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The troubling tax war between Albany and small business

By
John Aidan Byrne
Published Nov. 28, 2015, 7:00 p.m. ET

When Mike Brzoza’s cat was away, New York tax agents liked to play — and this was pure hardball hell.

Brzoza is caught in the crossfire of New York state’s deadly tax war on small businesses already struggling for survival, according to his tax accountant.

Brzoza’s Glendale Plumbing offices in Queens were recently padlocked and his staff sent home after state agents arrived, loudly demanding immediate payment of thousands in “overdue” sales taxes, his accountant told The Post.

And, in a strange twist, his office cat, Bella, was held “ransom.”

“They wouldn’t release Bella and only agreed to feed her once I came up with some money,” a distraught Brzoza recalled recently.

Brzoza was assessed $40,000 in “unpaid” sales taxes, excluding interest of 14.5 percent. He was also charged a special service fee: $436 to padlock his door.

“I got a really tough time,” Brzoza said. “I tried to be as nice and reasonable to them as I possibly could, but they were just cold and indifferent.”

Brzoza’s tax case is one of countless piling up in Albany. And sources say officials are dusting off more files that target one of the most vulnerable sections of the business community, small-company owners like Brzoza.

New York is amassing more each year in sales taxes — $27.4 billion estimated by the end of 2015, $4.6 billion more than in 2009, and they accounted for 27 percent of all taxes collected by the state last year, government data reveals.

The tax war comes as conditions for small businesses in New York deteriorate despite some recent breaks, with regulation and red tape sapping morale.

A new study by personal finance Web site GOBankingRates.com ranks New York 26th, in the bottom half of all states, for entrepreneurs wanting to start a business. New York has the nation’s worst tax score, tied with New Jersey, the study notes.

And with an average New York statewide sales tax of 8.48 percent, some analysts credit the latest sales tax haul to a “recovering” economy. Brzoza’s accountant thinks that’s laughable.

“I can tell you firsthand that New York state tax agents are ginning up sales tax liabilities against small businesses in record numbers,” said accountant David Selig, representing Brzoza. “During the past four years, the state has closed more businesses and assessed more fictitious liabilities than it has ever done before.”

In a statement to The Post, the New York State Department of Taxation and Finance said it takes “failure to remit sales tax very seriously because it is theft from customers, local governments and New York state. Customers pay sales tax fully expecting that it will be used for government purposes, not to line the pockets of business owners or to create an unfair advantage over honest businesses.”

Brzoza’s settlement is ongoing.