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March 24, 2010 - 9:22pm

L.B. Grand travesty

posted by ben bonarigo in business, Le Roy, L.B. Grand.

Though a retired physician living in Florida I am a native Batavian with more than a passing interest in the discussion of the taxation issue involving the L.B. Grand restaurant in LeRoy.

After giving considerable thought and engaging in review of some New York State journals and available news reports I made the effort to read  some of the formidably redundant tax code.  Then, following a quick review of statistical methods, I made an unsuccessful attempt to obtain the statistical method employed in the state Tax Code.
Any questioning of the bureaucracy,as you could guess, resulted in the usual government endless merry-go-round.

Some facts however did surface and these I want to share so the New York State Department of Taxation motives will be a little more transparent.

Years of state deficits and unbalanced budgets have created the need for the Tax Department to collect more so that cuts in budgets could be avoided.  In New York there exists a budget deficit greater than $8 billion dollars.

The top tax  enforcement official, William Comiskey, with the backing of Legislators and Govenor Patterson have unleashed the Department of Taxation and Finance to radically increase the number of audits on small businesses to build the state coffers.

Thus far the goals do not imply anything unreasonable.  However, the methods utilized and the individuals who have been hired in increasing numbers to levy these audits create serious skepticism.  Dubious sampling methods defy statistical plausibility.  These methods include one day samples which are inexplicably extrapolated to define years of income.

That method would be tantamount to estimating the average daily temperature in Batavia, N.Y. by taking a sample of one day then applying it to all days, in all seasons, for three years.  Sound crazy?  It is!   This method may be employed if a small business cannot produce records that the Tax Department considers acceptable and that includes receipts that have been carefully saved but have faded because the vehicle was thermal paper.  Such is the case with L.B. Grand Restaurant.

As stated by a N.Y. tribunal ruling on such a case, “A lack of records does not equate to a presumption that taxable sales have been underreported.  This does not give the division carte  blanche to simply extract convenient mumbers from an index and use them in a manner for which they were never intended.”

The target of such oppressive techniques would  be forced to resort to legal help at a huge  expense.  In many instances this has resulted in dismissal of the claims made by the Tax Department.  In the case of L.B Grand an alleged underpayment of sales taxes amounts to $247 thousand over three years has been decided even though gross receipts are approximately $500 thousand per year.  Sound crazy?  It is!

Involving tax attorneys would be certain to alleviate and possibly get rid of the charges.  Isn’t it amazing that a charge made with certainty by the State could almost inexplicably be made to go away?  Isn’t that a scary concept?   Pay the bill to the state or get a lawyer and he could make it disappear----for a staggering sum paid by the accused to preserve innocence.

Where does this place the small business owner?  I will not pander  your emotions though the overwhelming  mental anguish and suffering of  the innocent is palpable to me.

Think it over.  Can all of this really be happening?   In America?

DOUGLAS MCCLURG
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eye opening article..THANKS..A far off example that comes to my mind Is when an addict to Illegal drugs needs a fix and can't pay for It..They may go out and gain the funds for their habit by taking from someone who Is trying to make a living for themselves by the means they know how. NYS Is trying to feed their habits and going to the common man and trying to get their fix.. An example of the habits or laws, are these crazy retirement plans and over priced unions that have the state by the
Dave Olsen
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Thanks Dr. Ben for doing the research and sharing
William Villiamz
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I happened upon this film randomly at the library in Rochester. It's interesting to say the least.. ..Let me know what you think =) http://www.youtube.com/watch?v=VIB9FWKYNJ0
George Richardson
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Don't file a tax return and use this video as your defense. You lose, legality and reality are mutually exclusive when dealing with the IRS. If they say I owe them money, I pay it and hope they go away.
Howard B. Owens
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The video isn't entirely accurate, either. The 16th Amendment was legally ratified.
William Villiamz
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If there was a main motivator to go into law, it seems like self defense is one of the stronger reasons. However, I think the film asserts that the Supreme Court has ruled that the 16th amendment doesn't give any new power to tax. So it's only to tax corporate gains in an apportioned fashion. I'm glad people have watched it though, it is rather lengthy. Also, its certainly not as Disney as a Michael Moore movie. I'm hoping its factual, even though it's frightening. But yeah, I don't think anyone ever collected that 10k from the contest to prove the factual authority of the law to tax labor. Paying to work still seems sort of illogical. And under the right inflationary conditions, it could be a lot like slavery.

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