The prince of DC coffee gets a jolt from the king of sales tax

In Washington, D.C., Nick Cho is a local celebrity – at least among the coffee-loving crowd. He was the owner of a popular Capitol Hill hangout called Murky Coffee. Unfortunately for Cho, he’s been gaining fame for a less stimulating reason. He currently owes the government approximately $190,000 in back sales tax and penalties from sales at Murky.

Last fall he was detained by authorities on fraud charges, according to a report in Voice of the Hill. In lieu of jail time, Cho is required to perform 400 hours of community service and spend five years on probation.
 
As for the taxes, Cho has signed on to a payment plan that will start with the first installment of $276.41 on March 4, and continue for a year. After that, the payment will leap to $3,900 per month until the balance is paid off. If that sounds like a financial back-breaker, think again. The charges could have resulted in 40 years in prison.
 
Besides cleaning up the past, Cho also had to agree to better behavior in the future. The attorney general stipulated, “For every year the defendant resides or does business in the District of Columbia, he shall timely file and pay all District of Columbia taxes required under District of Columbia law.”
 
Where did he go wrong?
 
Cho’s trouble is not new. It started in 2008 when the DC tax office first seized his Capitol Hill coffee shop. At that time, he was estimated to owe approximately $400,000 in back sales taxes and penalties. He told reporters, “I messed up. I didn’t pay taxes and it all caught up with me.” 
 
Eventually, the city sold the contents of the coffee shop and the landlord evicted Cho. His other location in Arlington also folded, and Cho was arraigned for failing to pay sales taxes. When reporters asked Cho what he did with the money he took in as sales tax, he said he didn’t know. “It could have been anything.”
 
Where is Cho now?
 
The coffee business is still in his blood, though now the coffee shop is not his own. He has been serving as the interim general manager for Chinatown Coffee Co., which is co-owned by Max Brown, former general counsel to the District’s chief financial officer. Brown told reporters that Cho was a consultant, not an employee or a partner, and was brought in to help set up and groom a new manager.
 
“I knew he had some tax problems, which were a concern for me, but I assumed that he was working them out,”
 
As for Cho’s future at Chinatown Coffee, Brown says he’ll have to think about that. “We are going to do our due diligence.”
 
Related articles:

Already a member? log in here.

Editor's Choice

Upcoming CPE Webinars

Nov 24This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Dec 3The materials discuss the concepts and principles in the AICPA’s new special purpose framework.
Dec 9A key component to improving your firm’s workflow efficiency while enhancing your profitability at the same time is how you leverage emerging technologies.
Dec 9Kristen Rampe will cover how to diffuse the tension in challenging situations in this one-hour webinar.