Meals tax appeal falls short in court

Published 9:55 pm Friday, June 1, 2018

A former Suffolk restaurateur was found guilty in Suffolk Circuit Court Wednesday on eight counts of failure to pay meals tax.

Jose Moncada, the former owner of East Coast Taco Co. on West Washington Street, had been found guilty in General District Court in December and sentenced to 19 months in jail. The case was appealed to Circuit Court.

Suffolk restaurateurs are required to charge their customers a 6.5-percent city tax on food and drinks served in their establishments. They hold that tax until the 20th of every month, when they are required to turn over to the city the amount due from the prior month.

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If they do not pay and get too far behind, however, the treasurer’s office begins to take collection action. One of the last resorts is criminal charges.

East Coast Taco Co. failed to pay its meals taxes for August 2016 to March 2017, according to testimony in court on Wednesday. For some of those months, the restaurant did file a report of how much it owed but did not remit any payment. But it was later found that how much it owed was underreported, according to testimony from Rebecca Waller of the Commissioner of the Revenue’s Office.

For the other months, it didn’t even file the report. The restaurant closed in early April 2017 when the Treasurer’s Office, accompanied by sheriff’s deputies, came in and shut the business down.

A bank lien brought in about $2,800, most of which went to pay other taxes the business owed. A small number of $30 payments have been made in recent months, but the total amount now due is more than $12,000.

Moncada’s wife, Jackie Moncada, who worked at the restaurant with him, testified that overhead expenses were crushing the business.

“We needed product to sell,” she said. “We had to pay our employees.”

The Moncadas were hoping to make it to the summer and get on a payment plan with the city, as they had done in the past when they fell behind.

“We’ve always done pretty well in the summer,” she said.

Jose Moncada testified the same.

“When we got caught up the first time, we felt good we would be able to do it again,” he said.

Moncada’s defense attorney, Assistant Public Defender Elisabeth Culpepper, brought out case law to argue that the simple failure to pay meals taxes wasn’t enough.

“Something more than a lack of action must occur,” she said. “That, standing alone, is not enough to meet the burden. Criminal willfulness is a much higher burden of proof (than in civil law).”

Assistant City Attorney Kalli Jackson argued against that.

“He knew the consequences of it,” she said. “He was willfully paying the tax the months he did pay it, so he was willfully not paying it when he didn’t.”

Judge L. Wayne Farmer said the city had been gracious to Moncada but that didn’t mean “the city has to do that forever,” he said.

“When he chose to use the funds to pay for something else … that was a choice he made, a willful decision he made.”

Sentencing was set for Sept. 7 to give Moncada time to come up with a reasonable plan to pay back the money. Farmer indicated whether such a plan existed would factor into his sentence.