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Tuesday, August 18, 2009

Have You No Shame?:
A Tiferet Sta"M Advertises his Level of Observance Bein Adam L'Chavero

In addition to "Ask Orthonomics" and "Bad Financial Advice" titles, I'm adding another one and amending the title of a previous post so that topics of a similar nature fall under the category "Have You No Shame?"

Jonathan Rosenblum has a column up on Cross-Currents that was printed in Mishpacha in response the Deal ordeal, which sadly can no longer be labeled the newest fraud investigation/case, regarding yashrut which has some nice lines from Rav Shimon Schwab and the other sources.

One commentor recalls a recent situation and asks for advice:
"I recently purchased talis and tzitzis at a Sta”M store in a large and well-known frum community in the US. The sofer was busy at work when I got there, and stopped to help me select the right size and fit (who knew there were different talis fits these days). When it came time to pay he quoted me a round number. When I pulled out my credit card he said “well in that case we’ll have to pay Uncle Sam” and proceeded to calculate the tax. I usually do not carry much cash, but had just been to the ATM machine and had enough to cover this relatively small purchase. Without thinking much, I handed over the cash and was nichshal be’aveirah.
As I was leaving, I saw that same scenario play itself out with another customer in the store who was picking up mezuzos, (and paid cash).
Before I start moralizing, its obvious that I participated in cheating the government every bit as much as the sofer. And to that end, I’m asking for eitzoz for what might be a proper takanna. (I cant just send the state of __ a check for the money owed.
But I also cannot stop wondering as to the kashrus of the Stam and other articles sold in this store. Was everything done and checked kadas ukedin? Probably. Does it matter? Not sure how to think about it. Chaveirim, please advise."

This was my advice:
I can only hope that the sofer who we have bought tefillin and mezuzot from are honest businessman. I can’t imagine how an item that is acquired through such means is truly kosher.

But, no matter what the price and no matter what the method of payment is, as per tax law, he is the one responsible to make an accounting and pay up, although I too would feel like a participant in tax evasion for handing over the cash rather than a check or plastic for the purchase after he basically advertise the intent to defraud.

It would take a bit of a backbone, but perhaps you could march into the store and return the items for cash back and let the store owner know exactly why and that you want to be kosher with all of your dealings and later buy the same item from a sofer who, at the very least, has the good sense not to state his intents to defraud (can you imagine someone stating his intent to cheat on his wife or break Shabbat to a stranger that walks into his store?).

Beyond that, perhaps you can call the owner and inform him that cash is also taxable, speak to a Rav regarding the sofer’s practices since such advertising could potentially be an issue for the kehillah, or just try to go forward by paying through check/debit/credit and rest easy knowing that he, not you, is responsible for the taxes no matter what the method of payment.

After I posted my comment I did have the thought that he could claim sales tax on his own state tax form by claiming a purchase was made in a state without sales tax for that amount. This would take care of one aspect, but certainly wouldn't take care of the social security, medicare, federal, and state income taxes owed.

I'm not sure what I would do if I was the one to hand over cash after such a statement. I rarely think twice when I had over cash for a good or service because corportations and business are responsible to take care of their taxes, not the consumer. If I spend time feeling responsible, I simply wouldn't be able to step out into the marketplace! On a similar vein, those who engage in banking, tax services, or accounting/bookkeeeping know that you can't police every transaction, although sometimes it is prudent to drop a client because you simply can't trust them.

Please add your own advice in the comments section, especially if you have been in a similar situation.

41 comments:

BrooklynWolf said...

Actually, I had a very similar encounter (also in a safrus store) about three years ago

The Wolf

Avi said...

Not the first time I've heard of this, either. Is there any chance that the sofer simply includes sales tax in his prices (like many midtown Manhattan parking garages), but if you use a credit card, he has to pay merchant fees (typically 2 - 4%), so to discourage that, he says he'll have to charge you sales tax?

No? Oh well. (See, Rosie? I tried to be dan l'chaf z'chus!)

