IRS

Why Did the IRS Seize this Wedding Boutique and Sell Everything for Next to Nothing?

Former owners are suing for $2 million, accusing agency of violating the rules.

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Tony and Somnuek Thangsongcharoen, courtesy of Jason Freeman

In 2015, IRS agents strode into a Dallas wedding boutique, shut it down, and sold the entire inventory in just four hours to recoup alleged unpaid taxes. Now, the former owners are seeking financial compensation. They have filed a $2 million lawsuit, alleging multiple IRS rule violations and acts of impropriety.

Tony and Somnuek Thangsongcharoen opened their store, Mii's Bridal Salon, in Dallas, Texas, in 1983. The elderly Thai immigrants sunk their life savings into designer wedding dresses and were left penniless when the IRS sold them all, according to the couple's attorney.

"They've really been destitute," Jason Freeman, their attorney, tells Reason. "This really completely wiped them out financially."

In the lawsuit, the couple claims that the IRS conducted the entire seizure illegally, broke multiple statutes, and ultimately conspired to shut Mii's down.

According to the legal filing, the IRS believed Mii's owed $31,422.46 (which the couple disputes) and internally documented their 1,600 dress inventory as being worth $615,000.

The legal filing claims that the agent on the case originally recognized that the entire inventory would not need to be sold to satisfy the debt. However, Freeman obtained internal IRS communications through a Freedom of Information Act Request and found that IRS higher-ups decided that the agency should "shut down this failing business."

The lawsuit contends that the IRS violated its own rules in the process.

On the day of reckoning, March 4, 2015, 20 armed agents and members of the Dallas Police arrived at Mii's and told the Thangsongcharoens that they had two hours to write a $10,000 check or forfeit the entire inventory.

It was "totally improper to come in and demand a check like that within a matter of hours," Freeman says.

The couple didn't fill out a check, so four hours later, the IRS had sold the entire inventory and additional items through auction for $17,000. In conducting the sale so quickly and from within the store, the plaintiffs believe the IRS failed to comply with notice of sale and public sale requirements.

The auction took place under the IRS perishable goods sale procedures. Invoking it allows the IRS to seize and sell goods immediately instead of waiting 10 days and posting public notice of a sale, as is typically required. According to Freeman, such a quick sale "really circumvents statutorily prescribed safe guards" and is only meant to be used for perishable goods, not wedding dresses.

But the procedures also allow the IRS to sell goods immediately if it claims it would cost more to store them than they would gain from waiting to sell them. And that's how the IRS justified the immediate auction.

Freeman's internal documents show that the IRS internally devalued Mii's inventory in order to justify the perishable goods sale. They arrived at a valuation of $6,000—about $4 for a designer wedding dress. The IRS then claimed that storing the dresses would cost the agency more than they could sell them for.

Freeman also argues that the IRS overstated the costs that would be necessary to store the dresses, making the entire scheme "a bad faith engineered valuation designed to get what they wanted".

The IRS had decided that a perishable goods sale would be the "resolution where the government will benefit the most," as stated in internal communications.

Mii's was never able to reopen after the seizure. Tony Thangsongcharoen claims the stress of the ordeal caused him to have a heart attack and undergo quadruple bypass surgery.

The $1.8 million lawsuit was filed in the United States District Court for the Northern District of Texas Dallas Division earlier this year. It is meant to cover "damages resulting from the reckless, intentional, and/or negligent disregard of the Internal Revenue Code (I.R.C.) and governing Regulations by officers, agents and/or employees of the Internal Revenue Service ('IRS')".

Freeman says he hopes this lawsuit will help prevent future IRS misconduct.

"I don't think this is how citizens and taxpayers should be treated, ever … ," Freeman says. "While most government acts are performed with unquestionable integrity and good faith there are unfortunately exceptions to the rule. … When it happens they need to be held accountable. That's the only way to prevent it from becoming the rule."

