Dark Wing

Arlington County Meals Tax Delinquencies

60 posts in this topic

150K. Shameful... Roberto won't be getting any of my future business, if he does end up opening some new place.

Not surprising to see Murky Coffee high up on the list.

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Just to put these numbers into perspective (since not all area jurisdictions levy a meal tax), Arlington's meal tax on restaurants is 4%, so each $10k of delinquency represents a cool quarter-million of gross receipts. The tax is typically collected on top of the menu prices, so this really isn't a matter of squeezing the profit margins in an already difficult business - it's a matter of diverting funds that were collected on a separate line item from each diner in the government's name.

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When Ray's: The Steaks was in its fourth month of operation back in 2002 I couldn't make the payment on the meals tax due for the third month's revenue, which was due, I believe, on a Thursday and was in the amount of something like seven hundred dollars or so (I was doing about $3500 a week back then). Immediately upon the following Monday morning, a uniformed and enbadgened (be-badged?) tax enforcement officer showed up to explain that the meals tax collected was funds that belonged to the County and that to fail to deliver those funds was theft both from the County which was due those funds and from the customers from whom I fraudently took that money (if I did not deliver it to the County in whose name I took it from my customers)--sort of a triple-theft slash fraud scenario. How anyone got away with the kind of numbers reported, after the enforcement I experienced, is beyond me.

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Just to put these numbers into perspective (since not all area jurisdictions levy a meal tax), Arlington's meal tax on restaurants is 4%, so each $10k of delinquency represents a cool quarter-million of gross receipts.

I'm no "mathemagician", but that sounds like $4 Million Dollars in revenue to me.

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I'm no "mathemagician", but that sounds like $4 Million Dollars in revenue to me.

Funny but $250,000 x .04 = $10,000.

ETA - I see, $4 million generates roughly $150k in meal taxes.

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Better read the whole list, there are a lot of places I go to on this list including Whole Foods, TNR, Cowboy Cafe, Exxon, etc. As Mikey says, you can be a day late and land on the list, or paid it the debt off and the list not updated in a timely matter. That being said, bebo has been closed for a while and the higher you are on this list, the longer the period of debt may be.

Not surprising to see Murky Coffee high up on the list.

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Better read the whole list, there are a lot of places I go to on this list including Whole Foods, TNR, Cowboy Cafe, Exxon, etc. As Mikey says, you can be a day late and land on the list, or paid it the debt off and the list not updated in a timely matter. That being said, bebo has been closed for a while and the higher you are on this list, the longer the period of debt may be.

Based on this quote I don't think that Bebo is just a day late. Those are pretty strong words and potential charges.

 

The top delinquent, whose meals-tax bill totals $152,000, has seen the matter turned over to the commonwealth's attorney's office; treasurer's officials are seeking felony charges against the owner, and could seek to take possession of the owner's house in an effort to collect what is due.

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so each $10k of delinquency represents a cool quarter-million of gross receipts.

That chart though might include fines and/or late fees on top of the back taxes owed (I don't see an explanation of the amounts, although it is under the heading "Delinquent Tax Accounts").

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It appears the meal tax was enacted back in June 1991. Interest accrues starting 1% per annum, except includes 5% on top of other stuff, such as license tax. So, it adds up.

For anyone interested, attached is the actual code and language. What is interesting is that coffeeshops are included, but unclear if bakeries are or are not.

Ch65_MealsFoodandBeverageTaxation.pdf

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Took a look at the statute. While I support the collection effort, it does not appear that the violation constitutes a felony under that statute, and there does not appear to be personal liability (for the owner unless the business is a sole proprietorship) for not paying the tax when the business itself is supposed to be the taxpayer. This statute is an example in poor drafting. I don't know if some of the delinquent business owners intentionally failed to pay over the taxes knowing the county can't collect from them personally.

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Re: Bebo's alleged delinquincy -- let's not forget that Roberto had alleged major tax issues with Galileo too back in the day. As I recall, they involved sales tax owed to DC and the amount (alleged) was significant.

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it does not appear that the violation constitutes a felony under that statute

Carman reports that Donna pled guilty to charges of felony embezzlement on this. Five-year sentence; suspended pending restitution of the $156k owed.