Jeffrey said...

I once had a similar situation like this. I asked my Rebbe what to do. My Rebbe said that by paying cash I would be encouraging the merchant to avoid paying taxes, so my Rebbe discouraged me from paying cash.
I should note that the non-jewish corrolary to this example is buying something in state and shipping empty boxes to your cousin out of state.

Lion of Zion said...

SL:

"I can only hope that the sofer who we have bought tefillin and mezuzot from are honest businessman."

uh, i hate to burst your bubble, but since you've done such a nice job of highlighting some of our ills, i'll throw one back at you:

http://agmk.blogspot.com/2009/06/pre-marital-mikvah-parties-and-thieving.html

Ahavah Gayle said...

It's possible (granted, not probable) that the cashier didn't mean pay "the government" but rather meant to say "the credit company surcharge." There are many businesses (not religious ones, at that) that give a cash discounts because visa/mc charge 2% and Amx charges 2.25% of the balance to "process" credit card payments (though their computers do all the processing for a fraction of a cent per transaction - but that's another topic for another day). They can't technically charge you a fee for using a card (that would be a violation of their provider agreement), but they can give you a "discount" for not using one. If that's what the cashier meant, this this has nothing to do with sales tax, which could have already been figured into the price.

Anonymous said...

It can be very hard to not do business with someone. I once searched all over for certain products I needed. I was so happy when I finally found the items in the last store I went to and told the clerk that I would be placing a large order. (It was wood mouldings and other construction materials.) I went to browse in the showroom a bit more before finalizing the order and then heard the clerk talking on the phone loudly and telling some disgusting racial jokes. I left the store without placing the order. The next day I phoned the store and asked to speak with the owner. I wanted to explain what happened, that he should know why he lost a customer and that I was still willing to do business if he would give me his word that he would address the issue with the employee. It turns out the owner was the clerk and he had a few more choice words for me. Needless to say I did not purchase the items and had to keep searching. If I had bought them, they would have reminded me of that vile man everytime I looked at them. It was tough, but it was worth it.

Dave said...

I will not do business with a business I know is trying to defraud the government.

Bob Miller said...

Years ago, I discovered that a couple of seforim stores I favored in Boro Park preferred to be paid in cash or with checks made out to cash. This got me to thinking that there was a problem. I found that a very large nearby seforim store in Boro Park did add in sales tax and did take payment in all conventional ways. So I bought from them. It's like comparison shopping in general; look for the reputable above-board business that offers what you need at an affordable price.

Similarly with photo and electronic equipment--- Some NYC web-based mail order houses are crooks and their deals are fake. So seek out the good guys. I've seen comments on the Web about some of the crooks, that they're not open Saturdays. Other commenters have pointed other NYC dealers who are also Shomer Shabbos and run legitimate, reliable businesses.

The way we can promote good practices is to patronize only stores that follow them.

Ezzie said...

I've had similar (but reversed) situations many times. If a place tells me that if I pay cash there's no tax, I specifically pay via credit card. (I actually almost never carry cash - easier to say "sorry, no cash on me" then.)

As for others who don't take cards at all (cash or check only), I feel as you do in the post - not my responsibility, hopefully they track things properly.

alpidarkomama said...

I've been in that situation, and have walked out, even if I had to go to the trouble of locating the items elsewhere. I think it's UGH (a highly-technical halachic term).

Ariella said...

Collecting the sales tax should not make a difference to the merchant, for that cost is borne wholly by the customer, and filing for sales tax is required by any business with resale certificate. The advantage for them is not recording the sale, so their profits appears lower on the books.

Anonymous said...

You are correct Ariella. However, some merchants/businesses think they are doing the customer a favor by not collecting tax and that they will therefore get business and win the customer's loyalty.

rosie said...

