The Garage bar owner Jennifer Kelley said after a business license hearing this week her establishment at 121 W. Eighth St. remains open and isn’t closing anytime soon.
The city had demanded Kelley attend a show cause hearing Wednesday to explain why her business license should not be suspended or revoked because of failure to remit approximately $20,000 in delinquent sales taxes.
Kelley made her case and agreed to pay more than $11,700 in delinquent sales taxes to the city by mid-September.
When Kelley spoke at the hearing, her voice was frail. City Clerk Faye Harmer read a written statement by Kelley into the record.
In her statement, Kelley said she has been actively working to pay the taxes owed, organize business records and implement processes, procedures and oversight to ensure The Garage remains in full compliance with tax reporting requirements going forward.
“It is not lost on me how incredibly serious this is, and I truly wish I had addressed this sooner,” she said in her statement read by the city clerk.
She assured City Manager José Madrigal, who oversaw the hearing, that collected sales taxes were not spent on personal medical or health costs but on business expenses, and that was a practice she has brought to an end.
She said her biggest mistake was allowing the delinquent sales taxes to linger instead of communicating her situation to the city sooner, even as she was working on paying the money back.
According to city documents, The Garage had failed to remit nearly $19,700 in sales taxes as of mid-May. On Wednesday, Heidi Wise, deputy chief financial officer for the city, said Kelley had already paid about $8,000 ahead of the hearing.
“I do sympathize with your situation,” Madrigal said, adding he understands health issues and sales tax obligations for first-time business owners can be difficult to navigate. “… (But) you can’t just hold onto your sales tax when times are tough, because those are things that are being paid for the services that our citizens expect.”
Madrigal’s chief concern was how Kelley planned to pay back the missing sales taxes. He said in other circumstances he has given a business a week to pay half the amount owed and allowed the remaining balance to be paid over a set time frame.
Wise said a payment plan up to six months was workable since Kelley had paid nearly half of what she owed already. Kelley and the city landed on a three-month payment plan.
Madrigal said sales taxes are different from property taxes in that businesses collect them at the point of purchase, and businesses are required to remit those collections per state statute.
“It’s not necessarily a debt that comes upon you that you need to pay, it’s money that you’ve collected,” he said.
Kelley said she understands it’s not a debt and described other measures she’s taken to ensure sales taxes are kept separate from her business funds.
“Yesterday was one of many obstacles that I’ve had to face as a new business owner, and I will continue to face them head on with the help of my incredible staff and our supportive community,” Kelley said in an email to The Durango Herald on Thursday.
She said The Garage carries a negative stigma that “looms” over the bar, and changing that perception is one of her team’s biggest priorities – although that “isn’t made any easier when we are constantly fighting with comments and perspectives that simply don’t reflect the business we are today.”
“We made it our goal to create a space that is open to all and much more than just a bar,” she said. “The Garage still has pool tournaments, of course, but also hosts dance classes, charity events, holiday parties and birthday parties for all ages.”
In her statement, she said The Garage changed its public image last year and is committed to being “an open and safe space.”
“To my knowledge, I have no issues involving liquor violations, underage service or any police-related incidents,” she said.
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