So far, the government has moved to keep this case from getting a jury, requested the amount requested in the lawsuit to be trimmed, and commented that the Thangsongcharoens lack legal standing. According to the government, only Mii's, the bridal shop itself, should remain as a plaintiff.

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  1. …IRS higher-ups decided that the agency should “shut down this failing business.”

    Does Trump know the IRS under his predecessor had this ability? Time for the IRS to raid and sell off Morning Joe, I think.

    1. It should be enough to shut down half of MSNBC, at least.

    2. Look on the bright side: at least the government shut down a failing business instead of bailing it out. /sarc

  2. Freeman says he hopes this lawsuit will help prevent future IRS misconduct.

    Punishing the taxpayers for official misconduct hasn’t worked so well for misbehaving cops, but maybe it’ll work this time.

  3. Why? Because the patriot act is one of the most frightening pieces of legislation eve enacted.

    This is how tonys out there think the government should operate. Only against capitalist that is.

    1. Yup, and the ink was still wet on the “Patriot act” as building 7 was imploding.

  4. Was this a false flag operation for IJ?

  5. So, if the IRS’s justificatons for doing this are correct, then we are devolving into a banana republic. A government agency delibetately misapplying procedure because it is more convenient to their purposes is further evidence of how deep the rot goes on our civil institutions.

    1. this is so evident and obvious.. but people keep making statements like:

      “While most government acts are performed with unquestionable integrity and good faith”

      No, they don’t

  6. such a quick sale … is only meant to be used for perishable goods, not wedding dresses.

    IDK, styles change pretty fast.

    Tony Thangsongcharoen claims the stress of the ordeal caused him to have a heart attack and undergo quadruple bypass surgery.

    To be fair, if you need quadruple bypass surgery, you are a heart attack waiting to happen.

    1. I really hope that is some kind of gallows humor.

  7. Civilization requires taxes something something social contract yadda yadda love it or leave it free to choose blah blah blah.

  8. Government is just the name we give to the things we choose to do together.

    /Barney Frank

  9. Why?!? How dare you ask such questions of the IRS!!!

  10. 20 armed agents and members of the Dallas Police arrived at Mii’s

    20 armed agents and members of the Dallas Police arrived at Mii’s

    20 armed agents and members of the Dallas Police arrived at Mii’s

    1. yes this stuck with me also. i’d make a pad thai joke but it would be rude to the people who had everything stolen from them by thugs.

    2. But … most government acts are performed with unquestionable integrity and good faith

    3. They could have gotten poked with a safety pin or something.

  11. But the procedures also allow the IRS to sell goods immediately if it claims it would cost more to store them than they would gain from waiting to sell them. And that’s how the IRS justified the immediate auction.

    Yep, I can see where leaving the dresses in the store they just stole would cost way over $615,000.

    2015? Any bets on the political affiliation of the victims?

    1. Any bets on the political affiliation of the bottom feeders who were in position to buy $600K of stock for $17K on a couple hour’s notice?

      1. This has to be public information. Perhaps shaming the beneficiary is warranted. Or perhaps there is evidence of a conspiracy, ie prior communications between IRS and benficiaries, get em for RICO.

  12. This is why cries of ‘rule of law’ don’t have much effect on me.

    A bureaucrat can declare wedding dresses to be perishable goods. With any luck this couple will win this lawsuit. That won’t stop such behavior from happening again and again, whenever it benefits those with the power to abuse.

    1. not until the courts begin holding the feet of the agents who abuse the law to a very large and hot fire.. such as, formal misconduct, theft under colour of law, denying Civil Rights to the harmed individuals, malfeasance in office, violating their publically administered Oath of Office to uphold and defend the Constitution….. when some of these rogue agents end up losing their own homes from the legal costs to defend, losing their jobs AND pensions, or even waking themselves up one morning and finding themseles in prison for their misdeeds being properly labelled and treated, as if they were the next guy on the block

      1. Hear, hear!

  13. I’m thinking one of their competitors has relatives in the IRS?

  14. Why Did the IRS Seize this Wedding Boutique and Sell Everything for Next to Nothing?

    Because they can!