Avi,
Let's not go overboard with the l'chuf z'chus business. This one is very common.
I have also had offers in NY stores to avoid sales tax by paying cash but I was not carrying cash and ended up paying sales tax. Oh well, I try so hard to be unethical. If you want to legally avoid sales tax or the obligation to pay use tax (I don't know how many people are honest about that one anyway) you can send gifts to people by using a site located in a state where neither the giver or recipient lives.
I have a feeling, while still trying to judge l'chuf z'chuss, that this is a symptom of our community's lack of respect for civil law. Hopefully even if the store owner does not charge the customer tax, he pays it to the state because public schools depend on sales tax revenue.

Anonymous said...

Rosie,

Almost all states have a use tax, which requires you to pay the equivalent of state sales tax on items purchased out of state.

Granted, this is impossible to enforce, and I've never heard of anyone complying. Just saying...

Mike S. said...

Anonymous,

When I ordered computers and related gear on line, I paid the use tax. My other on-line purchase is clothes which are not taxable (below a certain limit) in my state.

rosie said...

States lose a ton of money on out-of-state sales. Most people do not keep track of what they spend online or when they travel to somewhere where items are not taxed or are taxed at a lower rate. Some people are so unaware of use tax that they openly brag about buying a large purchase such as jewelry in a state with a lower tax rate. Use tax where I live only applies to items bought elsewhere and brought back to my state to be used. It does not apply to gifts sent elsewhere.

Child אִישׁ Behavior said...

A friend of mine is a sales tax auditor and he tells me that this happens lots of times. In all sorts of stores all across the state. When people get caught they claim ignorance and settle for a much lower bill. This is the way of the world. In an effort to be Dan Likav Zechus I am going to make one point.

Dina Dimalchuza Dina only applies where the law is being followed and the government is stringent when it comes to these things. (So money laundering ect would be a no-no when it comes to dina dimalchusa) In the case of under-reporting sales tax, can you say that this falls under the category of Dina dimalchusa? The law of the land is only the law of the land as much as the said law is enforced.

Anonymous said...

As I commented on the post from LOZ. It really is a huge HUGE problem because the Sta"M (well, the sifrei Torah, the Mezuzot, and the Tefillin) may truly be non-kosher. This is because the sofer is required to be shomer mitzvot, and obviously this particular sofer is not shomer mitzvot (possibly ovehr on DM"D, Gezeila, Michshol, etc).

Mark

conservative scifi said...

I hate to be on the side of cash payers, particularly since I almost always use credit cards (which I pay off every month), but there are two separate reasons why a business might prefer cash over credit.

The first is the one focused on by the comments here, which is to cheat the government and avoid reporting legitimite sales. That is, of course, clearly illegal.

The second reason, however, is to avoid paying the surcharge to the credit card companies, which can range up to 3-5% of the total. So even an honest businessman would probably prefer cash payments, since he'll take home more profit.

Consequently, unless you hear the businessman express an interest in cheating "uncle sam", I am not sure it is fair to assume that the businessman is cheating, just because he prefers cash.

Anonymous said...

Child Ish: I don't think the law can ethically be ignored just because the government doesn't have the resources to enforce the law as vigorously as it might. This is not a situation where the government choses to look the other way and ignore the law. Besides, the majority of businesses do collect sales tax and report their profits.

JLan said...

"
The first is the one focused on by the comments here, which is to cheat the government and avoid reporting legitimite sales. That is, of course, clearly illegal.

The second reason, however, is to avoid paying the surcharge to the credit card companies, which can range up to 3-5% of the total. So even an honest businessman would probably prefer cash payments, since he'll take home more profit."

Except that your rationale only works in states and areas with low sales taxes. Any state like NJ (7%), NY (variable, but no county is lower than 7% and NYC is 8.375%), or Illinois (variable, but at least 6.25%) will end up charging significantly more for sales tax than for credit card use, which the owner will have to pay.

miriamp said...

We pay use tax. There, now you know of someone else who actually does it.

At least, we have ever since it started appearing as a line item on the state income tax forms and we only have to calculate and send it in. I knew of it in theory before that, but they made it so difficult to pay it, so I never sought out the proper forms.

rosie said...

