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Halloween, Pumpkin Stands, Little Kids & the Tax Man

By Brian Mahany

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Published: 01Dec2010
Word count: 401
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Halloween stories are usually quite scary and without happy endings. This story is certainly no exception.

Mention young entrepreneurs and many folks will conjure up visions of the neighborhood kid mowing lawns or selling lemonade on a hot summer day. This story is about two very young kids selling pumpkins in Lewiston, Idaho (population 30,000), selling them until the tax man showed up. A few days ago an employee from the Idaho State Tax Commission ordered a 4 year old boy and his 6 year old brother to shut down their pumpkin stand.

The boys parents were told that the stand could reopen if the family obtained all necessary licenses and permits and collected sales tax on the pumpkins.

Let's see, health inspections, agricultural permits, weights and measures, business licenses, sales tax permits and perhaps transportation department approval for signs and parking. That cost could easily be in the thousands of dollars. A bit much for a six year old who says he is trying to save money for sports activities. Then again, even if he did get all the permits, Halloween would long be over and the labor department would probably arrest the parents for violations of child labor laws.

This type of heavy handedness gives tax officials and government a bad name.

When I ran Maine's state tax department between 1995 and 1998, we frequently encountered seasonal vendors operating Christmas tree stands for 3 or 4 weeks a year. Most were tiny mom and pop operations and a few were larger commercial enterprises. Tax authorities have a job to do - and certainly no one likes to pay taxes - but a little discretion goes along way. Were the 4 and 6 year olds threats to Idaho's fiscal stability? Obviously not.

It is unknown whether the boys complied with the order or are now fugitives. Actually, they are probably folk heros by now.

News of the incident spread rapidly. Even TV commentator Glenn Beck picked up on the story.

Obviously, the parents had some involvement in the business. The local newspaper, the Idaho Reporter, carried a picture of one of the boys trying to pick up a pumpkin twice his size.

Thankfully, incidents this outrageous are few and far between. Tax officials do often become heavy handed however. If you are facing the closure of your business, seek professional help. Call your accountant or tax lawyer. Many problems can be solved without expensive audits, enforcement actions or litigation.

BrIan Mahany is a lawyer concentrating in tax law, asset recovery and white collar criminal defense. He is a partner in the Milwaukee, Wisconsin law firm of Mahany & Ertl. He and his firm handle a wide variety of tax matters including US Tax Court litigation, audit representation, tax compliance, offers and compromise and tax evasion defense. Brian welcomes comments and questions, contact him through his website http://www.mahanyertl.com

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