November 14, 2002

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Dispute over sales taxes—
State closes Margarita Music

Margarita Music was closed down last Tuesday, Nov. 5, by the Greene County Sheriff’s Department, upon order by the Ohio Department of Taxation.

The state directed the Sheriff’s Department to lock the store due to unpaid sales tax in the amount of $17,195, according to a suit filed by the State of Ohio against the store’s owner, Mike Chlanda. The suit, which was filed in Greene County Common Pleas Court, states that Chlanda has owed sales tax on the store since 1995. Along with interest and court costs, the total amount Margarita Music, 108 Dayton Street, owes is $19,858.

But according to Chlanda, the amount of sales tax that was assessed on his store was inaccurate.

“The state sales tax people and I are having a disagreement,” said Chlanda. Beginning in 1995 the sales tax assessed by the state on Margarita Music was wildly off base, assuming an income from the store about 20 times the accurate amount, Chlanda said.

“I want to make sure I pay my fair share of tax, but not 20 or 30 times what I owe,” he said.

Charles Natkins of Cleveland, a lawyer representing the Department of Taxation, could not be reached for comment.

Chlanda said he opened Margarita Music about 12 years ago in Kings Yard as Margaritaville. At first, he sold greeting cards and clothing along with music, but gradually the store’s focus shifted to music, especially hard-to-find jazz and rhythm and blues LP’s. The store moved to Dayton Street in March 2000, and in recent years Chlanda has conducted much of his business on e-Bay, running auctions on rare musical titles.

The timing of the Margarita Music closing is especially difficult for his family, Chlanda said, since his other business, the Yellow Springs Freeze Inc., recently closed for the winter.

Chlanda said he recently hired an attorney, but faces difficulty defending himself since tax records he needs are locked inside the store and not accessible.

However, Chlanda said, he’s working to reopen Margarita Music in a few weeks.

—Diane Chiddister