    “Nation of laws(R)”, remember?

    1. Government through the barrel of a gun, literally.

  15. But the procedures also allow the IRS to sell goods immediately if it claims it would cost more to store them than they would gain from waiting to sell them. And that’s how the IRS justified the immediate auction.

    If that’s the way the law reads, these people are fucked.

    1. And who praytel were the bitters at this quickly convened auction? No doubt LE buddies and criminals. Sick.

    2. “proceedures” are not laws, enacted by Congress after discussion, public comment, and signed into law by the President.

      They can, and must, make the claim that such power is not properly left in the hands of these two bit hooh hahs acting as agents under the public trust. They can make any rules or policies they want to make…. but they all MUST comply with the Constitution…. and in this case, there was no “due process”, nor proper warrants, etc.

  16. Where does the IRS find Americans willing to do this kind of thing? How can they sleep at night?

  17. That’s why they’re called the IRS. Because it’s all TheIRS. Ba-zing!

    Seriously though, this is totally fucked. I really hope these people win at least some compensation, but I’m not optimistic. The IRS is too powerful, and our court system rarely sides with the people over the bureaucratic machine that supports it. Even if they won, the IRS has no incentive to change their ways. Public outrage is much more effective than any legal victory in matters like this, and I just don’t see this kind of story picking up any major traction anywhere but Reason. Fuck, I’ll be pulling for them at least.

  18. On the day of reckoning, March 4, 2015, 20 armed agents and members of the Dallas Police arrived at Mii’s and told the Thangsongcharoens that they had two hours to write a $10,000 check or forfeit the entire inventory.

    “Nice store ya got here, be a shame if something were to happen to it.” The fuckers aren’t even trying to hide their blatant thuggery anymore.

    “While most government acts are performed with unquestionable integrity and good faith…

    Wrong. Although I understand why he thinks this. Stockholm Syndrome is a hell of a thing.

    According to the government, only Mii’s, the bridal shop itself, should remain as a plaintiff.

    What?! Did I read that right? *rubs eyes* Holy fucking shit. It was bad enough when they were charging money and property with crimes now they claim the bridal shop itself, not the business’ owners, the actual shop itself is the only entity that can sue them?! This must be what going mad must feel like.

    1. CA-
      You assume that he said it because he meant it, not as a strategy.

  19. IRS is short for GESTAPO !

  20. “While most government acts are performed with unquestionable integrity and good faith–”

    Let me stop you right there.

    1. I wondered what happened to Robby Soave. I think we found him, though he’s using an alias.

    2. Ain’t that the truth.

  21. “don’t have standing” courts love to dismiss cases on technicalities, esp when it favors the government.

  22. Burn down the IRS and salt the ground on which it stood.

  23. We can hope that they will prevail with a total retail price settlement (plus punitive damages and loss of income).
    At that point the IRS will have given the elderly couple the best going out of business sale ever.

  24. I blame the democrat progressive socialists who run the IRS.

  25. Whoever you blame, the did cannot be undone.

  26. Related: I was kind of furious at how this season of Fargo ended

  27. Worse than the Mafia coming in for “protection” money. At least the mafia let the business keep operating in order to keep collecting.
    They are Stupid as well as Evil.

  28. I would have cut the IRS a cheque for the whole amount that morning. Buy some time. It would have taken a couple hours for the thugs to figure out whether the cheque was made of rubber, right?

  29. I would have cut the IRS a cheque for the whole amount that morning. Buy some time. It would have taken a couple hours for the thugs to figure out whether the cheque was made of rubber, right?

    1. And then they add fraud to the list of charges. Nice try, though.

  30. The more you read about government the more sick you feel. Just plain robbery.

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  33. I say we hold a competing auction, for woodchippers. I bet they’ll be really popular if this sort of thing keeps up.

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