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

IRS seizeIn 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.

From - Reason.com - by Allie Howell

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5 years ago

This is the way the IRS has always worked. At one time the IRS had 15 years of our taxes taxes open because of tax investments we had. They audited us in areas that we had claimed no deductions. Multiple sets of attorneys got no where with the gents in the Indiana division. An agent came to our home and questioned our minor children ages 9 and 13, my husband did not stop her, I was not home at the time, I would probably have been in jail for obstructing her in the pursuit of obtaining information from our children. I was on alert for call up for Operation Desert Storm at the time. Our attorney filed a 911 form but the agent said it did not apply in our case and it was not acted upon. We were forced into bankruptcy, my husbands business was seized, our home was sold, vehicles taken and sold. We were left with our personal possessions, and the will to recover which we did.

Pete from St Pete
5 years ago

The pity of the whole thing is that the agents and their superiors get off scot free. Even if the plaintiffs are repaid in full the agents who perpetrated this gross injustice will still have their jobs. The punishment is to we taxpayers who will have to repay these poor people from government funds. Meanwhile their current and future source of income is gone.

5 years ago

We’ve GOT to stop the criminality of the IRS. It’s been going on for decades. We must speak up and demand that it be stopped.

Randy White
5 years ago

“We the people” have to get our government “for the people” back where our founding Fathers intended. We do that by voting in hard core, relentless conservative politicians. Vote America!

5 years ago

Wish to get rid of the IRS completely….They are not for Americans…

Tom Wilde
5 years ago

The IRS has become another arm of the Communist Left in our government. They act as if the government rules the country not We the People. Such arbitrary and heavy handed conduct is the hallmark of dictatorial Communism not the Constitutional Republic we allegedly live in with a Bill of Rights.

After the 8 years of the illegal Obama Regime the Bill of Rights is almost completely gone.

I have one question: WHY is John Koskinen still top dog at the IRS? He’s an Obama appointee and a flaming Far Left Socialist at the very least.

WAKE UP, America! If you want your country back purge these Deep State Obama agents! NOW!!

And while we’re busy purging Communist agents, start weeding out the “judges” who rule based on Leftist and Muslim doctrine not the established law of the land. THAT alone would end a lot of this kind of over-reach.

5 years ago

This is just awful what has happened to this couple and to other people whom the IRS wants to go after.
This is just another reason why we need the FAIRTax in the United States. It totally eliminates the need for the IRS. Say “buh-bye” to the IRS! For more info, go to Fairtax.org.

5 years ago

I hope they get a trial with a jury and they WIN!!!

5 years ago
Reply to  Sandy

And when they win they get more than they asked for and they fire the people that did this

5 years ago

Sounds like Nazi activity. Can’t believe this could happen in America.

5 years ago

Sounds like Obama’s socialism is in full swing here. The IRS needs to be taken down a few pegs.

5 years ago
Reply to  Gulliver

no. the IRS has to be GONE. fairtax.org. look into it.

Sandy Mittelstaedt
5 years ago
Reply to  bob

The IRS has become a rogue agency. Power grabbing and illegal! I agree – Get rid of it! The people of the U.S. can handle sending in their own taxes by way of consumption. All the government needs is an adding machine to tally up the revenue.

5 years ago

It is absolutely galling that the government uses our tax $
To pay the personnel at the IRS to behave like this.
And aren’t they also eligible for some kind of bonus packages
Also subsidized by the taxpayer
Sounds like some kind of a banana republic

5 years ago
Reply to  bob

The only problem with FairTax is that it would give us control of our money which the government does not want us to have.

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