Once upon a time in a dusty, sun-soaked town in California, there was a little dive bar named the Salty Serpent. Owned by a grizzled old man named Big Jim, this bar was famous for its cheap booze, surly service, and rowdy clientele. It was a place where people went to escape the pressures of the world, to forget about their troubles and drown their sorrows in a cold beer or a stiff shot of whiskey.
Big Jim was known for his meticulous record-keeping. He had a head for numbers and was fiercely proud of the fact that he never cheated on his taxes. He understood that the government needed its fair share to keep the country running, and as a patriot, he paid his dues on time, every time. To ensure that he never missed a payment, he kept a thick, dog-eared ledger behind the counter, recording every single transaction that took place in his bar.
One day, Big Jim received a letter from the California Franchise Tax Board. The letter informed him that an audit had been conducted on the Salty Serpent and that they had discovered significant discrepancies in the sales tax that Big Jim had paid. According to the tax board’s algorithm, Big Jim owed thousands of dollars in back taxes, a sum that threatened to put him out of business.
Big Jim was dumbfounded. He knew that his records were accurate, and he had paid every cent of sales tax that he owed. But the tax board’s algorithm, which had been upheld by the courts as a legitimate way to calculate owed sales taxes, assumed that cash-based businesses like the Salty Serpent charged a 400% markup on the liquor they sold. In reality, Big Jim only charged a 200% markup, a far cry from the inflated number the algorithm had assigned him.
Frustrated and desperate, Big Jim sought out the help of his friend, a young and tenacious lawyer named Amanda. Together, they decided to challenge the tax board’s decision and the algorithm itself. They believed that Big Jim’s case could set a precedent for other small businesses that found themselves in a similar predicament.
As they prepared for their legal battle, word of Big Jim’s plight spread through the town. The regulars at the Salty Serpent were a motley crew, but they were fiercely loyal to their favorite watering hole. They rallied behind Big Jim, organizing fundraisers and spreading the word about his fight against the tax board. The local newspaper even picked up the story, shedding light on the unfair treatment of small businesses by the tax board’s algorithm.
The day of the hearing finally arrived. Amanda presented their case with passion and conviction, arguing that the algorithm’s assumptions were flawed and unjust. She pointed out that the tax board had no concrete evidence of Big Jim’s alleged underpayment of sales taxes, and that the algorithm’s assumption of a 400% markup was arbitrary and punitive.
The judge listened carefully to Amanda’s arguments, and after a tense deliberation, she ruled in favor of Big Jim. She found that the tax board’s algorithm was indeed unfair and ordered that it be amended to account for the unique circumstances of each business.
This landmark decision was a victory not only for Big Jim and the Salty Serpent, but for small businesses all across California. The ruling forced the tax board to reevaluate its algorithms and led to a more equitable treatment of cash-based businesses.
As for the Salty Serpent, the bar continued to thrive, with its loyal patrons raising a toast to Big Jim, the man who had fought the California Franchise Tax Board and won. The old dive bar remained a haven for the down and out, where the drinks were cheap, the company was rough, and the stories of Big Jim’s triumph were shared again and again.
The above story is a true accounting of an actual dive bar California. I’m friends with the owner. Obviously the names have been changed to protect the innocent.
Except I lied about one part. When Big Jim took the tax board the court in real life, the court upheld the algorithm as legally valid and Jim had to pay $80,000 of taxes he rightfully didn’t owe.
posted from Michael’s Substack
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