Basically Miriamp,
a person should save all of his receipts in some type of organized form so that they can see what they bought and where they bought it from and when they bought it. Most people are not that organized and if you ask them at tax time what they bought online that year they wouldn't even remember. Someone once said on this blog that some states have an estimated amount based on income that someone can pay.
Keeping receipts can solve many problems anyway such as knowing how much I spent last yomtov etc. I just wish that I was organized enough to do it. Maybe if I spend less time on the computer it will help.

Ba'al hamaiseh said...

I am the ba'al hamyseh of the post on cross currents.

What is really bothering me is that when you go to a stam store you are essentially looking for kedusha and trust, and I feel like I got neither. How many of us actually unroll the mezuza when we buy it, and even if we do, are we qualified to know whether something is amiss? (Not me). When is the last time you actually saw the inside contents of your tefillin? Are there even parshiyos inside? (I recall hearing some scandal like this a few years ago). And when the sofer tells you that the teffilin need to be fixed (thereby earning him a fee) is he telling the truth? And does anyone verify whether it was indeed repaired?
What more, its fairly clear that this was basically “store policy” not some isolated incident. If he does most of his business in cash, he most likely doesn’t report it on his federal income taxes, FICA etc., and who knows what else. Is this a person who should be a sofer?

After thinking about it some more, my little mayseh cuts to the core of what we’ve been grappling with from Potsville to Deal. I have no doubt that if I bought tefillin from this sofer which were later found to contain photocopied parshioys, I would feel confident in going to the rabbonim, the vaad and all of my friends and making sure everyone knew not to trust this sofer, and my guess is I would probably be applauded for doing so. And if I did not go public with it and people later found out that I knew, the tzibbur would be justifiably mad at me. But given that the issue is tax evasion, I (we) are much more ambivalent about making a big stink over this—not only in regarding to the moser issue, but even regarding creating a kol in the community. If I were to take up this issue, my guess is that many roll there eyes and then (correctly) begin pointing out the many areas of halakha and life where I could use some improvement. Hence the most I can bring myself to do is write an anonymous post on a blog, making sure to conceal the identity of all involved, and asking for some guidance. Is this the right approach? Are there better (realistic alternatives?

-still seeking advice.

SephardiLady said...

Thanks for coming over here and commenting. I believe that if you were to make a stink, you would be greeted with a list of your weaknesses rather than a discussion of the issues at hand.

The deflection technique is particularly annoying. I remember ages ago expressing my sticker shock over tuition prices and someone pointed out that we spend money that we don't have to. Of all people, I am quite aware where we can cut back (despite being one of the most frugal people I know) and am more than willing to cut back. . . . but tuition has now exceeded $12K for Kindergarden! If we stopped eating, never bought a new to us/used pair of shoes or clothing, and got rid of our paid for cars so we never had to pay for gas, insurance, and maintence again. . . we would not have $12K in cash flow to fund another child's tuition.

Deflection is simply annoying and oftentimes unnecessary.

conservative scifi said...

Jlan,

You misunderstood my point. In my local Kosher grocery stores, the prices are set and there is no negotiation, so cash helps them but they are paying sales tax either way.

Usually at a Jewish Book store type business, the price is more negotiable. For example, one of the local stores routinely offers a "20%" discount (and rings you up on the register, so they are clearly paying sales tax as shown on the receipt).

They might be more willing to eat the sales tax cost to make the sale if they get cash, rather than credit. That is, even in a high tax jurisdiction, and probably particularly New York/New Jersey (I live further south), there is probably a robust competition among these types of stores. So when you walk in and the owner wants to close the sale, and you offer 100 dollars cash for a 105 dollar item, the owner might still pay the sales tax and tax on the profits but prefer cash because he will net 93 dollars gross after sales tax rather than 87 dollars after sales tax and credit card fee. Thus, by paying cash, the owner will get 5 more dollars in this example, but will still have paid the sales tax (and if profitable, hopefully will pay income tax, as well as all the other taxes like social security, unemployment, etc.).

