THE POWER TO TAX IS THE POWER TO DESTROY BOOKSTORES?: I know there are lawyers and legal experts who read this blog! Here’s a really troubling case for you all to look at:

“The owner of my local comic shop, Paige Gifford, was approached by the IRS in March for a ‘compliance audit.’ The brand-spankin new agent they had put on her case didn’t believe she could make a living selling comics. Once she was able to prove that she was in compliance, and not selling something on the side, and that yes, she did make a living selling comic books, the agent went after her inventory. He said that he knew how much baseball cards are worth, and so old comics must be worth a lot of money. He estimated how much her backstock was worth (based on his own bizarre calculation). He then told her that she hadn’t paid taxes on her inventory, and that she owed $14,000 in taxes. She’s a small business owner. $14,000 is a lot of money.

“So she got some help. At times the thing seemed almost resolved. But the IRS is determined to run her out of business. Within the last week she was told that she cannot have any backstock of comics. She has to destroy her backstock–shred or burn every comic book–by December 31st in order to get out of the debt. And she needs a receipt to prove that she destroyed the comics. Otherwise, she owes the IRS $14,000, and will owe the IRS an inventory tax every year from here on out. Even though her lawyer and accountant are convinced that she’s completely in compliance with every pertainable law.

“I don’t know about you, but if this audit is applied equally and across the board on all small-business owners, I don’t think there will be any bookstores or comic book stores left that are locally owned. You cannot have a decent comic shop without backstock, and according to the IRS, backstock is NOT ALLOWED.”

updates

a letter from the shop owner

links to taxpayers’ groups

more: “This case has the power to put most of the country’s comic book stores, and most of the country’s used book stores, out of business. It probably has implications for second-hand stores of all kinds, which means it poses a huge danger to readers and consumers. You and I will have fewer choices and the ones left to you will cost you more.”

more

comments-box discussion of the tax-technical issues here