Blog: Tax Fiasco Means One LA Bakery Could Have Assets Seized During Government Shutdown

Here’s one of the weirder stories to come out of the ongoing United States government shutdown: It seems that Los Angeles bakery Mr. Holmes Bakehouse could have some of their assets seized by the Internal Revenue Service, all because there’s no one at the government agency there to answer the phones.

The Intercept has picked up on the nuanced story surrounding Aaron Caddel of Mr. Holmes Bakehouse. According to Caddel, a misunderstanding with the company’s payroll taxes resulted in a missed payment and inquiry from the IRS in the second quarter of 2018. Caddel and the payroll administration company he uses, Paychex, had been resolving the issue — Paychex maintains the IRS mislabeled the appropriate payment — before the shutdown, but now that the government is working with a bare-bones staff, those conversations have stalled.

As a result, Caddel and Mr. Holmes Bakehouse seem to have passed an automated deadline for repayment, and received a notice generated by computer of an intent to seize the company’s assets by January 23, unless a payment of over $86,000 is made. Caddel tells the Intercept that he has been unable to reach any of the case workers who had been handling his cause, and that general inquiry lines either ring through to no one or are dead altogether.

What it all means is still somewhat unclear, though it’s technically possible that, after January 23, someone working the skeleton crew at the IRS could begin the process of asset seizure, unless the payment is made beforehand. Caddel says that he has the funds to pay if absolutely necessary, but that doesn’t solve the initial misunderstanding, and would put obvious financial strain on the small business. From the Intercept piece:

“This is the one moment in our business life when we want to talk to the IRS,” he said. Caddel added that the issue would not be fatal to Mr. Holmes Bakehouse, but still significant. “With small business, cash flow is vital. We’d be able to make the payment, but it definitely would be super impactful to us.”

So far, no resolution seems to have been reached, and the government shutdown continues. In the meantime, Mr. Holmes Bakehouse is still up and running in Highland Park and on Larchmont.