That's the reason many small convenience stores have the contractually invalid signs requesting cash payment for purchases less than 5 dollars.

So while some (perhaps most) businessmen who take cash may be cheating, I still don't think you can presume this is the case.

Conservative Scifi said...

ba'al hamyseh,

Not surprisingly, as a conservative Jew, I would focus more on the ethical observances than on the ritual observances. So while I would be very unhappy to find out that a Mezuzah was just a photocopy, I am more unhappy enduring the various chillulei Hashem regarding cheating businessman, criminal Rabbis, and other wickedness, which I am asked about by my non-Jewish colleagues.

It is tiring saying that there are some bad apples in every basket and I have begun to point out that none of these criminals was a conservative or reform Jew (not that I couldn't find some of those, including Rabbis too, if I wanted).

I wish all Jews would take business and public ethics as seriously as ritual ethics (or in the case of most reform and Conservative Jews, more seriously ;)

SephardiLady said...

rosie-Just to clarify your statement, those that itemize either itemize their sales tax paid (can use actual or an estimate) or state tax paid. Those with nice size incomes will almost always claim the state income tax paid, although large purchases could push it the other ways. The real benefit is for those who live in states with no income tax paid (e.g. WA, TX, FL).

I believe Miriam has a small business and 100% of the sales tax charged and remitted is deductible to her. I sell limited inventory in the course of business and haven't had to deal with this (yet). Hopefully soon. I'd love to sell more.

SephardiLady said...

I worked from time to time in a small Jewish book store. Granted, I wasn't in charge of the books, but the policy the owner had was to price everything with sales tax included.

He certainly NEVER advertised, even in a joking manner, about the need to hide from "Uncle Sam" or the state taxing authority. Rather, it was easier to price things with a nice round number and remit the tax from that. I actually do the same for the little inventory I sale, although I haven't sold enough to be subject to sales tax remittance because the little I sell isn't the main part of my business.

Miami Al said...

Conservative Scifi, correct, and as others have also pointed out, under Halacha, the rules for business ethics are MORE important than the ritual. I would suggest that in the non-Orthodox Jewish world, while there is much more of an emphasis on ethics in general, it isn't Jewish ethics. So while the Talmud may have more to say on business transactions than inspecting lettuce, the Jewish left ignores everything, while the Jewish right ignores the ethics and has written volumes on lettuce inspection. A little back to basics might be in order.

Unfortunately, I don't think it is a "few bad apples." I think given the responses and defenses, offered in the Jewish Press and by Rosie, plus similar reactions I've heard from others, I think that this behavior is seen as acceptable as long as you don't get caught.

Cash based businesses are real, but retail establishments engaging in that behavior doesn't appear anywhere in mainstream America. Perhaps in other ethnic markets, people are comfortable commenting on their evasion of taxes, I have no idea what it is like to be Asian and go into an Asian marketplace, but I don't encounter this behavior ANYWHERE else in my life.

I would like to see denunciations of the behavior that these men are accused of. One need not prejudice themselves against an accused but presumed innocent man, but I'd like to hear from Rabbeim that this behavior, if true is horrible and a clear violation of Jewish Law.

I suspect instead we'll see hysterics about the media portrayal and how these men are victims of anti-semitism, and how we should contribute for some fund to support their family while they are locked up.

SephardiLady said...

Neither do I unless I count the men and women who try to sell $5 flower bouquets and fruit at the corner (they don't joke about evading taxes, but I'm pretty sure they aren't legitimate businesses and I don't role down my window to find out), and I shop in plenty of ethnic stores.

rosie said...

The ethnic Italians have the Mafia. Does a hit man pay taxes when he is paid to kill someone?
In other ethnic neighborhoods there are street gangs. Do they pay taxes on their drug deals?
Truthfully, I don't know what their idea of a joke would be. I wonder what they joke about in militia groups. The polygamist Mormons in Utah must have some really funny jokes.
This last weeks JP is online for the world to see and they offer explanations as to how and why it happened but they do not declare it a mitzvah to steal from the government in order to pay for yeshivas.