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Onorato doesn't anticipate the plea will "impact [Galileo] at all." He says that the restaurant is still planning to open and may start serving within a couple of months.

I found this interesting since a conviction can certainly cause problems with getting a liquor license.

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I found this interesting since a conviction can certainly cause problems with getting a liquor license.

I guess someone else's name will be on that document. That said, I think his biggest problem is coming up with the $150+k.

After reading that article it makes you wonder if he owes anybody else money.

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I guess someone else's name will be on that document. That said, I think his biggest problem is coming up with the $150+k.

I read the application, and it requires anyone with an ownership stake to be declared, so unless his stake is 0% his name will be there.

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I could have sworn that there was a fairly large tax liability when the original Galileo closed.

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Really no jail time? I find it amazing that he has not yet paid the taxes and is in the process of opening a new place in DC. The fact that he had no assets, for someone so established, to me shows an intent to avoid paying. I have eaten numerous times at Bebo and quite frankly the service was horrific and all the while this was going on Roberto can often times be seen teaching a cooking class, which was cash only BTW. At times the service and food were criminal in my opinion.

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Really no jail time?

The five-year prison sentence was suspended, pending compliance with probation requirements, good behavior, and restitution. He could still go to prison.

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I read the application, and it requires anyone with an ownership stake to be declared, so unless his stake is 0% his name will be there.

Interesting. I guess he would not want a stake on paper since the tax man could seize it to pay what he owes to Arlington.

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Interesting. I guess he would not want a stake on paper since the tax man could seize it to pay what he owes to Arlington.

I have a feeling that the DC ABRA is not so dumb that they would not question his name not being on the paperwork. According to the application being convicted of a felony only requires additional paper work, but if someone gets a hair up their ass it could cause problems.

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The five-year prison sentence was suspended, pending compliance with probation requirements, good behavior, and restitution. He could still go to prison.

Thanks for the clarification, however I should have made my point a bit clearer. He should be forced to serve jail time based on the facts of the case, hiding assets and being chased rather then facing the issue head on. He has enough money to build a new restaurant, but not to meet his legal requirements to being a business owner. The average person does not have the ability to stay out of jail for stealing this amount of money.

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Thanks for the clarification, however I should have made my point a bit clearer. He should be forced to serve jail time based on the facts of the case, hiding assets and being chased rather then facing the issue head on. He has enough money to build a new restaurant, but not to meet his legal requirements to being a business owner. The average person does not have the ability to stay out of jail for stealing this amount of money.

I believe there is a reason the sentence was both light and suspended. As the piece stated, state 'meal taxes' must be paid (which may have not been paid); possibly the same with federal taxes, etc. And his plea was hastened at his lawyer's request. I would guess there is still another very large shoe waiting to drop.

As far as licensing, alcohol and otherwise, goes, there are many ways around the requirements of the statutes and regulations.

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Another article from Carmen in the City Paper. I guess he has not started making restitution yet. I wonder how much time he has.

I have to wonder if he is required to pay taxes on his cooking classes. If so, is he paying those?

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Another article from Carmen in the City Paper. I guess he has not started making restitution yet. I wonder how much time he has.

I have to wonder if he is required to pay taxes on his cooking classes. If so, is he paying those?

I find the quotes attributed to the Arlington County Treasurer, Frank O'Leary, in the article to be particularly galling. Comparing Donna to a kid knocking over a 7 Eleven and saying that he's "stealing our money" is typical of the political class in Arlington and elsewhere, but Frank, what Donna is doing may be illegal, but he's not stealing your money -- he's simply unwilling to part with as much of his money as you are empowered by the tax code to take from him.

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I think you are taking it a little too far FunnyJohn. But knocking over a 7-11 is a violent crime, or at least under the threat of violence, and so O'Leary is also taking it too far.

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I think you are taking it a little too far FunnyJohn. But knocking over a 7-11 is a violent crime, or at least under the threat of violence, and so O'Leary is also taking it too far.

I stand by my observation, [and Don I'm not going to say anything furhter about it, here].

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I find the quotes attributed to the Arlington County Treasurer, Frank O'Leary, in the article to be particularly galling. Comparing Donna to a kid knocking over a 7 Eleven and saying that he's "stealing our money" is typical of the political class in Arlington and elsewhere, but Frank, what Donna is doing may be illegal, but he's not stealing your money -- he's simply unwilling to part with as much of his money as you are empowered by the tax code to take from him.

