 

Amount Owed: $164,880

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Business Name: Amore Inc. 

Business Address: 27 Porter Pond Road Moosup CT 06354

Amount Owed: $167,103

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Business Name: DBC Occupations Unlimited Inc.

Business Address: 61 Hewett Street Warwick RI 02886

Description: A local employment agency. 

Amount Owed: $185,933

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Business Name: RAF Corporation

Business Address: 501 Roosevelt Ave. #207 Central Falls RI 02863

Amount Owed: $209,460

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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

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Business Name: ADF Incorporated

Business Address: Po Box 40369 Providence RI 02940

Amount Owed: $272,300

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Business Name: Quality Concrete Corp

Business Address: 114 Martin St. Rehoboth MA 02769

Amount Owed: $283,306

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Business Name: So Fresh So Clean LLC

Business Address: 140 Vandewater Street Providence RI 02908

Amount Owed: $285,693

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Business Name: The Potting Shed Inc.

Business Address: 711 Union Street Portsmouth RI 02871

Description: A local gardening shop. 

Amount Owed: $307,733

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Business Name:  Coastal Recycling Inc.

Business Address: 71 Great Road North Smithfield RI 02896

Amount Owed: $372,363

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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

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Business Name: Builders Resource Inc.

Business Address: 154 Sylvan Drive East Greenwich RI 02818

Amount Owed: $411,380

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Business Name: Richard D'Ambra DBA Mr. Flowers

Business Address: 9 Bowling Lane Bradford RI 02808

Description: A local flower shop. 

Amount Owed: $527,584

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Business Name: Northeast Concrete Products LLC

Business Address: P. O. Box 2189 Plainville MA 02762

Description: A regional construction firm that offers precast concrete for stormwater and ulility projects. 

Amount Owed: $608,530

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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

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Business Name: United Convenience & Petroleum Inc.

Business Address: 91 Modena Ave. Providence RI 02908

Description: A local gas station whose state registration has been revoked. 

Amount Owed: $683,591

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Business Name: RI Marble & Granite Inc.

Business Address: 35 Terminal Road Providence RI 02905

Description: A marble and granite manufacturer and contractor that serves homes and businesses.

Amount Owed: $1,028,778

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Business Name: Frank J. Ogarek DBA Access O/F Group

Business Address: 17 Riverwoods Ct Rumford RI 02916

Amount Owed: $1,148,372

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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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