KDOR confiscates restaurant's assets for delinquent taxes

Tribune photo/Jason E. Silvers A Kansas Department of Revenue sign marked 'Seized' is posted on the drive-through menu of the local Taco Tico and Opie's Restaurant, 1804 S. National Ave., on Tuesday after KDOR and local police officers seized the business assets of Trend Enterprises, Inc., D.B.A. Taco Tico, owned by Thomas Davis.

KDOR officials and local police officers executed tax warrants that had been filed in Bourbon County District Court, and seized the business assets of Trend Enterprises Inc., D.B.A. Taco Tico, and the company's president, Thomas Davis, the KDOR statement said. The business is located at 1804 S. National Ave.

The Manhattan-based nationwide auction company, Purple Wave Auction, was on-site at the restaurant's location Tuesday to haul off equipment and other furnishings inside the building. Several attempts to reach Davis on Tuesday and Wednesday for comment on this story were unsuccessful.

During periods of time between March 2005 and September 2007, the restaurant, which also contained one of the area locations of the Opie's Pizza franchise, incurred nearly $73,000 in delinquent sales taxes. Davis also owes about $26,000 in delinquent withholding taxes from periods between August 2003 and August 2007, the KDOR statement said.

KDOR spokeswoman Freda Warfield said the sales tax a restaurant generates through its profits is supposed to be sent back to the state, but Davis had failed to do so.

"When a customer is charged sales tax for a meal, the restaurant typically submits that sales tax back to the state," Warfield said. "But that didn't happen."

All known bank accounts, on-site cash, business inventory, and personal property assets, including personal vehicles belonging to Davis were seized and the business was sealed and closed. Seized assets will be sold at public auction to pay toward delinquent tax, the KDOR statement said.

Warrant execution occurs when all other collection attempts by KDOR have been exhausted. Some of these collection methods include multiple letters, telephone calls, letters of impending legal action, tax liens filed with the District Court of the domicile to secure the debt, previous bank levies, and on-site till taps, which are all executed in order to bring the taxpayer into compliance, the KDOR statement said.

Only after unsuccessful attempts does KDOR take this type of aggressive warrant execution action of seizing assets, which in this instance resulted in the business being closed, the KDOR statement said.

"This is the very last resort," Warfield said. "We will try to work with the taxpayer and try to set up repayment plans."

KDOR's standard practice is to continually encourage delinquent taxpayers, who are not lawfully filing or paying taxes (sales, withholding, etc.), to voluntarily enter into repayment agreements. When multiple collection attempts fail, KDOR is forced to protect the interests of the state and employ civil actions aimed at encouraging the taxpayers to comply, such as a bank levy, a till tap, in which law enforcement authorities remove all cash from the business' premises, or ultimately a seizure of assets, the KDOR statement said.

Bill Brittain, the Opie's Pizza franchisee, said Tuesday he will seek another location for the franchise, which operates several other restaurants in the region. Brittain added that while Davis' situation is unfortunate, he thinks the building will be occupied again soon.

"It's a shame because he's (Davis) a good guy and it was a good business overall," Brittain said. "That's one of those things that happens in business. You have to keep those lines of communication open."

Opie's moved into the building with Taco Tico about two years ago. Opie's food products will still be available at Mayberry's Neighborhood Restaurant, located at 101 State St., even after the closing of that franchise's location at 1804 S. National Ave., Brittain said.