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Downtown Charleston restaurant owner encourages peers to skip paying February sales tax

Butcher and Bee cooks

The hospitality sector has has added 8,000 new jobs in South Carolina since October 2018, the most of any job category. Lauren Petracca/Staff

South Carolina restaurant owners by Friday are required to submit sales taxes collected in February, but one downtown Charleston restaurateur is hanging on to the state’s money to cover payroll and urging fellow restaurateurs to do the same.

“I can’t say we won’t be penalized,” says Michael Shemtov, who owns Butcher & Bee, Workshop and The Daily. “But we’re not paying it, and my understanding is after speaking to (Department of Revenue) leadership is they understand these are extraordinary times: Save your cash, people.”

Revenue Department Director Hartley Powell was not available on Thursday afternoon for an interview; a spokeswoman for the agency said she was not aware of his conversation with Shemtov, nor had she heard of a movement to remit partial or $0 checks.

Shemtov has notified other local restaurants owners of his decision via text but also planned to post a video on social media outlining his strategy in hopes of reaching a wider audience.

“It is not an act of defiance,” says Shemtov, who characterizes the choice as a necessary response to an unprecedented situation. Other downtown Charleston restaurateurs on Thursday used similar terms to describe why they were turning to loyal customers for help: FIG and The Ordinary launched an online fundraising campaign to cover its employees’ health care and support its purveyors, such as fisherman Mark Marhefka.

As of Thursday evening, the campaign had reached about 30 percent of its $50,000 goal.

“We talked about optics and ultimately realized we raise money for all kinds of reasons, but never for our people,” owner Mike Lata says. “Tomorrow we might feel different, but we couldn’t really come up with a reason why people would think it was wrong. We felt if we didn’t do it now, we’d miss an opportunity.”

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Although Lata’s team settled on GoFundMe, he says he’s “supporting all of the initiatives” that restaurateurs are throwing at overlapping health and financial crises.

Restaurant owners earlier this week lobbied DOR to either forgive or postpone payment of sales tax for their last month of normal business prior to the coronavirus pandemic. “We have employers sitting on cash they could use to keep people on payroll,” Harry Root of Grassroots Wine said.

DOR on Tuesday extended the deadline for tax returns due April 1 to June 1. Taxes that were supposed to be filed during that period, including income and sales tax, will not accrue penalties or interest so long as they’re paid by June 1.

But restaurant owners seeking a more immediate solution to their cash shortage weren’t satisfied by the measure, as Shemtov says he explained on the call arranged by Sen. Marlon Kimpson, D-Charleston. Following the discussion, Shemtov says he felt “they’re there to work with us,” although he adds that the agency didn’t signal it would depart from the law or make any other explicit commitments.

“Candidly, this is not our money to spend,” Shemtov admits. “It’s a crazy thing, and I understand where people are coming from when they say, ‘you should have planned better.’ I understand. But at a 10 percent margin, it would take you four years to build up a six-month cushion.”

To make payroll at one of his restaurants, Shemtov needs to come up with $10,000. The sales tax he intends to keep is approximately $15,000.

“The idea is we need the resources to reopen our doors and employ people and provide service to community,” once the outbreak is controlled, Home Team BBQ owner Aaron Siegel says. Although he’s sympathetic to business owners who have already sent in their sales tax checks, he’s in favor of any type of government assistance, which will put restaurants back in a place to take care of their workers.

“Whatever contributes to that is huge,” he says.

Reach Hanna Raskin at 843-937-5560 and follow her on Twitter @hannaraskin.

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