Incredible Thuggery, Courtesy of the Florida State Government

I had a real zoo of a week last week - one of those stretches I have every once in a while in business where new items were being tossed into my queue far faster than I could take care of them.

One of the most amazing was courtesy of the state of Florida.  Almost exactly a year ago, I submitted some backup data on my Florida revenues in 2006 to an auditor for sales taxes.  Such audits are entirely usual and routine (if irritating) and come up with some regularity.  There was no way the auditor could have figured out my tax submission from what I initially sent him - I would have to spend time explaining what different categories in my revenue reports and GL meant.  Further, I had data on seven locations which are divided in the tax reports into two county reports, but he did not have the data for which should go to which.

Well, I never heard from the guy for a whole year to clarify these issues.  Not sure what he was doing, but he was probably screwing up somehow, because on Friday his supervisor called me and told me that the statute of limitations was almost up on 2006 and they needed to complete the audit.  To this end, the auditor had submitted to her some mess of a set of numbers (see my comments above, he couldn't have done a correct job no matter how competent he was since he never asked me for all the information he needed).  I can see the guy rushing around trying to cover his ass having probably forgotten about it for a year.  Anyway, I told the lady that the statute of limitations was her problem, not mine, because her employee initially contacted me a year ago and had been sitting on the case all that time.

Well, I guess I was naive.  It turns out the statute of limitations is in fact my problem in the power imbalance that exists between me and the state of Florida.  She told me that, admitting she had no basis for doing so, she was going to file a lien against me for $40,000 in unpaid taxes as a "placeholder" to get in under the statute of limitations.  Yes, this would trash my credit and my legal standing and cause me no end of problems having a government lien on my company, but it would circumvent the horrible situation that when they actually did the work they should have done a year ago, I might owe taxes they could not collect.

Of course I told her this was BS and of course that got me about nowhere.  After a lot of time, I got one concession.  If I could prove I was clean by Monday, they would not issue the lien.  Well I spent all Friday, Friday night, and Saturday working up the analysis that is supposed to be their job, working on a 1 business day deadline because they had pissed away 250 business days sitting on my case file.  Completing the analysis, I calculated I under-paid taxes by just under $7.  We will see on Monday if I am able to battle back against this absurd thuggery.  By the way, we are being audited everywhere by local governments hoping to dredge up a few pennies from the couch cushions.  It is taking so much of my time that I actually chose to back off of bidding on a couple of new projects -- no time to spare.  So much for stimulus.

On the bright side, I have a lot of good stuff saved up to blog but I did not feel like it on Sunday.  Instead, I spent some time soldering switches and other trackwork on my n-scale railroad.  Made good progress, only about 3 more switches left to build on this module (the switches below are obviously before painting and adding wood ties.  Examples of finished work is here).

Update: By the way, I operate in red states and blue states and cannot detect any real difference in how arbitrarily I am treated by the state bureaucracy (with the exception of California, which stands alone at the top of the list of state bureaucracies that are a pain to deal with).  They differ in laws and tax rates, that often make red states more hospitable, but their bureaucrats are all about the same.

  • ElamBend

    Texas gets a lot of marks for being business friendly, but when I did some business there a couple of years ago, I was sorely disappointed. I have never done business in CA, so don't have that comparison.

  • Kathy Soja

    Unbelievable. My sympathies.

  • Beautox

    Wow just about every post you post along these lines has me thanking my lucky stars that I live in New Zealand and not the USA ("land of the free" )

    Running a company here is a piece of cake compared to what you go through.

  • LoneSnark

    I wonder why that is, Beautox. All this poor treatment really is inefficient. Would it not be better for our political masters and indifferent to the rest of us if they eliminated the headache and replaced it with higher tax rates?

  • Jim Clay

    What Kathy said.

  • me

    Outrageous. My sympathies, and I am keeping my fingers crossed for a favorable outcome.

  • http://commonsenseliberty.wordpress.com Terry Noel

    Jesus wept. Here's hoping things work out in your favor today.

  • Noumenon

    I like your Forbes columns, but I wish those people could just read your blog. Love your passion, that never descends into plain ranting and that I can always identify with.

  • Thomas

    This is the beauty of the "regulatory" state which has replaced the "rule of law" a while ago. It is literally impossible to comply with all the arcane regulations that are administered by a horde of semi-competent civil "servants" who may or may not know the rules they interpret, apply and enforce.

  • Bill

    The only bright spot here is that the non-functional Florida auditor was not camping in your office.

    I once had a California county send a sales tax auditor, who demanded working space and that we assign someone to bring whatever files she wanted. After four months she arrived at a tax deficiency of less than $25. The following year the entire episode was repeated, this time for no deficiency found. So the taxpayers probably spent nearly $100K in her salary and benefits for an income of $25. Wonderful use of the taxpayers dollars.

    Of course, the actual audit time was much less...she spend most of the day on (my) phone and prolonged lunches. That's why I don't do business in California any more.

  • twolaneflash

    By "Bureaucrats are all about the same" I take it you mean lazy, incompetent, entitled, power mad, arrogant, hostile, narcisstic, and richly deserving to be unemployed after being properly humiliated and beaten. Or did I misread your post?

  • http://merrillovermatter.blogspot.com Greg Merrill

    Call me naive and I'm sure you will but . . . this sounds illegal to me. I am no way a legal expert but for a government official to admit they have no basis for a lein placed on a business and then threaten to do it? Sounds like a good reason to record all conversations with the tax auditors.

  • Mesa Econoguy

    These same people will shortly run healthcare/insurance.

  • EarlW

    I don't know about you, but if this happened to me, I would just pack it in. What's the point?
    Life is too short to be spending all this time dealing with red-tape and bureaucrats.

  • http://realitybucket.com Jay

    I live in Massachusetts and am on the poor side. What they have been doing here is preventing people who qualify for earned income credit from actually getting it. For the 2008 taxes, it was a desk audit with 30 days to get them a pile of info. Which I didn't, so we didn't get as much back (against back taxes we owe, so it's all paper but matters in the long run). Come to find out they'd done the same far and wide, intending people not to respond, generating extra revenue from the low income crowd to help plug the massive holes in state finances. For 2009 there wasn't even that. Simply a notice that, no, we had erred and owed $160 rather than being due almost $500. There was no explanation I could discern about where the error or disqualification was. I could have made a mistake, but I am reasonably sure I was not that far off.

    Thus I am completely unsurprised by your experiences.

  • http://realitybucket.com Jay

    Seeing the comments about simply packing it in, that occurred to me, but it's awfully hard to justify if you have that much existing investment and going concern in a location. If it were negligible, though...

    It amazes me to see anyone start a business in the current environment, despite the history of major companies having been founded in bad times. I have mixed feelings about doing more than scraping by on a part-time income until there is a climate change we can believe in. Business climate, that is.

  • tomw

    Pathetic incompetence with a topping of rude arrogance. Mmmm!

    I do believe that the shoe will be on the other foot if November has the expected outcome. Incompetent civil bureaucrats will be given cuts in pay, reduced retirement benefits and increased health care deductibles and co-pays.
    If only...
    The government employee gets better everything and more pay than their employers. Not gonna last.

  • tehag

    It appears you should begin taping your phone conversations.

  • Nick S.

    I would like to tape all of my phone conversations in case something like this happens, but it's illegal in most places without the consent of both parties, and across state lines, it gets even more complicated.

  • http://lifeloveandpickles.blogspot.com/ Rebecca

    So, what happened? Did they accept your analysis?