He certainly is "stealing our money." That is tax money paid by you, me, etc. at the restaurant, not money off of his earnings. Big, big difference if you ask me.

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I find the quotes attributed to the Arlington County Treasurer, Frank O'Leary, in the article to be particularly galling. Comparing Donna to a kid knocking over a 7 Eleven and saying that he's "stealing our money" is typical of the political class in Arlington and elsewhere, but Frank, what Donna is doing may be illegal, but he's not stealing your money -- he's simply unwilling to part with as much of his money as you are empowered by the tax code to take from him.

Meals tax is a sales tax and not an income tax. The diners pay the tax, the restaurant is merely collecting it on behalf of the government. In this case, Donna is stealing government funds. Substantively I don't see much difference between someone who refuses to pay his income tax vs not paying over sales tax that's been collected. In either case, you're keeping money that belongs to the government but for whatever reason, one usually isn't punished as a thief for not paying his income tax. If you get caught shopliftiing, you'll probably take a trip to the local jail. If you don't pay your income taxes, you can negotiate a payment plan or even have it discharged....crazy.

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My major issue is really not who should and should not get the money, but that he took the money from his customers under false pretenses, the check said that the money was to pay the meal tax, it obviously was not, and it appears that there was never any intent to use it for that purpose.

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I think Roberto Donna is a wonderful chef, and I thoroughly enjoyed taking a cooking class from him a few years back at the original Galileo. That being said, as an Arlingtonian, I hope they nail his ass to the wall until he pays back every penny that he's stolen. I'm not always the biggest fan of the Arlington County government, but in this case they have my full support. In fact I hope they continue to prosecute other brazen tax scofflaws who steal from patrons and county residents. I pay my taxes on time and in full (as do most individuals and businesses.) Why should anyone else be held to a lesser standard? (for example, Restaurant Vero and Tap & Vine owners I'm looking in your general direction...)

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Correct me if I'm wrong, but my recollection was that Chef Donna was given that particular space rent-free while the old Galileo space was being remodeled. So it seems he didn't have to pay rent AND didn't pay sales tax. . . . .

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Some of the money has been paid back according to this story. It also appears that there is at least one other outstanding debt. :)

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Today's article in the Post from J. Freedom du Lac, Meg Smith and Philip Lucas includes a quote from Don:

But not everybody is convinced that an opening is imminent. "There's so much noise about the tax stuff and Roberto's other issues that people don't actually think it's going to happen," said Don Rockwell, founder of the free-wheeling Washington-foodie discussion board, DonRockwell.com. "I've never seen a restaurateur fall from grace like this. Roberto was possibly the most important chef in D.C. 20 years ago.."

I wish Chef Donna well and hope to relive some great memories [the Lab and the Grill].

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There are always two (or more) sides to every story and a lot of these comments are speculation. But comparing any type of tax liability to knocking over a 7-11 is ludicrous. Also remember, Bebo isn't the only name on that list.

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There are always two (or more) sides to every story and a lot of these comments are speculation. But comparing any type of tax liability to knocking over a 7-11 is ludicrous. Also remember, Bebo isn't the only name on that list.

Not sure why you think he is being treated harshly, the dude pleaded guilty to a felony. You think that just because it is a tax problem it is no big deal? This is a bit different than cheating on his 1040. He took tax money paid by unsuspecting diners and used it for his own needs, that is a crime. Sure there were no firearms involved but it is still stealing.

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Sure there were no firearms involved but it is still stealing.

"Yes, as through this world I've wandered

I've seen lots of funny men;

Some will rob you with a six-gun,

And some with a fountain pen."

From Pretty Boy Floyd by Woody Guthrie

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One thing to keep in mind, for some of these operator in the lower reaches, a lost check can take a while to show up on automated lists. DC lost one of my sales tax checks and it took 90 days for them to credit the payment {even with photo copied of the cashed check} and even longer to remove the penalty and interest. If DC had published a list like this, there might have been some raised eyebrows and we have alwyays been current.

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Anyone hear about the results of the August meeting that followed this opinion?

Hopefully the money coming in here is making its way to the appropriate places.

08-621.pdf

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