April 23, 2014

These days, the celebrities and tax troubles go hand in hand. The Toby Keith’s I Love This Bar & Grill restaurant in Syracuse, New York, has been hit with a $189,000 tax warrant in back taxes according to the New York Department of State.

The chain of restaurants, which was inspired by Toby Keith’s 2003 country hit “I Love This Bar,” has 15 locations throughout the United States. The warrant was filed in Onondaga County, New York, on April 8. According to John Thomas, the chain’s marketing vice-president, the issue is being addressed. However, as of April 22, 2014, the warrant is still open.

The only reason the story of a restaurant with tax problems has got any traction with the media is because Toby Keith’s – who was named Billboard’s top country artist of the decade – is part of the business’s name. Still, there are three important lessons we can all take home from this story.

1. When It Comes to Business and Taxes, Be Careful What You Sign Up For

Toby Keith has no business interest in the Toby Keith’s I Love This Bar & Grill restaurant chain, except for a licensing agreement that allows the company to use his name. Each Toby Keith’s I Love This Bar & Grill restaurant is locally owned and operated, and therefore, Keith has nothing to do with the management of the restaurant. The actual business that was hit with the tax warrant operates under the rather less catchy name of CRGE Syracuse LLC.

Toby Keith, the person not the franchise, has quite a different view of taxes as his corporate namesake. In a 2011 interview with the Boston Herald on the subject of rich people paying higher taxes, he was quoted as saying to Country Weekly “It would be unpatriotic not to try to save the country. I’m sure people will bitch about it, but if it meant we get to operate in this country and live here another day, then so be it. ” However, that didn’t stop Keith from getting negative publicity for his namesake tax issues.

It is important to be aware of how a business is run and how it deals with its taxes before you attach your name, reputation and money to it. Even within a marriage, you must be confident your spouse is not involved in shady business, if you plan to file a joint tax return, as you could also be liable for their “mistakes.”

2. Don’t Mess With Taxes, Particularly Other People’s Taxes

Toby Keith’s I Love This Bar & Grill’s tax warrant is for back taxes on unpaid sales taxes. You may think that taxes are taxes, and that the type of back taxes you’re delinquent on doesn’t really matter; but you would be wrong. State taxation departments treat unpaid sales taxes more harshly than unpaid income taxes. While a state’s taxation department may be willing to accept a settlement on income taxes owed by a business in financial difficulties, sales taxes are rarely forgiven.

Why? Because sales taxes are paid by a business’ customers not the business. Sales taxes are added to the value of goods and services after costs and profit margins are factored into their price. Just like companies withhold income taxes from their workers wages and send them on to the IRS, businesses are not supposed to keep their clients sales taxes. When a business fails to transfer sales taxes to the state, it is, in a way, stealing from both its customers and the government.

3.Tax Warrants Aren’t Fun, But It Could Be Worse

The silver lining of getting a tax warrant on your business is that it could be worse. Look on the bright side: the taxman didn’t seize your company or sell its assets. Although that may still occur if you fail to pay your tax bills, tax warrants, like the one filed against Toby Keith’s I Love This Bar & Grill, allow businesses to remain open while they try to sort out their tax problems. Nevertheless, they do give the taxman the right to levy a business’s bank accounts and collect unpaid taxes.

If you would like to learn more about the thrilling world of tax warrants, read this article on how to remove a tax lien.