Wednesday, October 02, 2013

I Won't Pay You, But You Must Pay Me

It has been our experience that most people still do the ethical--and legal--thing by living up to their contractual obligations when dealing with struggling businesses. However, one need not be stupid about it; if the financially troubled business owes us and we owe them money, we "offset" receivables and payables and pay them the net amount, if any. (Landlords netting repairs and security deposit refunds are probably the offset example that is most familiar.)

But offset is not allowed when the other party is the government:
“Tax refunds will not be issued until normal government operations resume,” said the IRS. The IRS emphasized, however, that the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.
The IRS won't pay you, but you must continue to pay it or be subject to jail and/or fines.

Those who advocate more government, as opposed to private-sector, provision of services are in for a rude shock when they discover that the devil they threw out is replaced by a devil that is far worse because it doesn't have to worry about losing you as a customer or your poor Yelp review. © 2013 Stephen Yuen

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