SephardiLady said...

I don't know gang members or mafia members (actually, that isn't quite true, I did know some female gang members in public school, but kept my distance). Few people in suburban neighborhoods have any significant interaction with mafia members or gang members. Wise to steer clear too! I personally know people in the frum community that have been arrested for financial crimes.

rosie said...

Also, even if Rabbonim declare what happened in Deal "horrible" white collar crime is treated in America like they dealt with Martha Stewart. She planted a garden in jail.
Also, remember in the recent past when Obama tried to assemble a cabinet (not the type from Ikea)? Two of the people that he tried to appoint had failed to pay taxes properly and could not accept the post.

Dave said...

And yet no one was busy defending their actions in not paying taxes.

And I don't recall hearing of a Christian religious leader in a major denomination arguing from the pulpit that there was no need to pay taxes, and that tax fraud was morally fine.

And as has been said before (and over and over), there is a difference between someone making an error in taxes (which admittedly, I'm not sure the cabinet officials did -- I suspect it was an attempt to avoid taxes rather than a mistake), and deliberately evading them.

Miami Al said...

Dave, and a bigger difference between the guy avoiding taxes (though not paying taxes on personal use of a corporate supplied automobile for which you were not 1099'd is pretty technical... yes you are supposed to fill in accurately, but in the real world, people write down the W-2 and 1099 numbers), and people saying that it is okay.

Rosie, nobody is saying that there aren't non-Jewish crooks. The difference is the justification. I've never heard one of my Catholic (or Italian) friends EVER say anything positive about the mob, maybe mafia movies, but not the mob itself.

It's not that Jews have crooks that bothers us, it's the idea that it's okay and not sinful.

Martha Stewart didn't commit a white collar "theft." She wasn't convicted of stealing a dime, and she wasn't convicted of insider trading, she was convicted of lying in a police investigation. Nobody is EVER prosecuted for that because you want people to talk to the police, if they fear being prosecuted for cooperating, everyone will wait for a lawyer.

A little different from money laundering and organ trafficking.

rosie said...

But Al, no one will come out in public and say that it is "ok". They might say it between themselves but they don't publicly endorse embezzlement. Did you see this weeks, Jewish Press articles about this topic? No one said that Jews have a right to commit fraud. They do explain though how it is possible for someone to be religiously proper in one area and totally irreligious in another area. They also acknowledge that fraud in the frum world has existed for a long time. Everyone agrees that it is time for the community to learn a new "trade".

Dave said...

Many people have said so.

Including a very prominent Orthodox Rabbi.

JLan said...

"And when the sofer tells you that the teffilin need to be fixed (thereby earning him a fee) is he telling the truth? And does anyone verify whether it was indeed repaired?"

Ba'al hamaiseh- while it doesn't eliminate the possibility of a conspiracy or kickbacks, responsible stores will have one sopher that they use only for checking and another sopher they use only for repairing. That is, unless there's some sort of under the table kickback from outside, the sopher making the decision that something needs to be repaired knows he won't get the money for repairing it.

Larry Lennhoff said...

Coming too late to the conversation, but I wanted to mention a different type of fraud. When I was becoming observant, my wife went to NYC with the local Chabad rebbetzin for a Chabad women's convention. I asked her to pick up a tallit gadol for me. She walked into the store with the Rebbetzin, and asked for a tallit with tztzit tied according to Ashkenazi minhag not Chabad minhag. When they came out the Rebbetzin herself said "And these are Ashekeazi, not Chabad tzitzit, right?" The store owner verified it.

Over the years, probably half a dozen people have told me that they could tell I had been affiliated with Chabad because of the way the tzitzit on my tallit gadol were tied.

SephardiLady said...

Larry-Oh my.