Tony and Somnuek Thangsongcharoen immigrated to the U.S. from Thailand in 1983 and opened Mii’s Bridal and Tuxedo. But after over 30 years, their business is gone.
On the morning of March 4, 2015, over 20 armed government agents entered Mii’s and gave the Thansongcharoens two hours to pay the Internal Revenue Service (IRS) $10,000 or have their property seized, according to court documents. By day's end, their entire inventory had been seized and sold.
The IRS has been found violating the law when it comes to seizures in the past, and now the owner’s of Mii’s are the latest to accuse the agency of an improper and reckless seizure and sale of their property in a recently filed lawsuit against the U.S.
"To tell you how the clients reacted, [they were] just heartbroken and powerless,” Jason Freeman, managing member at Freeman Law LLC and the attorney representing the Thangsongcharoens in the suit, said.
“And they watched literally what they had spent their entire adult lives working for and building wiped out before their very eyes."
The IRS alleges the owners of Mii’s owed over $30,000 in back taxes from 2005, 2008 and 2010, according to court documents.
But the Thangsongcharoens claim they never actually owed any taxes, and the incorrect balance was due to a system error, according to the suit, and they had been working with the IRS to dispute the amount.
Circa did find public records on Mii’s of a state tax forfeiture in 2002, but their license has since been reinstated and there were no other records found on the business.
But experts say that regardless of whether the couple actually owed any taxes or not, the IRS seizing physical property is uncommon.
"They will generally levy bank accounts, garnish wages, those types of things," Glen Frost, managing partner of Frost and Associates, said. "It’s very rare of them to actually seize physical assets. It’s discouraged."
Frost said he has represented thousands of taxpayers against the IRS, and he can count on one hand how many times one of his clients had their physical property seized.
In the past the IRS has been caught violating the law when seizing private citizens' property.
According to a report published in 2013 by the Treasury Inspector General, the IRS did not comply with the law in 15 of 50 seizures randomly sampled, or over 30 percent, between 2011 and 2012.
But what really makes this case stand out, according to experts, is the timing of the seizure and sale. According to the suit, the IRS sold the property in just four hours.
The IRS denies that the sale happened that quickly, but does admit that the inventory was sold on the same day in March 2015 that it was seized, according to court documents.
Typically, the IRS is not allowed to sell seized property in less than 10 days of the raid, and not more than 40 days after.
But, if the property is classified as perishable goods, then the IRS is able to sell it quicker. Perishable goods could be anything with a short life expectancy, property that will lose its value in a short amount of time or something that would cost the IRS more money to store than it is worth.
"In my experience I’ve only seen a perishable goods exception in a few cases," Frost said. "Like, one example is a flower store."
The IRS invoked the perishable goods clause in this case in order to sell the gowns before the 10 day limit by claiming the gowns would cost too much to store, according to court documents.
"They took a very aggressive interpretation and approach here and used it to support their decision to invoke [the] perishable goods seizure," Freeman said.
The inventory had included over 1,600 gowns that had an estimated value of $615,000, according to the suit.
But the IRS sold everything for about $17,000.
The civil lawsuit was filed by the couple on March 1 in federal court in Dallas and they are seeking $1.8 million in damages.
The Justice Department told Circa they are not allowed to comment past their official court response. Circa also reached out to the IRS, but did not receive a response.
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