What Would You Do?

I just read a great article in the April 2008 edition of Inc. Magazine about an ice cream shop in Massachusetts that was seized for failure to pay $177,000 in state and payroll taxes. Toscanini's has been in business since 1981 and developed a following that eventually led The New York Times to proclaim theirs as the best ice cream in the world.

After a few years the business expanded to multiple locations and began wholesaling its ice cream to Whole Foods. One of the owners, Gus Rancatore, says he was overwhelmed by the complexities of managing multiple locations and a wholesale division. He was unable to obtain bank financing. He missed some tax payments (which led to penalties). Commodity prices were increasing and he was constantly faced with the decision of paying taxes or paying the milkman.

When the tax agents padlocked the building in January, the owners set up a Save Toscanini's! website to solicit donations for the unpaid taxes. Within a week, good Samaritans donated more than $30,000 to help save the business. The owners used the money to negotiate a payment plan with the Massachusetts Department of Revenue and was permitted to reopen the ice cream shop.

Some visitors to the website cited Toscanini's invaluable contributions to the neighborhood, the niche they served and the role they played in the community as reasons for giving, while others chastised him for being a tax cheat.

So, what are your thoughts? Have you ever missed a sales or payroll tax payment? If so, how did you handle the repayment? What would you do if you found yourself in Gus's shoes? If you have a similar or unique story about business taxes, please do share.