Tax Watchdog

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Posted by Robert Snell (The Detroit News) on Fri, Jul 24, 2009 at 12:11 PM

IRS accuses P. Diddy's restaurant of dining and dashing from tax debt

The Internal Revenue Service has rapped the knuckles of music mogul Sean "P. Diddy" Combs, whose Atlanta eatery Justin's Restaurant owes $7,373 in federal taxes, records show.

The restaurant, named in honor of his son, opened in 1998 and specializes in upscale Southern and Caribbean cuisine. An identically named restaurant in New York City closed a few years ago.


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What's owed:
  • The IRS filed a $7,373 tax lien against the restaurant on May 18 in the New York Department of State.

His side:

Combs' spokesman blamed the tax debt on a series of errors. First, the IRS was sending notices to the restaurant's old corporate address in New York -- one which hasn't been used in about 10 years.

"The new address was on file with the IRS, so it is surprising this happened," the spokesman said.

Second, the company that handles payroll tax payments for Justin's apparently underpaid the IRS for taxes in 2007.

After being notified about the lien by The Tax Watchdog, Combs' representatives scratched out a $7,373 check, which should arrive today, the Combs spokesman said.

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About this Weblog

Robert Snell of The Detroit News

Who owes taxes in Metro Detroit

Robert Snell is a Detroit News business reporter. He focuses on state and federal tax liens and, based on public records, interviews and Detroit News archives, identifies those who don't pay income, business and property taxes. He can be reached at rsnell@detnews.com or (313) 222-2028.

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Why we focus on unpaid taxes

Every year, about $345 billion in federal taxes are either late or unpaid, according to the IRS, ripping open holes in budgets and shortchanging schools and public safety. That forces taxpayers to cough up more than their fair share, tax experts say. About $2.5 billion went uncollected in Michigan between 2000 and 2006.

Liens are filed when taxpayers ignore government pleas for payment. Tax liens are like tar. They stick to everything - homes, cars and income. According to the IRS, liens give the government a legal claim to a person's or company's property. Liens serve as security or payment for the tax debt and a red flag to creditors.

There are a variety of reasons people don't pay. Some can't afford to and some refuse while others miscalculate or receive bad advice. Unpaid taxes can lead to prison - just ask actor Wesley Snipes.

This blog will focus on state and federal liens and identify those who don't pay income, business and property taxes. We will gather our information from public records, interviews and Detroit News archives.